The effects of political and legal constraints on expropriation in natural resource and manufacturing sectors

Glen Biglaiser, Hoon Lee and Joseph L Staats
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Glen Biglaiser: University of North Texas, USA
Hoon Lee: Texas Tech University, USA
Joseph L Staats: University of Minnesota Duluth, USA

International Area Studies Review, 2017, vol. 20, issue 4, 311-333

Abstract: Using panel data for up to 86 developing countries from 1960–2006, this paper investigates the effects of political and legal constraints on the tendency of host governments to expropriate in the natural resource and manufacturing sectors. Consistent with existing research, we find that host governments are more inclined to expropriate in the natural resource sector than they are in the manufacturing sector and that leftist governments are more apt to expropriate than rightist governments. However, we also find that political and legal constraints on host governments lessen the risk of expropriation, but do so with greater force as to the natural resource sector than for the manufacturing sector, and with larger effect as to leftist governments than rightist governments. The results suggest that leftist governments are especially inclined to expropriate in the resource sector unless constrained by political and legal factors from doing so and, because of lower initial capital requirements and increased mobility of assets, all governments, left and right, have less reason to expropriate in the manufacturing sector and therefore are more likely to resist expropriating even in the absence of political and legal constraints.

Keywords: Expropriation; foreign direct investment; political and legal constraints; economic sectors (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:sae:intare:v:20:y:2017:i:4:p:311-333

DOI: 10.1177/2233865917719063

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