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Government Actors and Acts of Expropriation

Government Actors and Acts of Expropriation. Nathan M. Jensen Washington University in St. Louis Jeremy Caddel Washington University in St. Louis. Research Question. Which government actors lead to contract disputes between countries and MNCs?

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Government Actors and Acts of Expropriation

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  1. Government Actors and Acts of Expropriation Nathan M. Jensen Washington University in St. Louis Jeremy Caddel Washington University in St. Louis

  2. Research Question • Which government actors lead to contract disputes between countries and MNCs? • How do political institutions affect these risks?

  3. Rule of Law • Rule of Law and Development (North and Weingast 1989; North 1990; Olson 1993, 2000). • Rule of Law and International Investment (Vernon 1971; Friden 1994)

  4. Political Risk and FDI • Institutions • Democratic Regimes • Veto Players/Political Constraints • Courts • Bilateral Investment Treaties • Preferences • Partisanship • Time horizons • Learning

  5. Empirical Work • Flows of FDI (Li and Resnick 2003; Jensen 2003; Busse 2004; Ahlquist 2006; Büthe and Milner 2008) • MNC entry strategy (Henisz 2002; Desai et al 2008) • Political risk insurance premiums (Jensen 2008) • Country/regime expropriation (Jodice 1980; Kobrin 1984; Minor 1994; Li 2009) • Investment Climate Surveys (Weymouth and Broz 2009; Biglaiser and Staats 2010)

  6. International Centre for Investment Disputes (ICSID) • ICSID clauses in bilateral investment treaties (Yackee 2007, 2008, Kerner 2009, Allee and Peinhardt 2009) • 156 Country Member • Role of Private Parties • Firms can initiate disputes • Do not have to exhaust domestic remedies

  7. Data • Sources: • Completed ICSID cases (180): case facts • Media sources, company information, case studies • Coding • Government actor initiating dispute • Secondary actors involved in the dispute

  8. ICSID Disputes

  9. Empirical Analysis • Dependent Variable (1970-2006) • Country-year dispute (1= dispute, 0 = otherwise) • Separating executive from other disputes • Key Independent variables • Political regime and political constraints • Methods • Logit model with cubic splines • Robustness (rate event logit, etc)

  10. Preliminary Empirical Analysis

  11. Conclusions • Political institutions affect non-executive disputes but not executive disputes • Legislative initiated disputes are very rare

  12. Future Work • Data Collection • Expropriations from 1990-Present • OPIC Political Risk Insurance Claims • Past Expropriations • Data coding • Government actors • Types of actions • Active dispute vs. failing to act • Relationship between actors • Independence of ministries

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