Even Constrained Governments Steal: The Domestic Politics of Transfer and Expropriation Risks
63 Pages Posted: 14 Jul 2012 Last revised: 19 Jun 2017
Date Written: March 26, 2015
This paper analyzes an understudied and contested form of sovereign theft, transfer restriction, which has supplanted expropriation as the most ubiquitous and costly type of international property rights violation. Veto-player-type constraints curtail governments' ability to engage in outright and (non-transfer-related) creeping expropriation, but have little impact on their ability to seize wealth via transfer restrictions. We use a formal model to derive testable implications regarding the effect of political institutions and domestic politics on governments' ability to collect these two types of rent. Empirically, we use novel time-series-cross-sectional data to show that while veto-player-type political constraints diminish expropriation risk, transfer risk is much less affected: even constrained governments impose transfer restrictions.
Keywords: International Property Rights, Transfer RIsk, Expropriation, Political Risk, Foreign Investment, Veto-Players, Political Constraints, Development
JEL Classification: F21, F23, G15
Suggested Citation: Suggested Citation