Expropriations of Foreign Property and Political Alliances: A Business Historical Approach

Abstract

This paper proposes a classification of government expropriations of foreign property based on the types of alliances sought out by governments in their quest for support for those actions. Based on a review of historical literature and social science studies of expropriations in sub-Saharan Africa and Latin America in the twentieth century, we define three types of alliances: with organized labor, with domestic business owners, or with sections of the civil service or the ruling party. We posit that each sector allying itself with the government expects rewards from the expropriation. We maintain that the type of alliance is determined by several factors, in particular, the longevity and legitimacy of the nation-state of the expropriating country, the strength of organized labor, and the political participation and strength of the domestic business sector. Our framework complements existing studies explaining when and why expropriations take place.