Heavy Lifting - thoughts and web finds by an economist
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Wednesday, December 19, 2007

Who knew?

In the absence of secure property rights in a foreign country, foreign direct investment is lower?

From the Energy Information Service's country brief on Bolivia:
In May 2006, President Evo Morales embarked on a campaign of resource nationalism, including the re-nationalization of all hydrocarbon resources and the renegotiation of export contracts with Argentina and Brazil. The impact of this campaign remains unclear: in the short-term, Bolivia has been able to secure higher prices for its natural gas exports, but foreign investment has been slow to recover to its former levels.

The re-nationalization, i.e., expropriation of private property for the so-called common or public good, is the antithesis to secure property rights. Is it any wonder that private investment in natural gas extraction or other carbon industries is considerably lower after the nationalization program was initiated?

Sure. The best defense against theft is to not own things in danger of being stolen.

It would seem that imminent domain has a similar but lesser effect.
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