Institutional constraints on economic nationalism in Latin America
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Economic nationalism has made an unexpected comeback in Latin America. This return is particularly surprising when one considers the institutional safeguards that the countries in the region adopted in the neoliberal 1980s and 1990s with the goal of protecting the property rights of private investors and preventing nationalization of multinational corporations in the future. My dissertation analyzes what role these safeguards, bilateral investment treaties (BITs), have - or have not - played in expropriation of foreign firms. A quantitative analysis of state takeovers in the region in 1985-2012 shows that the treaties have proven to be surprisingly toothless: they have not constrained nationalistic executives from attacking multinational investors. The second part of the dissertation explores the causal mechanisms behind the treaties' weak deterrent power. Case studies of Venezuelan and Bolivian hydrocarbon nationalization under Presidents Hugo Chávez and Evo Morales, respectively, show that the treaties are the weakest precisely when investors most need them. When a commodity boom increases profits in the sector, the host government is motivated to expropriate multinationals. Ironically, the price increase also enables governments to bear the treaties’ costs by accepting international arbitration and paying any resulting compensation. While previous research argues that leaders' leftist ideology has driven oil and gas expropriation in Latin America, my research shows that the politicians’ strategic calculations, not their commitments to leftism, better explain the causes and the timing of the nationalization processes, and the way the presidents pursued their nationalistic plans.