The Shield of Nationality
When Governments Break Contracts with Foreign Firms

The Shield of Nationality examines multinational corporations' relations with governments in developing countries and why governments can sometimes expropriate foreign-owned property.

Rachel L. Wellhausen (Author)

9781107443167, Cambridge University Press

Paperback / softback, published 28 April 2016

286 pages, 60 b/w illus. 1 map 31 tables
22.9 x 15.2 x 1.6 cm, 0.42 kg

'Rachel Wellhausen argues that, despite economic globalization, firm nationality plays a central role in determining the conditions under which governments honor their commitments to foreign firms. The Shield of Nationality employs a range of evidence to document the role of firm nationality, deftly pairing statistical analyses with in-depth, interview-based case studies.' Layna Mosley, University of North Carolina, Chapel Hill

There is extraordinary variation in how governments treat multinational corporations in emerging economies; in fact, governments around the world have nationalized or eaten away at the value of foreign-owned property in violation of international treaties. This even occurs in poor countries, where governments are expected to, at a minimum, respect the contracts they make with foreign firms lest foreign capital flee. In The Shield of Nationality, Rachel Wellhausen introduces foreign-firm nationality as a key determinant of firms' responses to government breaches of contract. Firms of the same nationality are likely to see a compatriot's broken contract as a forewarning of their own problems, leading them to take flight or fight. In contrast, firms of other nationalities are likely to meet the broken contract with apparent indifference. Evidence includes quantitative analysis and case studies that draw on field research in Ukraine, Moldova, and Romania.

1. Nationality and leverage in a globalized world
2. When governments break contracts
3. National diversity and contract sanctity
4. Explaining breach around the world: quantitative tests
5. Foreign firms and their diplomats in Ukraine
6. Moldovan deterrence versus Romanian gold
7. Investor-government relations in history
8. When national diversity erodes property rights
Appendix. Case studies: methodology.

Subject Areas: Political ideologies [JPF], Comparative politics [JPB], Political science & theory [JPA], Politics & government [JP]