Nationalization of U.S. Companies in Foreign Countries
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Nationalization is a potential threat to be considered when a U.S. company commits its capital resources to a foreign country. The U.S. company under these circumstances always becomes subject to the full panoply of the laws of the host country, leaving the company open to the possibility that the host country may take the company's investment without paying full compensation. The investing company therefore must always understand the possibility of political risk and how it can be avoided. Investors typically are concerned about nationalization in socialist or Third World countries where there has been a history of nationalization for political reasons, but nationalization is not limited to those countries and may also be undertaken directly or indirectly by developed and industrialized nations when they are faced with some circumstance that prompts them to see a threat and meet it in this fashion. There is a conflict in the law between Traditional Theory and Modern Traditional Theory on this point. The classical doctrine on the issue was developed in Europe from the seventeenth through the nineteenth centuries as the European states were becoming exporters. The doctrine was very protective of foreign investment. The taking of foreign property was completely prohibited, and the state that did take property had to make complete restitution to the foreign investor. Courts went to great lengths to assure that this was carried through. The traditional doctrine in its
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ertain economic activities to local citizens, which means a takeover by either expropriation, confiscation, or forces sales. Governments may domesticate industries by imposing a transfer of partial ownership to nationals, the promotion of nationals to higher positions of management, or the purchase of raw materials or components produced locally. Studies once suggested that takeovers were becoming more frequent. The takeover rate was about 6 percent from 1946 to 1973, and 10 countries accounted for two-thirds of all takeovers. By 1985 takeovers had decreased, and countries were more involved in the process of privatization than in nationalization (Hennessey 115-116).
Spain has turned to nationalization as a way out of economic and other difficulties several times in recent history. The Spanish nationalization of industry shows that countries may nationalize industries that are owned completely by their own citizens, an act which can have consequences for foreign and domestic businesses alike doing business in a given country. The industrial sector of Spain was effectively nationalized with the coming to power of the Franco regime after the Spanish Civil War and World War II. Spain's industrial sector was thereafter marked
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Some common words found in the essay are:
Earle August, Adam Smith, Traditional Theory, Labour Party, Institute INI, , Dolan Worden, Third World, Lilley UK, Solstein Meditz, traditional theory, foreign investment, foreign investor, schaffer earle august, compensation paid, library congress, country study, study washington, industrialized nations, foreign ownership, study washington dc, modern traditional theory, country study washington, modern traditional,
Approximate Word count = 1691
Approximate Pages = 7 (250 words per page)
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