What is the main outcome of applying expropriation in an economic context?

In an economic context, expropriation refers to the act of a government taking privately owned property for public use, often with compensation. The primary outcome associated with expropriation is a potential loss of investor confidence. When investors perceive that their assets could be taken without adequate reason or compensation, they may become wary of investing in that country. This can lead to reduced foreign direct investment and a general retreat from the market, as investors seek more stable environments where their investments are protected.

While expropriation can sometimes lead to increased government revenue (if compensation is collected or new resources are developed), the overarching impact on investor perception is typically more significant and negative, influencing long-term economic stability and growth. Expropriation might not improve business relationships, as it can foster fear and distrust between the government and private entities, and it does not inherently lead to greater competition in the market; in fact, it can diminish competition by dissuading new entrants who are wary of government actions. Therefore, the main outcome of applying expropriation in an economic context is indeed the loss of investor confidence.