Expropriation is the seizure of private property by a public agency for a purpose deemed to be in the public interest. Unlike eminent domain, expropriation may also refer to the taking of private property by a private entity authorized by a government to take property in certain situations.
Due to political risks that are involved when countries engage in international business it is important to understand the expropriation risks and laws within each of the countries that business is conducted in order to understand the risks as an investor in that country.
One example of expropriation occurred between the United States and Mexico in 1938 when the Mexican president Lázaro Cárdenas signed an order that expropriated almost all of the foreign oil companies operating in Mexico. This initially turned out to have great negative consequences on the Mexican economy when their oil exports were boycotted by major oil companies, decreasing exports dramatically, but later on, the economic benefits of this move became apparent, with the new national oil company PEMEX being an important contributor to the Mexican Miracle, and other countries soon followed with oil nationalization carried out in much of Latin America and the developing world.
Another example is the expropriation of Granahorrar Bank owned by Julio Carrizosa Mutis in Colombia in 1998 as part of the economic plan performed by the Colombian government to mitigate the financial crisis. In the late 90s, the Central Bank tried to reduce liquidity caused by the financial crisis and Granahorrar, which was at the time one of the highest rated financial institutions, suffered liquidity distress caused from the government's decisions. As a result, the bank was expropriated without compensation and sold, on October 31, 2005, to the Spanish Bank BBVA.
In Venezuela, the massive expropriation plan that started in 2007, allowed to expropriate thousands of companies (from all strategic sectors) and land (arguing that those that were unproductive should be used to promote "food security and sovereignty"). Expropriation and nationalization was one of the characteristics of the government of Venezuelan ex-President Hugo Chávez and President Nicolás Maduro. The result has been negative consequences in the economic sector.
The term appears as "expropriation of expropriators (ruling classes)" in Marxist theory, and also as the slogan "Loot the looters!" (" "), which was very popular during the Russian October Revolution. The term is also used to describe nationalization campaigns by communist states, such as dekulakization and collectivization in the USSR.
The term expropriation is found by late Marx writings, specifically in "Karl Marx: A letter to Otechestvenye Zapiski" to describe the process of turning agrarian/rural peasants into wage laborers/proletarians if the Russian country is to become a capitalist nation like that of the Western European nations.