## THE NEW WAVE OF NATIONALIZATION

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### Overview
- Governments are taking over private enterprises and resources at the fastest pace in 50 years.
- Since 2020, nationalizations have occurred on every continent and include takeovers of domestic and foreign-owned assets.
- Reported examples and aggregates from 2016–2026:
  - Russia has seized more than $48 billion in ports, factories, and consumer businesses since it invaded Ukraine in 2022.
  - Estimates of assets nationalized between 2016 and 2026 total $239 billion–$544 billion.

### Historical waves (major features and numeric facts)
- General pattern: four great waves over the past 100 years; pace and timing reflect political urgency, monetary conditions, and capital mobility.
- Wave I: 1930s (1931–38)
  - Context: end of the integrated 1870s–1930s world economy; Great Depression; end of free trade and capital flows.
  - Monetary regime: End of gold standard fixed-rate system.
  - Global price environment: Deflationary.
  - Dominant trend in global trade: Increased protectionism.
  - Sectoral focus: Banking and industry.
  - Examples and figures:
    - Between 1931 and 1935 the United States nationalized about a third of financial capital.
    - In Germany more than half of bank capital became state owned.
    - Italy nationalized 20 percent of private industrial and financial assets from 1931 to 1933.
- Wave II: Late 1940s (1945–52)
  - Context: Post–World War II mixed economic model; Bretton Woods fixed-rate system; high inflation aided timing and financing of nationalizations.
  - Monetary regime: Bretton Woods fixed-rate system.
  - Global price environment: Inflationary.
  - Dominant trend in global trade: Increased protectionism.
  - Sectoral focus: Industry, utilities, transportation.
  - Examples:
    - UK nationalized the Bank of England and multiple industries (aviation, coal, telephone, transportation, electricity, gas, iron and steel).
    - France nationalized the Banque de France; private financial institutions holding 80 percent of bank deposits; coal, electricity, and telephone sectors; and several major industries.
- Wave III: 1970s (1970–79)
  - Context: End of Bretton Woods; energy shocks; inflationary pressures; decolonization increased number of sovereign states.
  - Monetary regime: End of Bretton Woods fixed-rate system.
  - Global price environment: Inflationary.
  - Dominant trend in global trade: Increased liberalization.
  - Sectoral focus: Energy and commodities.
  - Examples and figures:
    - Peak in 1975: 28 countries carried out 83 expropriations—one every four days, on average.
    - Between 1971 and 1980, developing economies nationalized at least $26 billion in foreign-owned property, or 11 percent of total foreign direct investment in the developing world in 1980.
  - Aftermath: Large sovereign debt overhang; contractionary monetary policy from the Federal Reserve starting in 1979 helped end the wave; many assets were later privatized.
- Wave IV: 2020s (2020–present)
  - Context: Originated after the 2008 global financial crisis with emergency takeovers of financial institutions; more permanent nationalizations since late 2010s; shocks include the 2020 COVID-19 pandemic and the 2022 commodity price surge following Russia’s invasion of Ukraine.
  - Monetary regime: Floating-rate system.
  - Global price environment: Inflationary.
  - Dominant trend in global trade: Increased liberalization.
  - Sectoral focus: Commodities, utilities, mining.
  - Examples and recent actions:
    - France and Germany took over utility and electricity companies.
    - France put the largest shipyard in Europe under government control.
    - The United Kingdom nationalized railways and steelmaking.
    - The United States took a dominant ownership stake in the country’s only domestic rare earth producer.
    - A growing list of countries seized foreign-owned resources such as lithium, gold, uranium, nickel, and palm oil.

### Forms of nationalization and mechanisms
- Variety of legal and political instruments:
  - Outright confiscations.
  - Compensated expropriations.
  - State-facilitated forced sales transferring assets from one private owner to another.
- Effects on investors and states depend on:
  - Whether property was owned by domestic citizens or foreign investors.
  - Presence or absence of democratic institutions and diplomatic constraints.
- Inflationary environments can make compensated buyouts cheaper in real terms.
- Capital mobility historically constrains nationalizations by enabling investor exit, but current high integration has not prevented a rising tide of takeovers.

### Drivers of the current wave
- Geopolitical instability and security considerations (control of resources in strategic competition).
- Commodity market disruptions (price surges that make resource capture attractive).
- Renewable energy development (nationalization of minerals for renewable technologies to capture price benefits).
- Policy preference shifts toward interventionist economic policies amid geoeconomic fragmentation.
- Demonstration effects and procyclical clustering: success of nationalizations in one country can encourage others.

### Economic and geopolitical implications
- Possible reconfiguration of international trade and investment:
  - Geopolitical nationalizations increase risks for foreign direct investment between strategic adversaries.
  - Global economic and financial integration may not slow overall; instead, trade, lending, and investment could realign within geopolitically aligned blocs.
  - Neutral states may attract foreign capital by positioning as reliable intermediaries and safe destinations for investment.
- Historical lessons:
  - Earlier waves sometimes prevented immediate bankruptcies but segued into reduced trade and investment (1930s) or large public investment and rapid postwar growth (late 1940s).
  - The 1970s wave contributed to sovereign debt problems when compensation increased foreign obligations and global interest rates rose.

### Concluding observations
- Nationalizations are rising despite historically high capital market integration, indicating strong macroeconomic and geopolitical forces and growing political conviction that nationalizations are a vital economic policy tool in an era of geoeconomic fragmentation.
- The fourth wave may change, but not necessarily slow, patterns of global economic and financial integration, instead rearranging long-term trade and investment linkages.

*Nicholas Mulder, "The New Wave of Nationalization," F&D, June 2026.*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2026/06/mulder.pdf_