Foreign Direct Investment into Areas of Civil Conflict

Stream: Panel 63 - International Relations: Foreign Direct Investment and Elections in Africa 
Date: Wednesday, 28 September 2016
Time: 9.00 am – 10.30 am

Abstract

Existing research suggests that civil conflict has a negative effect on economic growth and international financial flows to conflicted countries. Nevertheless, several case studies suggest that conflict economics can increase financial flows in conflict zones in certain circumstances. This paper builds on this literature and argues that certain forms of civil conflict violence can lead to spikes in foreign direct investment. Two specific causal mechanisms are discussed: first, violence towards civilian groups can displace populations and enable resource exploration and extraction; second, conflict can displace rebels from previously held territory and enable resource accessibility and investment. Our empirical tests leverage previously unexplored project-level foreign direct investment and subnational data on conflict events covering 53 countries from 2003 to 2014.

Authors

Chungshik Moon (Presenter), Austrailian National University

Richard Frank (Presenter), Australian National University