Double-edged sword: understanding the localized effect of foreign direct investment inflow in conflict settings

Lorenzo Crippa and Laura Saavedra-Lux

No wp-2023-127, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: We analyse how inward foreign direct investment (FDI) received amid ongoing violence shapes armed conflict. We argue that FDI affects patterns of violence by influencing the state's counterinsurgency strategy. To prevent disinvestment, governments strive to capture territory linked to investment. Yet, heightened military presence in areas close to FDI projects reinforces rebel group reliance on irregular warfare, thus amplifying civilian victimization as a tool to elicit cooperation or enforce control.

Keywords: FDI; Foreign Direct Investment; Armed conflict (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-int
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