Emerging from war: Public policy and patterns of foreign direct investment recovery in postwar environments

Robert J. Moore ()
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Robert J. Moore: University of Hawai‘i at Mānoa

Journal of International Business Policy, 2021, vol. 4, issue 4, No 1, 455-475

Abstract: Abstract The postwar environment is different from those of active war and established peace, with risks of violence and political volatility existing alongside renewed commitments to stability and development. International aid organizations join governing institutions in guiding policies for postwar growth. Though investments here are risky, I argue that governments can clarify key uncertainties and accelerate the process of recovering FDI by strengthening policy in areas of information transparency, governing accountability, and engagement with international aid. These ideas are tested with a survival analysis of inbound FDI recovery using a worldwide sample of postwar periods from 1970 to 2008. I find that while transparency and accountability accelerate FDI recovery as expected, foreign aid tends to be associated with slower rates of recovery. Rather than encourage postwar FDI with a commitment to development, aid may be an indirect signal that the environment is yet unfit for private sector investment. Policymakers and aid organizations should not rely on aid alone to attract foreign investment in postwar environments. Structures that encourage investment for social responsibility, with a long-term market outlook, may be more successful in these contexts.

Keywords: emerging economies; foreign direct investment; institutional environment; political risk; foreign aid; survival analysis (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (3)

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DOI: 10.1057/s42214-020-00084-4

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