Knightian uncertain violence and the challenge of FDI-assisted development: policy recommendations where civilian lives are at risk

Pooja Thakur-Wernz (), Helena Barnard () and Marianne Matthee ()
Additional contact information
Pooja Thakur-Wernz: Washington and Lee University
Helena Barnard: University of Pretoria
Marianne Matthee: University of Pretoria

Journal of International Business Policy, 2024, vol. 7, issue 3, No 7, 356-390

Abstract: Abstract In this interdisciplinary paper, reviewing scholarship on both politically motivated and social violence, we use the Knightian distinction between (measurable) risk and (unknowable) uncertainty to examine how international business is affected when violence is directed at civilians, civilians are killed, and violence levels are constantly changing. Using data on 48 African countries (1997–2021), we show the uncertainty of these actions deters inward foreign direct investment (IFDI). As a high-commitment mode of internationalization, IFDI involves deepening knowledge of and exposure to foreign locations. Because uncertainty challenges the feasibility of deepening knowledge and is so hard to mitigate, investors behave differently than under risky conditions—they avoid contexts with Knightian uncertain violence. Our post hoc analysis shows that as IFDI decreases, exporting by local firms increases, suggesting another way to remain globally economically connected. Although our work raises many questions that demand further research, we can already identify useful policy insights. When violence makes a context uncertain to the point of virtual unknowability, IFDI will only assist development if policymakers and MNEs alike work to reduce violence. Multi-sectoral partnerships, increasing educational opportunities, and especially good governance are critical to ensuring IFDI is not appropriated by perpetrators of violence, but instead serves development.

Keywords: IFDI; Violence; Emerging markets; Uncertainty versus risk; Africa; Volatility; Violence against civilians (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1057/s42214-024-00188-1 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:joibpo:v:7:y:2024:i:3:d:10.1057_s42214-024-00188-1

Ordering information: This journal article can be ordered from
https://www.palgrave.com/gp/journal/42214

DOI: 10.1057/s42214-024-00188-1

Access Statistics for this article

Journal of International Business Policy is currently edited by Sarianna Lundan, Ari Van Assche and Anne Hoekman

More articles in Journal of International Business Policy from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().