The Subnational Political Economy of Political Violence and FDI

• In Event: Poster Session: International Political Economy II & Conflict Processes I
  In Poster Session: Poster Session: International Political Economy II

Abstract

What are the consequences of political violence for foreign direct investment (FDI)? The conventional wisdom in political science suggests that political violence inhibits foreign investment in the developing world (Jensen & Young, 2008). However, the existing empirical evidence is mixed. I argue that to understand the relationship between these variables we need to look sub-nationally. Specifically, I argue that though firms invest in countries experiencing conflict, they do not invest in subnational locations with conflict. I test this theory using novel spatial data on FDI and political violence. Analyzing FDI to 130 countries from 2003–2017, I use spatial autoregression, a method largely new to international political economy (IPE), to confirm that political violence deters FDI at the subnational level. Building on work in business and economics, this project forces us to re-examine the relationship between conflict and capital. This has important consequences for the determinants of FDI and post-conflict reconstruction literatures.

Author

• Anne Jamison, University of Wisconsin, Madison