Going Critical: Nuclear Cooperation and Foreign Direct Investment

• In Event: 21st Century Deterrence

Abstract

Policy makers and scholars have frequently debated how peaceful interstate nuclear cooperation influences the proliferation of nuclear weapons. Few have considered, however, the broader externalities that may occur as a result of such cooperation. We argue that nuclear cooperation between states has positive follow-on benefits for international business activity. When two states agree to cooperate on the development of nuclear energy, they send a signal to their own businesses and investors that the risk of investment in the other country is now lower. Additionally, cooperation on nuclear energy signals shared environmental concerns, further lowering the perception of risk. We test our expectation using data on nuclear cooperation agreements and foreign direct investment (FDI) for all dyads between 1990 and 2008. The results strongly support the argument that interstate nuclear cooperation positively impacts FDI flows.

Authors

• Sophie McMurray, University of Georgia

• Justin Conrad, University of Georgia

• David Gattie, University of Georgia

• Joshua Massey, University of Georgia