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

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  • Lorenzo Crippa
  • Laura Saavedra-Lux

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.

Suggested Citation

  • Lorenzo Crippa & Laura Saavedra-Lux, 2023. "Double-edged sword: understanding the localized effect of foreign direct investment inflow in conflict settings," WIDER Working Paper Series wp-2023-127, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2023-127
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    References listed on IDEAS

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    Keywords

    FDI; Foreign Direct Investment; Armed conflict;
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