Foreign Investment and State Conflicts in Africa

Rates of foreign direct investment (FDI) to Africa are increasing, yet little is known about how this will affect the political environment. One possibility, explored here, is that increasing levels of FDI within developing states will incentivize state conflict activity. Using an instrumental strategy, we show that in states with a low regard for civil liberties, or with unhealthy economies (i.e. states with a cash deficit), increased access to investment is associated with a higher number of conflict actions by the state. We argue that access to investment can push regimes into using violent strategies to secure their internal environment and to ensure their survival, specifically in their engaging in conflict against opposition and armed combatants. This underscores the need for extensive monitoring of state behavior following the receipt of investment, similar to the oversight of conditional aid.