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The geopolitics of FDI: Can weak states deter hegemons using foreign investment?

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  • Krane, Jim

Abstract

Policymakers in two small and weak states, Qatar and Guyana, leveraged foreign direct investment by oil and gas firms to enhance their strategic security and protect against threats from neighboring hegemons. The case of Qatar reveals a major improvement in security relations with the United States that coincides with Mobil's participation in the Qatari natural gas sector. The case of Guyana reveals a similar process, with Guyanese officials choosing ExxonMobil over rival firms interested in its offshore oil concessions. Guyana willingly accepted inferior contractual terms in exchange for the prospect of bolstered security ties with the United States. This paper explores the phenomenon of host country governments leveraging American FDI to militarily balance against a regional hegemon. The two cases depict host countries using investment to seek security, rather than following the more documented path of using preexisting security ties to attract investment.

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  • Krane, Jim, 2022. "The geopolitics of FDI: Can weak states deter hegemons using foreign investment?," Resources Policy, Elsevier, vol. 75(C).
    • Handle: RePEc:eee:jrpoli:v:75:y:2022:i:c:s0301420721004499
    DOI: 10.1016/j.resourpol.2021.102440
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    1. Alvarado, Rafael & Cuesta, Lizeth & Kumar, Pavan & Rehman, Abdul & Murshed, Muntasir & Işık, Cem & Vega, Nora & Ochoa-Moreno, Santiago & Tillaguango, Brayan, 2022. "Impact of natural resources on economic progress: Evidence for trading blocs in Latin America using non-linear econometric methods," Resources Policy, Elsevier, vol. 79(C).

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