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The effect of economic coercion on companies’ foreign direct investment decisions: Evidence from sanctions against Russia

Author

Listed:
  • Elena V McLean

    (University at Buffalo, 12292SUNY Buffalo, USA)

  • Jeheung Ryu

    (26717Ewha Womans University, South Korea)

  • Taehee Whang

    (26721Yonsei University, South Korea)

Abstract

Existing research on the relationship between economic coercion and foreign direct investment suggests that sanctions have no effect on investments in targeted countries or may even encourage investment inflows. A key limitation of this research, however, is its aggregate country-level focus, which fails to capture company-level decision-making processes and factors shaping them. In contrast, this paper evaluates multinational companies’ investment plans as reflected in new investment announcements and shows that sanctions in fact lead to significant adjustments in multinational companies’ plans to invest in a targeted country. Our company-level analyses of new investment projects in Russia show that companies are less likely to announce new investments after the imposition of economic sanctions against the country.

Suggested Citation

  • Elena V McLean & Jeheung Ryu & Taehee Whang, 2024. "The effect of economic coercion on companies’ foreign direct investment decisions: Evidence from sanctions against Russia," Conflict Management and Peace Science, Peace Science Society (International), vol. 41(4), pages 438-462, July.
    • Handle: RePEc:sae:compsc:v:41:y:2024:i:4:p:438-462
    DOI: 10.1177/07388942231198490
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    References listed on IDEAS

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