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Whose greed, whose grievance, and whose opportunity? Effects of foreign direct investments (FDI) on internal conflict
Abstract
This paper investigates the influence of foreign direct investments on the probability of civil conflict onset, contributing to the debate on globalization and civil conflict. I relax the common assumption that all forms of globalization are equivalent in their effects on civil conflict. I also incorporate the cross-sectoral heterogeneity of investments in existing arguments about the socioeconomic externalities of foreign direct investments as determinants of conflict. With long time horizons and managerial control of their foreign affiliates, foreign direct investors are strategic players aiming to maximize profits and uniquely able to alter their environment through socio-political channels. This distinguishes FDI from trade and foreign portfolio investments. Through a combination of political agency and socio-economic influences on grievance and greed among domestic groups, some types of FDI are likely to alleviate the risk of civil conflict (service sector FDI), while others exacerbate it (primary sector FDI). Analyses using a new data set of sector-specific FDI stock, 1980–2013, lend empirical support to the argument. Showing that economic globalization can have simultaneous positive and negative externalities, these findings are informative for the current dialogue on the role of global markets in sustainable development.
... For instance, a study by Blanton and Blanton (2007) found that FDI significantly lowers both the probability of conflict and its intensity. Another study by Mihalache-O'Keef (2018) found that the impact of FDI on conflict was industry-specific; the author found that service sector FDI led to fewer conflicts, extractive sector FDI led to an increase in conflicts, and FDI in the manufacturing sector had a neutral effect. ...
... In general, this study observed that the impact of conflict on FDI depends on the type of conflict, the duration of the conflict, and the sector in which the investment is being made. For example of the nexus between foreign direct investment (FDI) and conflict numerous study are found among this in an empirical study of 147 countries, Mihalache-O'Keef (2018) found that the impact of FDI on conflict was industry-specific; the author found that service sector FDI led to fewer conflicts, extractive sector FDI led to an increase in conflicts, and FDI in the manufacturing sector had a neutral effect. Similarly, in a study of 27 African countries, Asiedu and Lien (2011) found that FDI inflows to countries with a history of conflict were lower than those without a history of conflict. ...
... In another study of 25 countries in the Middle East and North Africa, Al-Sadig (2009) found that FDI inflows were negatively affected by political instability and conflict This study has consistent findings with similar study conducted Blanton and Blanton (2007) and Mihalache-O'Keef (2018) that founds FDI significantly lowers both the probability of conflict and its intensity and the sector in which the investment is being made .According to the finding of the study in Ethiopia during the studied period the FDI inflows are negatively affected by military conflicts, and the negative effect is more pronounced for FDI in the manufacturing sector than for FDI in the service sector. ...
This paper aims at assessing the foreign direct investment inflows to Ethiopia from 2018 to 2022. A qualitative research method is applied to analyze current and relevant documents, government reports, and case studies, obtained through library research. The results indicate that investment inflows during the year 2018 to 2022 were volatile due to the global COVID-19 pandemic and unsecured political conditions in Ethiopia. During the onset of the Tigray war, FDI inflows to Ethiopia declined by 6%, even though it accounted for more than a third of foreign investment in the sub-region. According to the findings of this paper political instability associated with various ethnic conflicts, most notably the conflict in the Northen Ethiopia, as well as the insecurity in the Horn of Africa, and the acute shortage of foreign currency is currently viable challenges for foreign investors. On the other hand, the interest rate, FDI-friendly economic environment, adequate supply of labor force, adequate raw materials supply, proxy to international markets, conducive fiscal and monetary policy, and easy import and export procedures are economic opportunities for foreign investors in Ethiopia. The article suggests that the government should maintain stable political conditions and peace to attract more investment inflows into Ethiopia in the future as well as the need for a comprehensive assessment of the overall risks faced by foreign investor in Ethiopia due to the high degree of peace and security and foreign direct investment interconnectedness and interdependence. Policymakers can use this information and needs to develop policies that address the risks faced foreign investor operating in conflict-prone regions in Ethiopia. The study highlights the need for policymakers to promote peace and stability to attract FDI inflows, especially from developed countries.
... Empirical research on the matter is difficult given the complexity of the subject, and dominated by conceptual and case study-based arguments. As a notable exception, Mihalache-O'Keef (2018) provided empirical evidence for primary sector foreign direct investment (FDI) to increase the likelihood of conflict, and for tertiary sector FDI to decrease its likelihood, with results for the secondary sector inconclusive. Yet, the secondary sector accounts for up to 40% of economic activity in low-and medium-income economies -which are more likely to host conflict -and is therefore worthy of further investigation. ...
... We contribute to the literature in two inter-related ways. First, we extend the arguments presented for the primary and tertiary sectors by Mihalache-O'Keef (2018) to the secondary sector. Disaggregating the secondary sector into subsectors builds understanding on the dynamics of foreign firms' presence, as subsectors vary in terms of the proximity to raw materials and natural resources in the value chain, the intensity in skilled and unskilled labor, or the pollution intensity of production. ...
... However, the majority of FDI-conflict studies focus upon interstate conflict and the private sector in the aggregate. Studies on the impact of FDI on peaceful development commonly are at the macro level and use inflow of foreign investments as a measure of FDI to assess aggregate socioeconomic impacts of MNCs and FDI (see discussion in Mihalache-O'Keef, 2018). There is a need to focus more directly on not only the corporate side of this equation, but also its heterogeneity, to better understand which types of FDI, delivered in which ways, matter most, reflecting from the body of peacebuilding research that the same FDI can be positive for peace under certain conditions, it can be negative under others, but most often it carries both positive and negative consequences in the same investment simultaneously. ...
The private sector has become an important part of the peace and conflict landscape, including the business case that multinational corporations (MNCs) make for peacebuilding support. This article uses the Indonesian context to explore the foreign MNC-conflict relationship in the manufacturing sector and to challenge the inherent value of this business case across all business sectors. We analyze the effects of various dimensions of corporate investment-based presence on violent conflicts, utilizing a cross-sectional model at the district level. We find that in industrial subsectors that are upward in the value chain, intensive in raw materials and low-skilled work (e.g., Heavy Industries, Food & Tobacco), foreign firm presence exacerbates local violent conflicts. Results in other sectors further down the value chain confirm the potentially positive role of MNCs in peacebuilding. These findings are also relevant for the wider CSR literature in that relationships between host countries and MNCs in fragile or conflict-affected areas are more complex than previously acknowledged, and call for additional research into sector-specific variances on business impacts in fragile and conflict-affected settings.
... Business affects the risk of conflicts and violence (Ganson et al., 2022), and studies underline FDIs' particular influence which depends on the sector of activity (Mihalache-O'Keef, 2018;Pinto & Zhu, 2018). The influence is negative for the tertiary sector, as foreign subsidiaries are relatively intensive in skilled and high-skilled labor, embedded in the local society, prone to quiet and peaceful context, and do not give rise to much greed or grievance. ...
... On the opposite, foreign subsidiaries of the primary sector may induce violence, as they are intensive in low-skilled workers and close in the value chain to the rent generated with primary resources, which exacerbates greed, grievance, and conflicts. Violence occurs also as these activities are often associated with negative externalities, non-compliance with environmental and social regulations, and violation of human and property rights, especially in countries suffering from institutional void (Mihalache-O'Keef, 2018). The theoretical predictions are undetermined in the case of industry as it is composed of subsectors that are close to the primary sector (e.g., heavy industries, food processing, tobacco) and others that are similar to the tertiary sector (e.g., car manufacturing, microelectronics, biotechnologies) in terms of primary resources, pollution, skilled and low-skilled labor, and technology intensities (Mihalache-O'Keef, 2018). ...
... Violence occurs also as these activities are often associated with negative externalities, non-compliance with environmental and social regulations, and violation of human and property rights, especially in countries suffering from institutional void (Mihalache-O'Keef, 2018). The theoretical predictions are undetermined in the case of industry as it is composed of subsectors that are close to the primary sector (e.g., heavy industries, food processing, tobacco) and others that are similar to the tertiary sector (e.g., car manufacturing, microelectronics, biotechnologies) in terms of primary resources, pollution, skilled and low-skilled labor, and technology intensities (Mihalache-O'Keef, 2018). Mihalache-O'Keef (2018) confirms empirically the indetermination of the relationship between industrial FDIs and local conflicts on a sample of developed and developing countries. ...
This study investigates the effects of the investment-based presence of multinational enterprises (MNEs) on poverty in developing countries. The relationship is decomposed into different pathways corresponding to various facets of firms’ presence and activities, and monetary and multidimensional poverty. We hypothesize that depending on the pathways, the effects can be positive or negative in terms of poverty alleviation, and an overall conclusion has to be nuanced. The hypotheses are tested across 431 Indonesian administrative districts, observed in 2008, 2014 and 2018. Pooled instrumental variable regressions show that a higher presence of foreign MNEs does not reduce the number of people below the poverty line. It raises the depth and severity of poverty, and the population is also more exposed to pollutions. These results inform the ongoing debate, and offer important implications for policy makers eager to attract foreign direct investments, as well as for MNEs’ managers concerned with social responsibility and achieving sustainable development goals in host developing countries.
... This relatively small body of work has been inconclusive, with findings ranging from FDI as an important factor for internal peace (e.g., Barbieri and Reuveny, 2005;Blanton and Apodaca, 2007;Bussmann and Schneider, 2007;Mihalache-O'Keef, 2018) to FDI as a source of internal violence (e.g., Gissinger and Gleditsch, 1999;Mihalache-O'Keef, 2018;Olzak, 2011) 4 to FDI having no significant effect on intrastate conflict (e.g., Sorens and Ruger, 2014). This paper examines how FDI can shape the institutional environment of destination countries in terms of its capacity to promote socio-political stability. ...
... This relatively small body of work has been inconclusive, with findings ranging from FDI as an important factor for internal peace (e.g., Barbieri and Reuveny, 2005;Blanton and Apodaca, 2007;Bussmann and Schneider, 2007;Mihalache-O'Keef, 2018) to FDI as a source of internal violence (e.g., Gissinger and Gleditsch, 1999;Mihalache-O'Keef, 2018;Olzak, 2011) 4 to FDI having no significant effect on intrastate conflict (e.g., Sorens and Ruger, 2014). This paper examines how FDI can shape the institutional environment of destination countries in terms of its capacity to promote socio-political stability. ...
... From the liberal position, globalization promotes economic growth, improves the efficiency of redistribution, and generates social welfare for the entire population. Accordingly, it is expected to be a boon to domestic peace by eliminating reasons for grievance and alleviating greed (Mihalache-O'Keef, 2018).On the other hand, globalization critics, in particular the structuralist position, are skeptical about this effect, as they point out that globalization-driven opportunities are associated with a discriminative redistributive process, paving the way to discontent (e.g., Koubi and Böhmelt, 2014;Olzak, 2011). The empirical investigation of these two contradictory claims through the lens of FDI is very sparse. ...
... Then, Chapter 3 analyzes the potential of FDI to counter socio-political instability, one of the most pressing challenges faced by developing countries. Some studies such as Bussmann (2010) and Mihalache-O'Keef (2018) have investigated the impact of FDI along with various measures of conflicts. This chapter rather examines how FDI can shape the institutional environment of destination countries in terms of its capacity to promote socio-political stability conditions and absence of violence. ...
... The political stability aspect per se has not been explored. Following the literature on the effects of globalization on conflict, in which the focus has been on trade, a few studies, such as Bussmann (2010) and Mihalache-O'Keef (2018), have investigated the particular role of FDI along with various measures of conflict (onset, occurrence, intensity, etc.) This chapter rather examines how FDI can shape the institutional environment of destination countries in terms of its capacity to promote socio-political stability conditions and absence of violence (hereafter political stability). ...
... From the liberal position, globalization is argued to favor economic growth, improve the efficiency of redistribution, and generate welfare for the entire population. Accordingly, it is expected to be a boon to domestic peace by eliminating reasons for grievance and alleviating greed (Mihalache-O'Keef, 2018). On the other hand, globalization critics, in particular the structuralist position, are skeptical about this effect as they point out that globalization-driven opportunities are associated with a discriminative redistributive process, paving the way to discontent (e.g., Koubi and Böhmelt, 2014;Olzak, 2011). ...
Institutional quality is considered one of the most important, if not the most important, determinants of long-run growth. For many de- velopment specialists, development gaps between rich countries and developing countries lie in the weakness of the latter group’s institu- tions, which results from both internal and external factors. Regarding external factors, the recent decades have seen a (overall) rapid and continuous increase in Foreign Direct Investment (FDI) flows to devel- oping countries. This surge in FDI inflows, beyond its direct economic consequences in host countries, has other implications, notably for the institutional environment. Because good institutions reduce the cost of doing business for Multinational Corporations (MNCs), governments competing to attract FDI tend to align the institutional framework in their countries with the needs of foreign direct investors. In ad- dition, MNCs can resort to lobbying and pressure to influence local institutions. Against this backdrop, this thesis examines how external actors, through FDI, can contribute to institutional development in the developing world. This thesis, therefore, explores the institutional change potential of FDI in developing countries through three chapters using suitable statistical and econometric tools. Each chapter explores a specific aspect of institutions, namely economic institutions, approached notably with the protection afforded to private property (Chapter 2), socio-political stability (Chapter 3), and corruption (Chapter 4). This thesis also explores heterogeneity in the forms of FDI, which could result in differential institutional impacts. Chapter 2 investigates how the quality of economic institutions in developing countries responds to changes in FDI inflows. The results show that economic institutions improve in countries with larger FDI flows and this effect is driven by FDI from developed economies while no significant link is detected for FDI from developing economies. Furthermore, they indicate that the positive institutional impact of total FDI is likely to be mitigated in countries where the natural resources sector represents a major driver of FDI. The findings suggest that the quality of the institutions in FDI origin countries matters in the FDI/economic institutions nexus in the developing world. Chapter 3 analyzes the potential of FDI to counter socio-political instability by improving economic opportunities. There- fore, it focuses on Greenfield FDI for its more direct impact on growth and job creation and thus its stronger socio-economic externalities. The results clearly evidence that Greenfield FDI favors political stability in the developing world. Accounting for the possibility for governments to use political repression to impose stability, this chapter also examines the influence of this variable in the FDI-political stability relationship. The results indicate that Greenfield FDI tends to promote political sta- bility compliant with governments’ respect for human rights, therefore preserving individuals’ wellbeing. Accordingly, countries should pay more attention to such investments with the stronger impacts on growth and jobs creation as Greenfield FDI. Chapter 4 draws on the resource curse literature to investigate whether the impact of resource rents on corruption is conditional on the origin of capital used to produce these rents, focusing on FDI in the resource sector in Africa. We find that resource rents are more corruption-breeding in countries with higher FDI in the resource sector, compared to lower FDI countries where the relation is mixed. We also show that the quality of democratic institu- tions determines whether these countries can avoid the increase in their corruption resulting from higher resource FDI and higher rents. (...)
... They argue that FDI increases market concentration, producing high rents over which states and challengers fight, which is particularly likely within weak states (Pinto & Zhu, 2022). Others focus specifically on natural resource extraction, assessing disaggregated data on FDI in mining activity, where conflict is driven by the extortion of companies by 'loot seeking' rebels, or issues pertaining to disagreements between foreign companies and host communities (Berman et al., 2017;Wegenast & Schneider, 2017;Mihalache-O'Keef, 2018;Christensen, 2019;Vadlamannati et al., 2020). ...
... Our finding for all FDI, thus, supports the theoretical mechanism for increased protest offered by Christensen (2019), who examines only FDI projects relating to mining company-community conflict due to bargaining failure under imperfect information. Yet, our results also speak to the debate on FDI and serious armed violence, and they suggest, like others, that only extractive FDI is susceptible to generating battle deaths that meet the threshold for civil war (Mihalache-O'Keef, 2018). These results are also generally in line with findings based at the country level showing no relationship between the level of FDI and the onset of civil war (de Soysa, 2020). ...
The question of foreign direct investment (FDI) and socio-political development is debated heavily. Liberals believe that FDI brings economic opportunities and/or increased incentives for peace and security among host societies. Critics suggest that FDI is exploitative, leading to conditions that increase the risk of violence. We take a political economy perspective that views FDI as problematic depending on how FDI affects politically powerful local interests. As such, all forms of FDI should meet domestic opposition, but only FDI in the extractive sector, where domestic political actors have little at stake, escalates to major war. Building on recent work which examines this question pertaining to extractive sector FDI, we introduce sub-national, geo-referenced data on FDI in all sectors for evaluating local conflict using combined data from four distinct geo-referenced conflict databases. Using site-period fixed effects with a difference-in-difference like approach, we find that FDI in all sectors increases local conflict. Conflicts induced by most FDI sectors fall short of becoming civil war, except for extractive sector FDI.
... Berbagai kejadian konflik karena beroperasinya perusahaan asing menunjukkan tingginya risiko kebijakan liberalisasi investasi asing di bidang pertambangan (Mihalache-O'Keef, 2018). Risiko itu muncul karena berbagai karakteristik inhenren dari pertambangan yang umumnya dikategorikan sebagai sumber yang tidak bisa diperbaharui (non-renewable), yang risikonya adalah sumber akan habis dan memberikan peninggalan konsekuensi ekonomi, dampak sosial, dan kemungkinan degradasi lingkungan yang parah. ...
... Dampak lingkungan adalah risiko lainnya yang harus dihadapi. Risiko dampak lingkungan dari pasca eksplorasi tambang, seperti batubara (Mihalache-O'Keef, 2018), timah di Bangka (Rosyida, Khan, & Sasaoka, 2018) dan logam di Goldfields (Marais, 2013) telah memberikan ancaman serius terutama bagi kehidupan masyarakat lokal. ...
Albeit many experts have conducted research related to the resolution of foreign mining and extraction problems, those that provide an overview in the perspective of defense and security are still rare. Specifically, for the case of foreign mines in Indonesia, through the perspective of national security and defense, we conduct research to provide new ideas and solutions. To explore the various types of conflicts that arise in the extractive and mining sectors, which will harm national defense and security, we conduct research using a mix-method approach (qualitative and quantitative). Qualitative studies are in the form of literature studies, interviews with six resource persons (the views of mining experts), and focus group discussions in four loci (50 participants): Kendari, Palu, Ternate, and Jakarta. Quantitative studies were carried out by distributing questionnaires at all four loci with a total of 50 respondents who were analyzed by the AHP-DEMATEL-FMEA technique. We find that the problem of foreign mines in a comprehensive national security and defense perspective must prioritize community development and nationalism perceptions. We provide a causal-effect sequence of all factors identified and developed two main scenarios: positive vector-based scenarios and Negative vector scenarios. Both scenarios are predictive of the sequence of risks and opportunities to be responded to by formulating agenda-settings in the form of activities or policies. At last, we also provide four propositions that the problems should engage with the perspective of national defense and security.
... However, one should be aware that foreign investment can lead to social conflict that hinders food security. Indeed, the presence of different motives between the companies and local people or government becomes the reason for the conflict, as the former wants to extract profit rather than humanitarian reasons, whereas the latter wants to be part of economic activities that may develop their social conditions [46,47]. Moreover, the entry mode of foreign investment, such as via merger and acquisitions, may lead to companies' different attitudes towards their commitment to the local people where the project is located [48]. ...
The continuing oil palm expansion on food security has prompted fierce debate. On one side, analysts argue that local community incorporation in the oil palm sector can increase food purchasing in the market. However, the expansion has also brought unprecedented consequences of losing highly nutritious food due to forest conversions. This study aims to analyze oil palm expansion and local food security in various regions in Indonesia by tackling the following questions: (a) Which factors influence palm oil expansion, and does foreign investment play a role? (b) How does palm oil expansion affect food security in Indonesia? Socioeconomic methods have been applied in this study, including a systematic literature review and qualitative interviews with key stakeholders from various domestic and international organizations. These two methods help us triangulate the academic literature findings with real-world situations as perceived by the actors in the related field. Results indicate that, firstly, foreign investors have not only made a direct investment to facilitate oil palm expansion, but also indirect financial intermediaries are held without holding financial equities to upstream oil palm companies (e.g., supply chain financing contracts, channeling using local financial institutions such as credit union). Secondly, while large corporations asserted monoculture oil palm expansions, some smallholding farmers use mixed cropland expansion to share food and oil palm crops in their own smallholding terms. With the oil palm expansion, farmers can secure a cash flow from palm oil, but an unintended outcome is less nutrition diversification, and often because of the distance to markets, some commodities are favored over a more diverse diet. The outcomes of oil palm development vary and are multifold, as some stakeholders report that some studies show improving cash flows at the farm level, but other studies insist that food insecurity still prevails.
... Pembangunan seringkali tidak lepas dari masalah sosial, terlebih jika pembangunan tersebut merupakan pembangunan infrastruktur yang sifatnya masif. Isu seperti terkait keterlibatan tenaga kerja asing serta guyuran investasi yang besar, kemudian menjadi salah satu dari sedikit isu yang berpotensi menimbulkan gesekan-gesekan maupun kesenjangan sosial yang dapat berpengaruh kepada kehidupan masyarakat di area yang terdampak pembangunan tersebut (Elena Grad-Rusu, 2016;Gabriel Adu, 2008;Mihalache-O'Keef, 2018). Dalam situasi ini. ...
The construction of the Cisokan Hydroelectric Power Plant (PLTA) in West Bandung Regency has significantly impacted the surrounding community. Even though it increases electricity availability and provides economic benefits, this project also raises problems, especially for women's communities, including issues of violence, sexual harassment, and gender inequality, by referring to the values of Sustainable Development Goals (SDGs) #1 (Eradicating Poverty) and #5 (Gender Equality). This service aimed to empower women through increasing knowledge and skills in the community, especially vulnerable groups such as women, to strengthen their social resilience against the negative impacts of social issues and gender inequality in hydropower development. Activities involved training, mentoring, and Focus Group Discussions (FGD) with the participation of 54 Fatayat NU cadres in Rongga Village and Cipongkor Village. The results included increased women's organizing, increased financial management and digital marketing skills of local MSMEs, and confirmation of residents' situation through FGDs. The potential for sustainability of this program was immense through the involvement of Fatayat NU and PLN in continuing existing activities and organizing.
... Overall, the data analysis dictates that there is a significant and positive relationship running from FDI toward economic growth. (Aurangzeb and Stengos, 2014;Doytch, 2015;Leitão and Rasekhi, 2013;Li and Liu, 2005;Mihalache-O'Keef, 2018). Asian region and low-income judging from the size of estimates, it is easier to interpret that the magnitude of foreign investment in developing countries is of much larger nature when the whole sample is considered. ...
Purpose
The prime objective of this study is to offer fruitful implications about allocation and directing foreign direct investment (FDI) to gain maximum economic advantage. The study offers innovative findings by contributing to a new angle.
Design/methodology/approach
The study used the annual data of 24 countries, for the period of 1995–2016 and employed quantile regression and GMM as main estimation techniques. For robustness of empirical findings and to check income effect, the study divided the countries as high income, low-income panels.
Findings
Overall, the findings reported very interesting and surprising results as regional analysis. The results show the sensitivity of FDI for Middle East and high-income group of countries, inferring that there might several other factors due to which FDI is adversely affecting growth and these countries need to reform institutional quality.
Research limitations/implications
The paper is restricted for 24 countries of Asia and Middle East, based on the data availability.
Practical implications
The high-income countries should put more efforts to attract funds. The Asian and Middle East countries countries can update trade regulations to encourage entrepreneurs and reduce trade tariffs.
Originality/value
The present study investigated the role of FDI for economic growth in the context of Belt and Road Initiative countries of Middle East and Asian regions. The paper reviewed the past literature and identified regional analysis as a research gap to focus on Belt and Road Initiative in Asia and Middle East region.
... In this stage, societies and their representative authorities ought to give more priority to health and environmental issues than other domestic and foreign affairs/politics. Domestic and international actions should keep the current dialog on the role of domestic and global markets in sustainable development considering the quality environment and health (Crawford, 2006;Mihalache-O'Keef, 2018). ...
This article aims at answering the following questions: (1) What is the influence of age structure on the spread of coronavirus disease 2019 (COVID-19)? (2) What can be the impact of stringency policy (policy responses to the coronavirus pandemic) on the spread of COVID-19? (3) What might be the quantitative effect of development levelincome and number of hospital beds on the number of deaths due to the COVID-19 epidemic? By employing the methodologies of generalized linear model, generalized moments method, and quantile regression models, this article reveals that the shares of median age, age 65, and age 70 and older population have significant positive impacts on the spread of COVID-19 and that the share of age 70 and older people in the population has a relatively greater influence on the spread of the pandemic. The second output of this research is the significant impact of stringency policy on diminishing COVID-19 total cases. The third finding of this paper reveals that the number of hospital beds appears to be vital in reducing the total number of COVID-19 deaths, while GDP per capita does not affect much the level of deaths of the COVID-19 pandemic. Finally, this article suggests some governmental health policies to control and decrease the spread of COVID-19.
... As highlighted by Oetzel et al. (2009), firms can help prevent conflict by ensuring that risk-management practices are conflict-sensitive and/or by promoting a sense of community and economic development. Indeed, Mihalache-O'Keef (2018) finds that tertiary sector investments can come with a peace dividend as they may alleviate the risk of civil conflict. ...
Purpose
This paper aims to address the relationship between critical and mainstream international business (IB) research and discuss the ways forward for the former.
Design/methodology/approach
The paper empirically maps critical IB scholarship by analysing more than 250 academic articles published in critical perspectives on international business ( cpoib ) from 2005 to 2017. The paper also includes a citation analysis that uncovers how critical IB research is recognized and discussed in mainstream IB studies.
Findings
The extant critical IB research can be broken into five main topical clusters: positioning critical IB research, postcolonial IB studies, effects of international business activities, financialization and the global financial crisis and “Black IB” and corporate social responsibility. The citation analysis demonstrates that critical IB research is rarely recognized in mainstream IB academic outlets.
Originality/value
This paper is the first to empirically map critical IB research and to measure its impact on mainstream IB research. Based on these insights, as well as discussions of the more critical voices within mainstream IB studies and the debate over critical performativity in critical management studies, ways of developing critical IB research are examined.
... As highlighted by Oetzel et al. (2009), firms can help prevent conflict by ensuring that risk-management practices are conflict-sensitive and/or by promoting a sense of community and economic development. Indeed, Mihalache-O'Keef (2018) finds that tertiary sector investments can come with a peace dividend as they may alleviate the risk of civil conflict. ...
Open access: https://www.emeraldinsight.com/doi/full/10.1108/cpoib-02-2019-0015 //
The purpose of this paper is to open up new lines of research into the engagement of corporations during humanitarian crises. The paper provides an introduction to core concepts in the delivery of humanitarian assistance, as well as a comprehensive overview of when, why, how, and to what effect corporations engage in humanitarian action. Building on extant literature and policy reports, the paper synthesizes concepts and insights to map the interdisciplinary field of research on corporate engagement in humanitarian action. The paper systematically reviews and describes different dimensions of corporate engagement for delivering humanitarian action and explains key complications that inspire new research questions. In particular, the paper highlights challenges associated with getting corporations to engage in humanitarian action; challenges associated with ensuring effective corporate engagement; and challenges associated with ensuring ethical engagement. By raising new questions about corporate engagement in humanitarian action, this paper develops an original and positive research agenda for international business, management research, and related fields.
Recently, post-conflict foreign direct investment (FDI) has garnered scholarly interest due to its potential for ending the “poverty-conflict trap” endured by many developing countries. However, few empirical studies have investigated whether FDI breaks such a vicious poverty-conflict cycle and, if so, how. Using intrastate armed conflict data from 1970 to 2019, where more than half the states experienced civil conflict recurrence, we test whether FDI curbs post-conflict onset through the mediation of economic recovery. Empirical results from two-stage generalized structural equation models appear to show that post-conflict FDI increases the magnitude of economic reconstruction and lessens grievances, indirectly decreasing the probability of conflict recurrence. Empirical findings also offer evidence in support of the mediation mechanism. We conclude that post-conflict FDI is a catalyst that could help war-torn countries escape the poverty-conflict trap.
This study questions the widely supported claim that economic globalization benefits developing countries by enhancing their prospects for civil peace. Drawing on ideas from across the social sciences, this study questions the nature of causation between economic globalization and civil peace and how it should be conceptualized and modeled. Instead of assuming a straightforward and static relationship whereby economic globalization directly increases the likelihood of civil peace, a range of alternative hypotheses are considered, including those about reverse and reciprocal causation and about dynamic and path-dependent effects. Using dynamic panel regression and vector autoregression, the study empirically examines how trade openness and foreign direct investment affect civil violence in a sample of all countries classified by the United Nations as developing. The results find positive links between economic globalization and civil peace, as much of the literature predicts, but show that this relationship mainly arises from complex patterns of causation rather than from the pacifying effects of economic globalization. These results are robust to various model specifications and sampling strategies. The study ends by considering whether economic globalization may indirectly promote civil peace by fostering long-term economic development.
Foreign shareholders are essential in the capital market. The study on A-share listed firms from 2012 to 2021 examines the impact of foreign ownership on internal control and its transmission effect. Using text analysis and machine learning methods, we construct a variable named “internal control willingness” to explore the impact of subjective willingness. The findings indicate that foreign shareholding significantly enhances internal control quality, with a more pronounced effect observed in samples demonstrating a more positive internal control willingness. Moreover, foreign shareholders contribute to the invested firm's sustainable development by enhancing internal control quality. Further research demonstrates that the positive impact of foreign shareholding is more significant in firms with legal foreign shareholders, highly competitive industries, and sound legal environments. These findings can aid host country firms in more efficiently leveraging foreign resources and provide empirical evidence for opening up China's capital market and formulating foreign investment regulations.
Why do firms demand antidumping protectionism? Contemporary literature highlights a plethora of causal mechanisms within the data-generating process, including retaliatory motives, exchange rate appreciations, business cycles, and deindustrialization. I argue that countries that are economically integrated into global markets should be associated with less demand for antidumping trade remedies. In particular, countries with higher levels of trade and financial flows should receive fewer petitions for antidumping trade remedies from firms overall, ceteris paribus. I test this theoretical argument with a series of de facto globalization indicators collected from thirty-three countries between 1978 and 2022, finding support for these arguments.
This study draws on world-systems theory to generate new explanations for the uneven patterns of civil violence found in the world today. A large and well-developed literature shows that low-income countries with stagnant economies and undemocratic political systems are the most susceptible to outbreaks of civil violence. This literature, however, fails to consider how countries are positioned relative to the structures of global capitalism. By contrast, world-systems theory has long emphasized that a country’s position within the international division of labor shapes many of its domestic outcomes, including those related to development and democratization. Combining these two literatures suggests that “world-system position” has direct and indirect effects on civil violence, with the indirect effects being mediated by development, democratization, and related factors. Drawing on a sample of 152 countries observed from 1970 to 2018 and using high-quality data on major incidences of civil violence around the world, the study finds compelling evidence that non-core countries are considerably more prone to civil violence than core countries and that this gap is widening, not narrowing, over time. These results are robust to alternative measures of world-system position and various model specifications.
The study analyses the nexus between Savings (Savings- Investment), Foreign Exchange (ImportExport) Gap and net Foreign Direct Investment (FDI) inflow into Asian Countries. Economies for this analysis
are taken from Newly Industrialised Countries (NICs) based on the valuation of GDP of the respective
countries. Six countries, such as, China, India, Indonesia, Thailand, Malaysia and Philippines are considered
for this study over a period 1982-2016. Using Panel Data Approach, the analysis has been able to find out a
long run cointegration between Savings Gap and FDI as well as Foreign Exchange Gap and FDI. As proposed
by Two Gap Model, the influence of FDI has been found on both the variables. Whereas the effect of savings
gap on net FDI inflow is positive and significant for the said period with a negative Error Correction Term
which proves the movement from short run disequilibrium to long run stable equilibrium. After proving the
direction of causality, the short run joint influence of savings gap with its lagged values has been checked.
Through Wald Test, the result is proved to be significant. On the other hand, the effect of Foreign Exchange
Gap on FDI is not significant in nature. Finally, from the study, it is suggested that if domestic savings for all
the six countries together are given importance from the level of respective Governments, the Savings Gap may
be reduced which will indicate less dependence on foreign investments into these countries. Being NICs, selffunding of future investments is always preferred which is only possible if countries are contended with
adequate capital accumulation on their own in previous periods.
This study examines empirically the impact of civil conflict on cross-border lending. Our sample covers 165 countries over the period 1984-2019 with loan data disaggregated at the economic sectoral level (primary, secondary and tertiary sectors), an analysis that is absent in existing literature. Our results indicate that cross-border lending to the primary sector is not significantly influenced by civil conflict, whereas cross-border lending to secondary and tertiary sectors is negatively impacted by the outbreak of civil conflict, leading to a decreased volume of loans or reversals of existing loans.
Dans cet article, nous étudions l’influence des conflits sur le développement financier à partir d’un échantillon de pays d’Afrique subsaharienne (ASS). Nous considérons tous les types de conflits (internes et externes) et retenons une définition non restrictive du développement financier. Les estimations sont effectuées par la Méthode des Moments Généralisés (GMM) en système à deux étapes. Sur la période 1984-2013, nos résultats montrent qu’en ASS, le niveau de développement financier est une fonction décroissante des conflits ; qu’ils soient internes, externes ou généraux. Nos résultats, qui ne dépendent pas du choix des indicateurs de développement financier et de conflits, sont robustes à l’ouverture financière « de jure » et de « facto », à l’hétérogénéité ethnique, aux unions monétaires et accords commerciaux régionaux ainsi qu’à l’hypothèse de Rajan et Zingales [2003]. Ils semblent suggérer que la réduction des conflits, en plus de ses objectifs humanitaires, est également cruciale pour le progrès économique. Classification JEL. F51, H56, G21, N47, P51
Do reports of sexual violence by state forces influence foreign direct investment? While studies have examined the impact of government human rights performance on FDI, how investors react to civilian victimization during wartime remains understudied. We investigate this with a focus on conflict-related sexual violence (CRSV). We argue that sexual violence by state governments results in the loss of FDI during conflict due to reputational and economic costs faced by foreign investors. With increasing international developments on CRSV, ties to governments that perpetrate sexual violence can be harmful to how the global community perceives foreign corporations. Moreover, government sexual violence signals that the government is relatively weaker than its opponent, creating uncertainties for foreign corporations regarding future investment opportunities in the host state. Analyzing sexual violence by government forces for all civil conflicts from 1989 to 2008, our findings show a decline in FDI as government sexual violence increases.
How do foreign direct investment (FDI) inflows affect democratic survival? No study has examined how FDI influences the likelihood of democratic survival, although many studies have studied the effect of regime type on FDI inflows. The previous finding that FDI contributes to authoritarian survival and decreases prospects for democratization does not answer this question since determinants of democratic transitions are clearly distinct from those of democratic survival. I argue that FDI in non-primary sectors is more likely than FDI in primary sectors to contribute to democratic survival since non-primary FDI is likely to produce growth-enhancing effects through upstream and downstream linkages in the host economy and facilitate the diffusion of democratic ideas and norms originating from the West. To overcome the problem of the sectoral FDI data's poor coverage, I exploit an exogenous variation in FDI inflows by utilizing a country's geographical distance from developed economies. Using a sample of democracies from 1970 to 2010, I find that inward FDI, instrumented by market proximity to developed economies, is associated with an increased likelihood of democratic survival. The analysis of primary and non-primary FDI also provides supporting evidence.
This study aims to investigate the causal linkage between foreign direct investment (FDI) inflows and economic globalization (considering de facto and de jure indexes) for 7 Association of Southeast Asian Nations (ASEAN) countries for 1985-2018. Our sample consists of Indonesia, Laos, Malaysia, the Philippines, Sin-gapore, Thailand, and Vietnam. Empirically, we propose the panel bootstrap cau-sality test based on wavelet decomposition to find a causal link between the series in different time scales. The main advantages of the methodology can be listed as follows; (a) testing the unit root behavior of the series, or existence of a cointegra-tion relationship between the series are not prerequisites , (b) one can test the causal relationship between the series in different time scales. Also, we employ the panel bootstrap causality test of Kónya (Econ Modell 23:978-992, 2006) to compare our results with the panel bootstrap causality test based on wavelet decomposition. In addition to the causality analyses, this study utilizes the panel bootstrap cointegra-tion test of Westerlund-Edgerton (2007) to find long-run relationship between variables. The proposed method's results exhibit that ASEAN countries' FDI inflows and types of economic globalization levels have mutually affected each other, especially in the long-run. The empirical findings offer some significant implications for policymakers.
Existing work seeks explanations for state repression mainly in domestic factors such as ethnic/religious cleavages, poverty and inequality, struggle for power, regime type and quality of state institutions, lack of loyalty, demand for scapegoats, and cultural or psychological traits of perpetrators. How foreign influences shape state repression has been given less attention. Furthermore, the focus of the empirical literature has been largely cross-country, leaving much local variation unexplained. In this article, I examine how far foreign interests can explain the local (spatial) variation of deportations and massacres during the Armenian genocide. Between 1915 and 1917 the Ottoman Empire carried out a massive campaign of state repression (deportations and massacres) against its Armenian population. There was meaningful variation across Ottoman provinces in the intensity of this campaign, that is, some provinces experienced more repression than others. I investigate the determinants of this spatial variation. My empirical analysis is guided by a rationalist (economic) model where deportation is a tool to stifle Armenian calls for independence, but the benefit and cost of deportation vary spatially. For example, deportation is costlier (i.e. the risk of foreign intervention is greater) in locations where foreign economic and military interests are threatened by the departure of Armenians. In line with the model’s predictions, my empirical analysis indicates that there were fewer deportations in places where Armenians worked for the German-owned railway.
In another commentary on the Oetzel and Getz (2012) article – “Why and how might firms respond strategically to violent conflict” -, the author zooms in on the strategies of MNEs to reduce conflict risk. This is the core idea behind the ‘peace through commerce’ thesis. The strategic risk management initiatives described in the chapter correspond mainly with MNE non-market strategies and include: (1) indirect and collaborative responses such as cooperating with non-governmental organizations (NGOs); (2) indirect and unilateral responses such as donating resources; (3) direct and collaborative responses such as mediation interactions between parties to the conflict; and (4) direct and unilateral responses such as speaking out publicly against the acts of violence. Importantly, since conflict weakens the institutions that restrict discretionary actions by the government and reduce the transparency of transactions, some MNEs are also expected to fall in the category of “conflict-profiting” firms.
This commentary on the article by Gao, Wang and Che (Journal of International Business Studies, 49, 1060–1080, 2018) titled “Impact of historical conflict on FDI location and performance: Japanese investment in China”, discusses the manner in which political conflict and its associated risks have been studied in the current literature. It is argued that the political risk literature mostly examines political risk in isolation and tends to ignore the interdependencies with other types of risk such as economic/financial, technological, ecological, and sociocultural risks. This is deemed as important since the boundary between political and other risk types may be very thin. The author explains the high degree of interconnectedness and interdependence among the various dimensions of risk due to the phenomena of globalization that exists at the sub-national, national, international, and even supranational levels. While each category of risk may have relevance in specific contexts, a comprehensive assessment of the overall risks faced by the modern MNE is needed.
This study has examined the potential impact of China-Pak business cycle synchronization on human development in Pakistan. Data covered the time span of 1975-2017. Other independent variables include inflation, GDP per capita, external debt and FDI. Results of unit root test showed that all variables were stationary with mixture of level and first difference. F-bounds test confirmed the presence of long run relationship among the variables. ARDL technique was applied to obtain long run coefficients. The study found that FDI and GDP per capita had positive and significant impact on human development while China-Pak business cycle synchronization, inflation and external debt had negative and significant relationship with human development in Pakistan. Results showed the value of error correction term -0.16 with 1 percent level of significance which confirmed the presence of short run equilibrium in the model. All independent variables had significant relationship with human development in the short run. CUSUM and CUSUMSQ stability tests showed that parameters of the model were stable. The study suggested that government should focus critically China-Pak business cycle synchronization to uplift human development in Pakistan for which domestic production should be promoted to facilitate domestic producers that might be helpful to improve employment level which finally can raise human development. Control on inflation is significant for the sake of human development. Policy makers should take steps for improvement in GDP per capita and FDI to encourage human development in Pakistan.
Does foreign direct investment increase cooperation among states? This study uses new data on Chinese investment as well as measures of political relations based on United Nations voting data to estimate the international political effect of the Chinese overseas investment boom. Contrary to predictions based on previous “commercial peace” literature, our results show that Chinese overseas investment has a negative effect on bilateral relationships in developed countries, and its influence on those with developing ones is statistically insignificant. We complemented our empirical tests by investigating the mechanisms based on the heterogeneity of ownership status of investors and sectors. The results indicate that the effect is mainly driven by state-owned enterprise investors and investment in natural resource sectors. Our findings offer valuable insights into whether and how economic interdependence affects political relations with a rising power in the current era. In so doing, this paper contributes to the existing literature, bringing a broader perspective to bear on the foreign policy consequences of China’s economic rise.
The abundant biodiversity in Indonesia has not been managed wisely. Ecosystem destruction and theft of biological specimens continue to occur. On the other hand, monitoring and security of entry and exit of biological specimens, especially microbes through airports and ports, is still less than optimal. We suspect that some extraordinary events, such as forest fires, bird flu, and anthrax, were deliberately created for the benefit of certain parties as part of a bioterror scenario. So far, the management and security of Indonesia's biodiversity are still not integrated and weak in law enforcement. From the perspective of national defense, biodiversity management for biodefence development is very important. Therefore, we conduct this research aiming to produce a biodiversity management model for the development of a reliable and integrated biodefence in Indonesia. We chose a mixed method to describe the threat factor of biodefence and its correlation to biodiversity. In the initial step, we took a qualitative approach through the study of literature, documents, and FGDs.Then, we identify factors for formulating a model. We compiled a questionnaire distributed to 40 selected respondents (purposive sampling) and then analyzed using SEM (Structural Equation Model) at two loci (Padang and Medan). Based on the model, we conclude that the constructs of biodiversity, management, and biodefence have strong interplay (r> 0.5); which means the respondent agrees that biodefence correlates to logical biodiversity in Indonesia. The public understanding of biodiversity problems has a 72% effect compared to the management of biodiversity governance which is only 33%. Biodiversity management does not yet describe the size of perceptions about biodefence and biodiversity. Thus, a possible conclusion to discuss is that government officials in the context of biodefence are not yet eager to deal with the problem of biodefense. ABSTRAK Keanekaragaman hayati yang melimpah di Indonesia belum dikelola secara bijak. Penghancuran ekosistem dan pencurian spesimen biologis terus terjadi. Di sisi lain, pemantauan dan keamanan masuk dan keluarnya spesimen biologis, terutama
The new 'Business For Peace' (B4P) paradigm urges multinational corporations (MNCs) to enter conflict zones and fragile post-conflict environments as an alternative to traditional development aid. While B4P's positive impact through economic opening and Corporate Social Responsibility is assumed, corporate presence can instead exacerbate conflict dynamics in certain settings. As B4P is becoming a standardized component throughout all multilateral development aid activities per the United Nations Global Compact B4P platform and the UN's 'Delivering As One' mandate, we argue that bringing B4P into the forefront of research on business, development, and conflict is essential. In this article, we unpack the relationships between business, conflict and liberal peace politics that led to the B4P framework. We then show how five major debates influence B4P today: if MNCs should be peacebuilders; if so, what should they do; how do we define and model 'peace' activities; how businesses navigate conflict economies; and how businesses engage with informal economies. We then show how these discussions guide the international community's multi-billion dollar development agenda and influence how businesses see their new role as peacebuilders and peacemakers. We conclude with suggestions for forward research on this rapidly emerging topic.
We explore a long-standing prediction in the international business literature that managers’ subjective perceptions of political risk – not just the level of risk – are important for how firms manage political risk. The importance attributed to political risk by corporate executives has increased over the last 15 years and our results show that political risk is now considered more important than commodity (input) risk. Our analysis suggests that nearly 50% of firms avoid (not simply reduce) foreign direct investment because of political risk. Using a unique survey-based psychometric evaluation of manager risk aversion, we show that firms with risk averse executives are more likely to avoid investment in politically risky countries – a key implication of behavioral models. This relation is economically stronger when agency problems are more likely to be severe: for example, when executives are less aligned with shareholder value maximization, and when executives are younger (and therefore might put their personal career concerns in front of shareholders’ interests). While numerous studies have shown that political risk affects foreign direct investment using objective measures of such risk (electoral uncertainty, conflicts, etc.), our study documents that executives’ subjective perceptions of political risk are also important for political risk management.
We investigate the impact of civil war on foreign direct investment (FDI) flows to developing countries. We employ a new data-set that disaggregates FDI inflows to primary, secondary and tertiary sectors. Second, we control for a richer set of economic and institutional variables that could determine FDI inflows including population, gross domestic product (GDP) per capita, the degree of trade openness, exchange rate variability, inflation, the governance structure of the host country using International Country Risk Guide data and its regime type using the POLITY autocracy–democracy data. We also address the reverse causality between FDI and conflict and the potential endogeneity of explanatory variables by employing dynamic system generalised method of moments (GMM) techniques in estimation. Our results indicate that primary sector FDI flows to developing countries are not significantly affected by civil war, whereas secondary and tertiary sectors FDI are more sensitive to such outbreak, potentially leading to reversals of existing FDI. Among institutional variables, government stability and control of corruption are more significant compared to regime type, law and order, and bureaucratic quality.
Drawing on institutional theory, this study examines the question of how host country institutions affect corporate social responsibility (CSR) adoption by multinational enterprises (MNEs). I propose that CSR encompasses a set of practices that MNEs draw on to signal legitimacy in different kinds of institutional contexts – contexts that vary in how they shape issue salience and stakeholder power in a given issue field. Building on ideas related to field opacity and the managerial implications of CSR, I study why MNEs adopt two distinct types of CSR policies: standards-based CSR in response to contexts marked by issue salience, and rights-based CSR in response to contexts marked by stakeholder power. To test these hypotheses, I use subsidiary and firm-level data from a sample of 540 Western European MNEs in the issue field of labor rights. Results show that MNEs strategically adopt these CSR policies related to their presence in distinct institutional contexts. The study offers implications for how MNEs manage the legitimacy of their global operations and how CSR, as a form of private governance, can emerge as both a substitute and complement to regulatory institutions.
This paper underlines the influence of trade diversification on GDP per capita growth. Using methodologies developed by Brenton and Newfarmer (2007) and Amurgo- Pacheco and Pierola (2008). we breakdown exports of 64 developing countries into intensive margin (old traded flows), extensive margin by new partners (geographic diversification) and extensive margin by new products (product diversification). Estimations of the augmented Solow model by system-GMM for the period 1990-2009. first confirm that trade diversification has a positive effect on growth, However, this positive effect of diversification tends to decrease with the level of GDP per capita. Finally, the effect of product diversification is twice as large as the effect of geographic diversification: to implement economic growth, developing countries should extend exports of new products rather than exports to new partners.
The consequences of globalization for the development of a more peaceful world remain highly controversial. This article seeks to clarify the impact that the globalization of the economy may have on civil war and political instability. Liberals argue that countries heavily dependent on the global economy (whether measured by trade or investment) are likely to experience higher economic growth, greater affluence, more democracy, and increasingly peaceful conditions at home and abroad. In stark contrast, most dependency theorists argue that high levels of trade and investment tend to generate greater economic inequality. Relative deprivation theory suggests that such inequality will increase the risk of political instability. From these two broad perspectives, a set of hypotheses is developed and tested on a global dataset for the period 1965-93. The consequences of an open economy prove to be quite complex. A high level of trade does generate more domestic peace; at the same time, direct foreign investment also creates conditions conducive to political instability. However, the consequences of trade are dependent on what is being exported. Exports of manufactured goods create high levels of welfare and equality, while exports of agricultural products promote poverty and inequality. Inequality emerges as but one of many factors which lead to political instability.
The mix of products that a country exports predicts that country's subsequent
pattern of diversification and economic growth. But does this product mix also
predict income inequality? Here we combine methods from econometrics, network
science, and economic complexity to show that countries that export complex
products - products that are exported by a few diversified countries - have
lower levels of income inequality - at comparable levels of GDP per capita and
education - than countries exporting simpler products. Using multivariate
analysis we show that the connection between income inequality and economic
complexity is stronger than what can be explained using aggregate measures of
income, institutions, export concentration, and human capital, and also, that
increases in economic complexity are accompanied by decreases in income
inequality over long periods of time. Finally, we use the position of a country
in the network of related products - or product space - to explain how changes
in a country's export structure translate into changes in income inequality. We
interpret these results by combining the literature in institutions with that
on economic complexity and structural transformations. We argue that the
connection between income inequality and economic complexity is also evidence
of the co-evolution between institutions and productive activities.
This paper presents a model, based on the advance-retreat course (ARC) model (Dai, Liang, & Wu, 2013a;Dai, Liu, & Liang, 2013b), of long-term economic growth under environmental pressure. The model is used to explain economic convergence and divergence; construct an optimal long-term growth model for basic, emerging and real total output; derive an optimal growth accounting equation; indicate the optimal paths of long-term growth and economic structure change; analyze empirically the growth for U.S. and China. Among the findings are that emerging industries contribute significantly to real output in the long term; that economic diversification can increase real output and promote long-term growth. The paper suggests policy orientations that are needed to avoid economic collapse.
The security externalities of globalization and capitalism continue to play an influential role in peace research. Typical contributions to these interrelated areas of scientific inquiry address the hope that the external openness (commercial liberalism) and the internal freedom of an economy (capitalist peace) pacify interstate as well as intrastate relations. I claim, despite the empirical support both theses have received, that they face considerable analytical hurdles. Commercial liberalism has, on a theoretical level, not yet moved much beyond the opportunity cost arguments that enlightenment philosophers first advanced more than 200 years ago. The capitalist peace research program similarly does not offer clear micro-level mechanisms explaining why the interactions between economic agents and political decisionmakers should be more peaceful in capitalist than in state-dominated economies. Drawing on the political economy literature, I argue that economic liberalism should distinguish between level- and change-effects of both globalization and capitalism and that thinking in analogies between domestic and interstate peace has prevented the field from making analytical headway. Both literatures will only profit from the advent of ‘big data’ in the case that the field addresses the theoretical challenges upfront.
The recent events in Syria, Iran, Iraq, Tunisia, Egypt, Libya and Pakistan have highlighted the importance of political events to business. Government actions, furthermore, are increasingly pervading all spheres of business activity. Since political events and government actions may affect enterprise performance, there is a need to take them into account in planning and executing strategy. As a response to the increasing impact of political events on business, a new function concerned with the assessment of country risk is gradually emerging in enterprises. Yet, this function is not without its obstacles. This study reports on the obstacles that plague the country risk process in multinational enterprises. In order to achieve this aim, interviews have been conducted with related persons in Jordanian enterprises, who are involved in risk management. It was found that the majority of Jordanian interviewees are unsatisfied with their existing approach for assessing country risk. This research has also offered suggestions for improving practice and offered directions for further research.
This article examines the globalisation of corporate strategic philanthropy as played out in the Niger Delta of Nigeria -- a region that has been marked by a history of state and petroleum industry collusion both in social repression and environmental destruction. Social control of the Delta has rested largely on what Watts (2001) conceptualises as 'petro violence', the joint security imposed by the Nigerian military and oil companies to police their installations and the environment of social unrest that surrounds petroleum extraction. In examining the extractive industry's response to social dislocation, this study focuses on the adoption of a model of partnership and participatory development by Shell Nigeria. The implementation of the social stabilisation project promoted by Shell's partnership model and facilitated by international donors and state institutions (understood in corporate strategy as a 'leveraged buy in'), exemplifies the reciprocal formation of the corporate social governance projects and development assistance in the Nigerian context. Yet this new model's attempt to achieve social consent is partially contradicted by the corporate requirement of profit maximisation served by rising prices associated with perceived and real threats to oil supplies. The oil companies' pursuit of a social 'licence to operate' thus rests uneasily with an industry whose underlying logic profits from the upward movement of oil prices, dependent on instability and violence. * Her dissertation project, concerning social welfare interventions associated with the oil industry in the Mexican Gulf and the Niger Delta, is based on 16 months of field research funded by the Social Sciences and Humanities Research Council of Canada, the Mario Einaudi Center for International Studies and the Latin American Studies Program at Cornell University
It is often asserted that the debate over industry location and the environment is closed. It is argued MNCs do not invest in highly polluting industries in developing countries in order to take advantage of weaker environmental regulations, as environmental costs are not sufficient to warrant industry relocation. This article argues that this assertion may not always hold for foreign direct investment in the most highly hazardous industries in developing countries, and that there is reason to revisit this debate. In addition, there has been a growing incidence of FDI and double standards practised by MNCs in hazardous industries in the South in the past decade, while at the same time very little has been done to transfer clean production technologies. Recent voluntary environmental initiatives on the part of global industry do not seem to have changed the situation. Instead, there seems to be growing concentration of so‐called ‘green’ investment in clean‐up, rather than clean technologies. Though such technologies may help to remediate contaminated sites and provide a place to put hazardous wastes produced in developing countries, they do not do much to help to avoid the generation of hazardous wastes in the first place.
In this paper we examine the differential effect of the primary, services, and manufacturing sector FDI on economic growth. The analysis explores whether the sectoral composition of the FDI inflows, alongside the amount of FDI flows, play a role in contributing to the host country's economic growth. Empirical analysis, using cross-country data between 1990 and 2003, shows that while the magnitude of FDI flows have a positive effect on economic growth the sector in which the FDI occurs is also important. As the share of the manufacturing sector in FDI flows increases there is a positive effect on economic growth. Whereas, as the share of primary or services sector investments increases there is a negative effect on economic growth. The results are robust to inclusion of different determinants of economic growth, panel analysis, and consideration of endogeneity.
Scholars have studied effects of economic openness and democracy on national income inequality in two literatures. In democracy studies, scholars agree democracy reduces inequality but empirical evidence is ambiguous. In globalization studies, effects of economic openness on inequality are debated but have not been rigorously examined. This article is the first systematic statistical study of the effects of both economic openness and democracy on income inequality. These effects need to be studied together. The authors measure national income inequality from a comprehensive Gini coefficient data set. Economic openness is measured from trade flows, foreign direct investment inflows, and financial capital inflows. The period studied is 1960 to 1996, the unit of analysis is a country decade, and the sample includes 69 countries. The authors find that democracy and trade reduce income inequality, foreign direct investments increase income inequality, and financial capital does not affect income inequality. Policy implications are discussed.
This essay examines the role of the agricultural input industry in the negotiation of two environmental treaties: the Cartegena Protocol on Biosafety and the Stockholm Convention on Persistent Organic Pollutants. It seeks to explain why industry players were willing to accept a phase-out of POPs chemicals but were reluctant to accept strict regulation of the trade in genetically modified organisms. This comparison is an important one to consider, as the line that once divided the agricultural chemicals and agricultural biotechnology industries has become more blurred, such that many of the same firms now are involved in both pesticide production and agricultural biotechnology. The essay argues that in order to fully understand industry positions on these two treaties, economic factors facing these industries must be examined. The shifting profitability of the pesticides and seeds industries over the past two decades goes a long way to explaining not only the positions industry players took in these two environmental treaty negotiations, but also the merger of the two sectors in recent years.
Since the late 1990s, there has been a flood of research on natural resources and civil war. This article reviews 14 recent cross-national econometric studies, and many qualitative studies, that cast light on the relationship between natural resources and civil war. It suggests that collectively they imply four underlying regularities: first, oil increases the likelihood of conflict, particularly separatist conflict; second, ‘lootable’ commodities like gemstones and drugs do not make conflict more likely to begin, but they tend to lengthen existing conflicts; third, there is no apparent link between legal agricultural commodities and civil war; and finally, the association between primary commodities - a broad category that includes both oil and agricultural goods - and the onset of civil war is not robust. The first section discusses the evidence for these four regularities and examines some theoretical arguments that could explain them. The second section suggests that some of the remaining inconsistencies among the econometric studies may be caused by differences in the ways they code civil wars and cope with missing data. The third section highlights some further aspects of the resource-civil war relationship that remain poorly understood.
In chapter 10, Baylee Harrell and Clayton Thyne highlight what we know about those legacies of civil war, including the destructive effects of war on the nation's economy, the health of its citizens, and the education of its youth. They examine the influence of civil war on health, with an emphasis on mortality, disabilities, and mental trauma, and how women and men are affected differently by civil wars. The chapter also examines how civil conflicts influence education and economic growth in the short and long term. The authors identify some policy levers that the international community can use to reduct the risk of renewed conflict through post-conflict reconstruction and rehabilitation of the economy and the society.
Research summary : In the context of economic nationalism, we investigate the relevance of political affinity between countries to the initial acquisition premium offered in cross‐border acquisitions. Political affinity is defined as the similarity of national interests in global affairs. We argue that political affinity affects how foreign acquirers anticipate their bargaining position in their negotiations with domestic target firms. With decreasing political affinity, the host government becomes increasingly likely to intervene against foreign firms in an acquisition deal. Consequently, foreign acquirers need to provide a more lucrative initial offer to dissuade target firms from leveraging government intervention to oppose the acquisition. Our prediction is supported by strong evidence that political affinity, as revealed by UN general assembly voting patterns, leads to lower initial acquisition premiums.
Managerial summary : Media reports suggest that politics plays an important role in international business transactions. However, we still know very little about how bilateral political relations affect corporate decision‐making. In this article, we analyze the influence of the quality of bilateral political relations on the bidding behavior of foreign acquirers in cross‐border acquisitions. We argue that the host government is more likely to intervene against the foreign acquirer during deal negotiations if the quality of bilateral political relations is poor. A lower political affinity between countries therefore decreases the bargaining power of the acquirer and pushes up the initial bid premium the acquirer has to offer to the local target. Our empirical results confirm our argument. Copyright © 2015 John Wiley & Sons, Ltd.
Can the political science literature on sons-of-the-soil (SoS) conflict and civil war explain patterns of ethnic conflict over land in sub-Saharan Africa? Sons-of-the-soil terminology, developed with reference to conflicts in South Asia, has been used to describe some of Africa’s most violent or enduring conflicts, including those in eastern DRC, northern Uganda, the Casamance Region of Senegal, and southwestern Côte d'Ivoire. Is Africa becoming more like South Asia, where land scarcity has often fueled conflicts between indigenous land owners and in-migrants? This paper argues that political science theories that focus on rural migration and land scarcity alone to explain outbreaks of SoS conflict in Asia fall short in Africa because they are underdetermining. The paper proposes a model of structure and variation in land tenure institutions in sub-Saharan Africa, and argues that these factors are critical in explaining the presence of absence of SoS conflict over land. This conceptualization of the problem highlights the strong role of the state in structuring relations of land use and access, and suggests that the character of local state-backed land institutions goes far in accounting for the presence or absence, scale, location, and triggering of large-scale SoS land conflict in zones of smallholder agriculture. A meta-study of 24 subnational cases of land conflict (1990–2014), drawn from secondary and primary sources and field observations, generates case-based support for the argument. The study suggests that omission of land-tenure institution variables enfeebles earlier political science theory, and may inadvertently lead policy makers and practitioners to the erroneous conclusion that in rural Africa, primordial groups compete for land in an anarchic state of nature.
The theory of imperialist capitalism, as is well known, has so far attained its most significant treatment in Lenin’s works. This is not only because Lenin attempts to explain transformations of the capitalist economies that occurrred during the last decade of the nineteenth century and the first decade of the twentieth, but is mainly because of the political and historical implications contained in his interpretations. In fact, the descriptive arguments of Lenin’s theory of imperialism were borrowed from Hobson’s analysis. Other writers had already presented evidence of the international expansion of the capitalist economies and nations. Nevertheless, Lenin, inspired by Marx’s views, was able to bring together evidence to the effect that economic expansion is meaningless if we do not take into consideration the political and historical aspects with which economic factors are intimately related. From Lenin’s perspective, imperialism is a new form of the capitalist mode of production. This new form cannot be considered a different mode of economic organization, insofar as capital accumulation based on private ownership of the means of production and exploitation of the labor force remain the basic features of the system. But its significance is that of a new stage of capitalism.
Foreign direct investment (FDI) has been linked to economic growth in a number of countries. Productivity spillovers at the firm level have been identified as a key element in the process by which FDI stimulates economic growth. Moreover, there is evidence of FDI-related productivity spillovers in China. Whether these spillovers have been of sufficient size to affect growth at the aggregate level, however, is an empirical question. We apply meta-analysis to the corresponding empirical literature to find an answer. Our main finding is that the effect of FDI on Chinese economic growth is much smaller than one would expect from a naïve aggregation of existing estimates. Publication bias and a profusion of estimates based on less preferred study and sample characteristics have served to inflate observed estimates. Once these effects are accounted for, the estimated effect of FDI on Chinese economic growth is reduced to statistical insignificance. This suggests that the cause(s) of the Chinese “economic miracle” likely lie elsewhere.
Most countries in Sub-Saharan Africa (SSA) have been associated with low and volatile
growth performance over the years. Export diversification has been identified in the literature
as growth-inducing. This study provides evidence on the relationship between export
diversification and economic growth using panel data of forty-two (42) SSA countries.
Employing the system Generalised Method of Moments (GMM) estimation technique and
three different measures of diversification, we find that export diversification has a positive
and significant effect on economic growth in SSA. Our results are robust to the measures
of export diversification. The results do not however support a hump-shaped (non-linear)
relationship between export diversification and economic growth in SSA. The findings have
relevant implications for policy.
In 2014, the Uppsala Conflict Data Program (UCDP) recorded 40 armed conflicts with a minimum of 25 battle-related deaths, up by six from 2013. This is the highest number of conflicts reported since 1999, and 11 of these conflicts were defined as wars, that is, conflicts generating 1,000 or more battle-related deaths in one calendar year. Further, an escalation of several conflicts, coupled with the extreme violence in Syria, resulted in the highest number of battle-related deaths in the post-1989 period. Yet, compared to the large-scale interstate wars of the 20th century, the number of fatalities caused by armed conflicts in 2014 was relatively low. Additionally, seven conflicts identified in 2013 were no longer active in 2014. However, four new conflicts erupted in 2014, all of them in Ukraine, and three previously registered conflicts were restarted by new actors. Furthermore, six conflicts reoccurred with previously registered actors. A positive development, however, is the increase to ten of the number of peace agreements concluded and signed in 2014, which represents a further four compared with 2013. And although this increase is part of a positive trend since 2011, it is worth noting that several peace processes remained fragile by the end of the year.
Migration is thought to cause sons of the soil conflict, particularly if natives tend to be unemployed. Using data from India, the authors investigate the causal effect of domestic migration on riots by instrumenting for migration using weather shocks in migrants' places of origin. They find a direct effect of migration on riots, but do not find that this effect is larger in places with more native unemployment. They argue and find evidence that migration is less likely to cause rioting where the host population is politically aligned with the central government. Politically privileged host populations can appease nativists and reduce migration through means that are less costly than rioting. Without these political resources, hosts resort to violence. Beyond furthering the sons of the soil literature, the authors detail a political mechanism linking natural disasters and, possibly, climate change and environmental degradation to riots, and demonstrate a widely applicable strategy for recovering the causal effect of migration on violence.
We assess the effects of foreign and domestic capital on economic growth using the latest data and better models of economic growth than those previously used. We explicitly consider the role of human capital in the process of economic development. We find no evidence that foreign direct investment harms the economic prospects of developing countries. The flow of foreign capital from 1980 to 1991 spurred growth in gross domestic product per capita, while the level of foreign stock, or 'foreign penetration,' had no discernible effect. Indeed, new foreign investment was more productive dollar for dollar than was capital from domestic sources. Previous suggestions that foreign investment flows are less beneficial than domestic ones were based on a misinterpretation. Moreover, foreign direct investment stimulates investment from domestic sources. Consequently, developing countries have no reason to eschew foreign capital, as dependency theorists urge.
Since 2010, many African governments have challenged twenty years of extractive sector liberalization that has played a key role in unlocking mineral riches and attracting foreign direct investment. The potential for extractives to drive economic structural transformation is intuitively attractive, the Africa Mining Vision (2009) document providing a primary template. Geological inheritance alone, however, is not a panacea for economic development, industrialization or poverty alleviation. While much attention to the ‘resource curse’ has identified the problem of excessive rent-seeking and the consequent impact on elite consolidation, democracy, governance and macroeconomic distortions, a more fundamental problem, the ‘other resource curse’, may be an overlooked driver: a lingering assumption that mineral resources should straightforwardly provide significant revenue streams for public goods, inputs for industrial transformation, and extensive employment. Geology alone is neither conducive nor antithetical to economic development. Stakeholders require a more comprehensive understanding of the possibilities and limits of extractives in contemporary Africa.
We investigate the causes of civil war, using a new data set of wars during 1960-99. Rebellion may be explained by atypically severe grievances, such as high inequality, a lack of political rights, or ethnic and religious divisions in society. Alternatively, it might be explained by atypical opportunities for building a rebel organization. While it is difficult to find proxies for grievances and opportunities, we find that political and social variables that are most obviously related to grievances have little explanatory power. By contrast, economic variables, which could proxy some grievances but are perhaps more obviously related to the viability of rebellion, provide considerably more explanatory power.
How does globalisation, especially foreign direct investment, influence the risk of intrastate conflict? While several prominent studies have found that globalisation reduces the probability of civil war, we use new data and methods to approach the question. In particular, we test for the possibility that foreign investment is endogenous to conflict risk and appropriately use inward foreign investment stock rather than net inflow to measure an economy's exposure to international capital markets. We find no evidence that foreign investment affects civil conflict, suggesting that governments' fundamental security interests trump the economic losses they can expect to suffer from failing to compromise with potential rebel groups.
Despite recent economic gains in much of the Third World, sociologists have paid little attention to the possible national benefits of economic growth. Instead, they have focused on the possible harm caused by the Third World's dependence on foreign investment and trade. Our analysis questions that focus. Based on data for 62 less-developed countries spanning two decades, we find that the effects of dependence largely vanish when (1) the effects of economic growth are carefully specified, and (2) the "semi-difference" models currently in vogue in cross-national research are replaced by more appropriate difference or difference-of-logs (growth-rate) models. In light of the common claim that economic growth in the Third World benefits only the rich, we employ measures of national welfare that the rich cannot readily monopolize. The effects of economic growth on national welfare are large and robust, whereas the effects of dependence are hard to find. These findings contradict earlier studies, which had concluded that the effects of dependence dwarf the effects of economic growth.
Despite extensive criticism, Marx's theory of rebellion has not been analyzed directly in cross-national research. The failure of proletarian revolutions to occur in the most developed countries has discredited Marx's predictions. Recent cross-national studies of rebellion and political violence have discovered a perplexing positive effect of economic development on rebellion, net of income inequality and political democracy. We show that a proper understanding of Marx's theory can explain this finding. Economic development fosters revolt because of its impact on proletarianization and class exploitation. We offer a Marxist interpretation of rebellion research and develop a novel measure of class exploitation in a cross-national regression analysis of violent rebellion in 61 countries. Our results conform to Marx's expectation that the effect of class exploitation on revolt is conditioned by market crises. Although some findings are consistent with alternative theories, we suggest that the findings provide new empirical support for Marx's insights.
One of the most robust findings in the literature on civil conflicts is that high income levels are associated with a lower risk of conflict onset. This article addresses the wealth-conflict link and discusses it in relation to the dominating 'greed vs. grievance' dichotomy. It is further argued that the effect on conflict of grievances, in the form of horizontal inequalities, is conditioned on national wealth. More specifically, there may be a higher risk of civil war in those countries that have much wealth, but where a large share of the population is potentially excluded from accessing it. The empirical analyses testing this argument employ time-series cross-section data for 1951-2004 and find support for the theory. The authors also show that taking this conditional relationship into account improves our ability to predict the onset of civil conflict.
The World Bank and the International Monetary Fund have become the most powerful macroeconomic development strategists in the Third World. Structural adjustment program (SAP) is the code term for their main strategy. One of SAP's objectives is to induce a business climate attractive to investors in Africa. This study evaluates Somalia's banana industry and associated foreign investment in the 1980s. The analysis shows that foreign investment modernized banana production and increased exports, but did not improve the starvation wages of plantation workers. Moreover, since nearly 75% of the earnings from exports leave the country, such investment does not enhance Somalia's capital accumulation fund. -from Author
This study revisits the political effect of Foreign Direct Investment (FDI) on the level of democracy in developing countries. The author finds that FDI has dual political effects based on the panel corrected standard error (PCSE) analysis using panel data covering 124 developing countries from 1970 to 2005. Although the political effect of aggregate FDI is negative, FDI from developed democracies exerts a significant positive effect on democracy. FDI in the primary sector plays a negative role in the political development in developing countries. The author also finds a regional difference in the political effect of FDI due to uneven distribution of disaggregated FDI.
We study the determinants of the sectoral distribution of foreign direct investment (FDI) in Eastern Europe and Central Asia, focusing on the investment climate and state of democracy. Using a dynamic system generalized method of moments estimator, we examine twenty-one countries for the period 1994–2008. We find that when human capital is controlled for, the host country investment profile has a positive effect on agricultural FDI and the host country state of democracy positively affects agricultural and manufacturing FDI. In addition, services FDI is attracted by educated labor, whereas FDI to other sectors is attracted by cheap labor. Moreover, natural resource endowments have a positive impact on FDI in the sectors of agriculture and manufacturing.
How do we account for multinational energy companies that are able to operate in “risky” political environments? While traditional risk indices may tell us why a country is considered a difficult operating environment, they tell us very little about why some multinationals are neverthelessly able to operate successfully in such countries over long periods of time. In fact, risk indices by their very nature make “success” almost impossible to capture due to their sole focus on country behavior. In reality, when a multinational energy company enters into a given country, the firm establishes relationships with a series of stakeholders, not a single “host country” entity; further, the behaviors of those stakeholders (good or bad) do not exist in a vacuum, but rather are largely influenced by the multinational's own behavior. In other words, the risk is in the relationship between the firm and the country's stakeholders. This article argues that success is therefore a function of the firm's ability to manage relationships among a variety of stakeholders within a given country. A case study of Cameco, a Canadian-based uranium mining multinational which has been operating in the politically “risky” country of Kazakhstan for two decades, bears this out.
It is argued that P-values and the tests based upon them give unsatisfactory results, especially in large samples. It is shown that, in regression, when there are many candidate independent variables, standard variable selection procedures can give very misleading results. Also, by selecting a single model, they ignore model uncertainty and so underestimate the uncertainty about quantities of interest. The Bayesian approach to hypothesis testing, model selection, and accounting for model uncertainty is presented. Implementing this is straightforward through the use of the simple and accurate BIC approximation, and it can be done using the output from standard software. Specific results are presented for most of the types of model commonly used in sociology. It is shown that this approach overcomes the difficulties with P-values and standard model selection procedures based on them. It also allows easy comparison of nonnested models, and permits the quantification of the evidence for a null hypothesis of interest, such as a convergence theory or a hypothesis about societal norms.
This exploratory study investigates the risk perception and risk management strategies of Western multinational enterprises in the Middle East. A sample of 49 German companies operating in Saudi Arabia provides the empirical setting for this research. The study reveals that cultural risk is assessed as more important in the business environment than political, financial, and economic risk. The most critical risk factors are not sufficiently included in the methodology of country risk measures, which are often used as a source for country‐specific risk information. In terms of risk management strategies, participating firms use mostly informal approaches rather than structured hedging or insurance products. Furthermore, we find that firm size has implications on the perception of some risk factors and for the level of risk management sophistication.
High levels of economic inequality found in less developed countries have been attributed to the penetration of their economies by investments of multinational enterprises based in more developed nations of the West. This attribution has been widely supported by both historical and quantitative research. There are several interpretations concerning why this might be so, but the one offered here is that foreign investments cause high levels of inequality by distorting the evolution of the labor-force structure. It is suggested that Third World economies penetrated by foreign capital will have unusually rapidly growing proportions of the labor force employed in the tertiary, and it is growth of this proportion which mediates some of the effects of dependence on inequality. Our quantitative analysis of cross-national data (a) corroborates previous research linking dependence to inequality, (b) indicates that dependence is associated with growth of the tertiary, and (c) suggests this is one important link between dependence and inequality.
The paper outlines and compares two models of how globalization is likely to affect the risk of civil war - a liberal model and structuralist model. Overall, we find considerably more support for the lib- eral model than for the structuralist, anti-globalist model. Trade does appear to have a capacity for in- creasing internal peace - not directly, but via trade's beneficial effects on growth and increased politi- cal stability. Overall, we find economic openness to be associated with higher growth. Our results give no support to the idea that globalization reduces growth, not even for poor countries. We found some evidence that trade increases income inequality. However, in contrast the robust link established be- tween income inequality and violent crime, we do not find any relationship between inequality and civil war. In sum, the beneficial effect of trade and foreign investment outweighs whatever violence may be generated by increased inequality. We find that economic openness is associated with greater stability of political systems. This effect is particularly strong for democracies, but also positive for inconsistent regimes and autocracies. Finally, in our analysis of the factors increasing the likelihood of civil wars, we find no direct impact of economic openness. However, countries with a high income per capita and a stable political system have considerably lower risk of civil war than those without. Hence, since we find economic openness to increase average income and political stability, we do find an indirect conflict-reducing effect of globalization.
This research helps to increase our collective understanding of the complex interrelationships between foreign investment dependence and environmental degradation. Panel regresssion analyses of 35 less developed countries from 1980 to 1999 are conducted to test the hypothesis that foreign direct investment in the primary sector increases carbon dioxide emissions from agriculture production. Results confi rm the hypothesis, providing support for the theory of foreign capital dependence. Level of agriculture production and the use of tractors are also found to increase the growth of carbon dioxide emissions from this primary sector activity. Conversely, nations more likely to ratify international environmental treaties exhibit suppressed growth in emissions. These fi ndings underscore the need for social scientists to investigate the environmental impacts of both the level and transnational organization of production in different sectors as well as the overall use of relevant machinery and the environmental commitments of nation-states.
In the literature on civil war onset, several empirical results are not robust or replicable across studies. Studies use different definitions of civil war and analyze different time periods, so readers cannot easily determine if differences in empirical results are due to those factors or if most empirical results are just not robust. The authors apply a methodology for organized specification tests to check the robustness of empirical results. They isolate causes of variation in empirical results by using the same definition of civil war and analyzing the same time period while systematically exploring the sensitivity of eighty-eight variables used to explain civil war in the literature. Several relationships with the onset of civil wars prove robust: large population and low income levels, low rates of economic growth, recent political instability and inconsistent democratic institutions, small military establishments and rough terrain, and war-prone and undemocratic neighbors. Variables representing ethnic difference in the population are robust only in relation to lower level armed conflict.
The interpretation of the resource-conflict link that has become most publicized—the rebel greed hypothesis—depends on just one of many plausible mechanisms that could underlie a relationship between resource dependence and violence. The author catalogues a large range of rival possible mechanisms, highlights a set of techniques that may be used to identify these mechanisms, and begins to employ these techniques to distinguish between rival accounts of the resource-conflict linkages. The author uses finer natural resource data than has been used in the past, gathering and presenting new data on oil and diamonds production and on oil stocks. The author finds evidence that (1) conflict onset is more responsive to the impacts of past natural resource production than to the potential for future production, supporting a weak states mechanism rather than a rebel greed mechanism; (2) the impact of natural resources on conflict cannot easily be attributed entirely to the weak states mechanism, and in particular, the impact of natural resources is independent of state strength; (3) the link between primary commodities and conflict is driven in part by agricultural dependence rather than by natural resources more narrowly defined, a finding consistent with a “sparse networks” mechanism; (4) natural resources are associated with shorter wars, and natural resource wars are more likely to end with military victory for one side than other wars. This is consistent with evidence that external actors have incentives to work to bring wars to a close when natural resource supplies are threatened. The author finds no evidence that resources are associated with particular difficulties in negotiating ends to conflicts, contrary to arguments that loot-seeking rebels aim to prolong wars.
A growing area of empirical literature in sociology investigates the social and environmental impacts of foreign direct investment. Building on macrosociological theorization of foreign capital dependence and prior research, I test the hypothesis that less-developed countries with higher levels of foreign capital penetration in the primary sector use a greater amount of pesticides per hectare of arable and permanent cropland. Findings for the ordinary least squares regression (OLS) and robust regression analyses of 40 less-developed countries confirm the hypothesis, and underscore the need for social scientists to assess the effects of foreign capital penetration in different sectors.