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Foreign direct investment and militarized international conflict

Bibliographic Data

ID3916345
AuthorsMargit Bussmann (0009-0000-9340-7800, Universität Greifswald, corresponding author)
Year2010
Volume47
Issue2
Pages143-153
Publication date2010-03-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueJournal of Peace Research (JOURNAL)
Journal identifiersISSN: 0022-3433 • E-ISSN: 1460-3578
PublisherSAGE Publications Inc (PUBLISHER)
DOI10.1177/0022343309354143
OpenAlexW2128405581
LanguageEN
Citations received42
References cited44

Liberals claim that countries avoid conflict in order not to disrupt economically beneficial exchange. The statement that economic integration reduces the likelihood of conflict is largely based on the effects of trade. A similar rationale can be applied to economic interdependence in the form of international capital exchange. A state is expected to avoid political risk, especially severe forms such as militarized disputes, in order not to deter investors. This study tests, on the dyadic and monadic levels of analyses, whether the liberal peace proposition holds when economic integration is operationalized as foreign direct investment (FDI) stocks, inflows, and outflows. The results for the years 1980-2000 indicate that inflows and stock of foreign investment reduce the risk of an outbreak of a fatal dispute, regardless of whether they are tested in a single equation or a simultaneous equation model. Thus, reverse causality does not bias the pacifying effect of foreign investment inflows and stock. The results also support the underlying notion of the commercial peace that militarized conflicts inhibit foreign investment. The onset of a fatal conflict reduces FDI inflows, and, if tested in a two-stage instrumental variable approach, FDI stock, the most complete measure of economic integration through foreign investment. Accounting for endogeneity seems particularly important when analyzing the link between the onset of fatal disputes and the outflow of FDI

Econometrics · Economics · Endogeneity · Foreign direct investment · International economics · Macroeconomics · Monetary economics · International Development and Aid · Natural Resources and Economic Development · Political Conflict and Governance

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Unique citing works42
Citations per year3
Citation span2012 - 2026 (15)
Citation velocitycurrent
Highly citedNo
Citation typesNeutral: 40

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