The impact of civil war on foreign direct investment flows to developing countries

Abstract

This document is the author's post-print version, incorporating any revisions agreed during the peer-review process. Some differences between the published version and this version may remain and you are advised to consult the published version if you wish to cite from it.

Revisiting the bi-directional causality between debt and growth: Evidence from linear and nonlinear tests

“…The aim of Hypothesis 2 is to investigate the relationship between sectoral FDI -primary sector FDI, manufacturing sector FDI and service sector FDI -and Nigeria's exports. As noted in our literature review, increasing evidence suggests that the type and extent of the impact that FDI has on a host country will vary when total FDI is disaggregated by sectors (e.g., Alfaro, 2003;Li et al, 2017). The use of aggregate FDI data may not reveal the whole picture, as it may obscure the fact that the impact of FDI is unlikely to be equal for all recipient sectors.…”

“…Similarly, while FDI inflows may promote exports at aggregate national or regional level, not all product exports may be affected in the same way. Moreover, although not related to the FDI-exports literature, Li et al (2017) attribute the use of sectoral FDI to the underlying sector-specific characteristics and the fixed costs associated with the nature of such inward investments, which are generally higher for primary sector FDI. In turn, this would imply that oil exports which typically entail use of technological advantages embedded in 'resource seeking' inward FDI which is expected to incur high fixed costs, need to generate more profits through export revenues.…”

Foreign direct investment and civil violence in Sub‐Saharan Africa

“…Previous research has also considered a broad set of governance (political risk) factors in modelling associations between civil violence and FDI inflows (Li et al, 2017). Whilst these variables are not directly relevant to the enforcement level per se, they may reflect certain aspects of a country's enforcement sector, particularly its governance structure, and hence, it is worthwhile checking the robustness of our findings to those variables.…”

“…So, the FDI variable we adopt here is based on flow data rather than stock. 10 According to the UNCTAD, flows of FDI have three components (equity capital, 10 Although flow data may not be ideal empirical proxy to study theories related to FDI (see Kerner, 2014 for a critique from political science perspective), it has still been used widely in economics literature (Asiedu and Lien, 2011;Asiedu, 2006;Li et al, 2017) and is the most comprehensive FDI data for the SSA countries for 1972-2013. Besides, as Li et al (2017, p. 494) duly note it, "measurement errors are endemic in every attempt to quantify aggregate economic measures".…”

“…In a recent study, Li, Murshed, and Tanna (2017) investigate the impact of civil conflict on FDI inflow. In contrast, our focus in this paper is on the reverse causality: the effect of FDI inflow on civil violence.…”