'Foreign Direct Investment (FDI) in Conflicted States'
A Political Science and International Relations Programme research seminar.
Event type: Seminars21 November 2018 from 1.00 pm - 2.00 pm
Speaker: Prof Shaun Goldfinch, VUW
Conflict-afflicted states are considered undesirable destinations for foreign direct investment (FDI) due to, inter alia, political instability, regulatory unpredictability, and expropriation risk. We argue that political conflict and instability do not necessarily lead to higher levels of FDI expropriation risk. On the contrary, conflict can reduce incentives of the state executive to expropriate,reducing expropriation risk. Just as rule of law and other institutions can constrain a state from expropriating assets; so can instability, conflict and incapacity. There is a potential substitution effect here. A firm can choose to invest in an environment where the state is constrained from expropriation by rule of law and the standard ‘good’ institutions; or it can draw on its technological advantages and seek to invest where the state is constrained by its instability, inability, and lack of incentives to expropriate. Thus we arrive at two types of state constraints. Using a dataset of FDI location decisions in oil and gas sector made by 159 US firms across 38 countries between 2007 and 2013, we show that civil war risk, terrorism risk, and terrorism events are positively associated with investment in oil and gas.
Shaun Goldfinch is an Adjunct Professor at Victoria University of Wellington. His research focuses on public management/administration/governance, public policy, international business/FDI, and development and conflict/fragile states. Professor Goldfinch held positions at Universities of Nottingham, Otago and Canterbury, American University of Sharjah, University of the South Pacific and visiting positions in Japan. His articles were publisihed in Public Administration Review, Public Administration, Governance, Journal of Peace Research, Journal of Policy History, Public Administration and Development, Asian Studies Review, Government Information Quarterly, Public Management Review, Civil Wars, etc. Books include Remaking New Zealand and Australian Economic Policy (Georgetown University Press, 2001), Dangerous Enthusiasms (Otago University Press, 2006) and Prometheus Assessed? (Elsevier, 2012).
All are welcome, no RSVP required!