The Restraining Effects of Foreign Direct Investment on Armed Conflict: How Foreign-Owned Mines Shape the Conflict Location

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Date

2024-09

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Mosbacher Institute for Trade, Economics & Public Policy

Abstract

Despite the well-documented connection between resource wealth and conflict, levels of violence in mining regions can vary significantly. For example, although diamond and copper mines in the southern regions of the Democratic Republic of Congo (DRC) were the location of intense conflict during the civil wars, recent violence has shifted to the eastern parts of the country. Similarly, in Ukraine's Donbas, separatists targeted Ukrainian-owned mines but spared the vicinity of a German company's facility. My recent research suggests that the threat of military intervention from the home governments of foreign miners can restrain attacks on the vicinity of foreign-owned facilities, especially when the home country has strong military capabilities and a reputation for intervention.

Description

A new issue of The Takeaway explores how foreign-owned mines can influence the location and intensity of conflicts. In “The Restraining Effects of Foreign Direct Investment on Armed Conflict,” Dr. Gyu Sang Shim explores how foreign direct investment (FDI) in mining can influence the level of armed conflict in resource-rich regions. Shim’s recent research suggests that while resource wealth often leads to violence, the presence of foreign-owned mines can deter attacks due to the potential for military intervention from the miners’ home countries. This deterrent effect is particularly strong when the home country has significant military capabilities and a history of intervention. Shim, an instructional assistant professor at the Bush School DC and a Mosbacher Institute Research Fellow at Texas A&M University, has focused much of his research on how firms leverage their diverse political backgrounds against investment risks. The Takeaway is a publication of the Mosbacher Institute for Trade, Economics, and Public Policy at the Bush School of Government & Public Service at Texas A&M University.

Keywords

Foreign Direct Investment, Armed Conflict, Mines

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