Armed Conflict, Military Expenses and FDI Inflow to Developing Countries

  • Nusrate Aziz, Usman Khalid
  • Defence and Peace Economics, October 2017, Taylor & Francis
  • DOI: 10.1080/10242694.2017.1388066

How military expenses effect FDI inflows to developing countries in the presence of armed conflict

What is it about?

Economic theory suggest that high levels of military expenses reduces FDI inflows to a country. However, in the presence of armed conflict in a country whether the negative relationship between military expenses and FDI inflows holds is debate able. We provide evidence that a country experiencing armed conflict can actually benefits from increased military expenses by attracting higher FDI inflows.

Why is it important?

Our work show that in the long run, higher military expenses in the developing countries that experience armed conflict can lead to higher FDI inflows compared to countries that face no conflict. This result has an important policy implication for the policy makers in conflict ridden low income countries as it provides policy maker a tool through which they can attract foreign investment in the country.

Perspectives

Dr. Usman Khalid
United Arab Emirates University

Working on this paper was a great experience as this was my first independent project after my PhD. I really enjoyed working on the topic and my co-author was very supportive.

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http://dx.doi.org/10.1080/10242694.2017.1388066

The following have contributed to this page: Dr. Usman Khalid and Dr Nusrate Aziz