IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/11402.html

The Impact of Conflict on Foreign Investments : Evidence from Project-Level Data

Author

Listed:
  • Grover, Arti
  • Vézina, Pierre-Louis

Abstract

This paper examines how armed conflict affects the global allocation of foreign direct investment using monthly conflict fatality data matched with project-level greenfield foreign direct investment (FDI) and cross-border mergers and acquisitions (M&As) from 2010–2023. The presence of an armed conflict is associated with a decline in the number of greenfield projects (16.5%), FDI associated jobs (15.6%), the number of origin countries (12.4%), and the number of sectors (15.6%). The sensitivity of FDI to conflicts has intensified during 2020–2023, especially so for one-sided violence against civilians. Conflict fatalities that are geographically dispersed within a country are more strongly negatively correlated with FDI, while conflict in neighboring countries also deters FDI. Across sectors, we find that semiconductor and biotech investments are most sensitive to conflict, while sectors like coal, oil, & gas are less affected. A synthetic counterfactual analysis of Ukraine reveals that it lost approximately 10,000 jobs annually that were directly associated with FDI following the 2014 annexation of Crimea. These patterns quantify the role of conflict in perpetuating development traps and highlight the broader economic stakes it has for development policy.

Suggested Citation

  • Grover, Arti & Vézina, Pierre-Louis, 2026. "The Impact of Conflict on Foreign Investments : Evidence from Project-Level Data," Policy Research Working Paper Series 11402, The World Bank.
    • Handle: RePEc:wbk:wbrwps:11402
    as

    Download full text from publisher

    File URL: https://documents.worldbank.org/curated/en/099254406012623954/pdf/IDU-3893c41c-bc12-4fb2-afab-c50516752781.pdf
    Download Restriction: no
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:11402. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.