Indigenous peoples’ reactions to foreign direct investment: a social movement perspective

Abstract

A growing body of literature highlights that large-scale investments in sensitive contexts can undermine both firm financial performance and peace-positive development. We investigate whether and under what conditions foreign direct investment (FDI) proximate to Indigenous land claims increases or decreases conflict. Drawing on social movement theory’s identification of powerful frames and political opportunity structures as drivers of mobilization, we predict that FDI proximate to Indigenous land claims will promote conflict. We leverage novel data on the global location of Indigenous land claims and a global corpus of more than 4 billion news articles. We find that when locations with Indigenous land claims are treated with FDI, we observe an increase in media-reported armed conflict events. We further argue and find this effect to be driven by rebels acting on behalf of Indigenous people who target (multinational) corporations and the governments who offer them the formal license to operate. These negative effects are found across a wide range of industries. Our results underscore that for investments in sensitive socio-political contexts, such as Indigenous lands, firm performance and the livelihoods of community members are heavily influenced by conflict risk mitigation efforts.