Armed Conflict and the Location of Extractive Foreign Direct Investment

Abstract

Despite the link between resource wealth and conflict, some mining regions experience intense violence while others remain relatively peaceful. This paper argues that foreign ownership of mines restrains armed conflict near mining facilities. The potential for intervention by the home governments of foreign miners discourages rebel attacks. Using a staggered difference-in-differences design with georeferenced conflict and mining facility data from 1998 to 2010, the analysis shows a reduction in armed conflict following the entry of foreign miners. The military expenditure of the foreign miner’s home country further strengthens this restraining effect, highlighting the protective role of foreign ownership.