Cross-border M&A, greenfield FDI and the onset of intrastate conflict, 1990–2015

Abstract

PurposeBy examining the link between the two types of FDI and intrastate conflict from 1990 to 2015 in 138 countries, this paper intends to test the peace-through-FDI thesis.Design/methodology/approachTo empirically test the hypotheses, this study examines county-year observations from 1990 to 2015 for 138 countries. An instrumental variable method is utilized to this end.FindingsThis paper shows that, while greenfield FDI generates pacifying effects on intrastate conflict, M&A investment is likely to promote the onset of intrastate conflict.Originality/valueDespite the extensive literature on FDI and the onset of intrastate conflict, many have approached FDI as a singular phenomenon, and have not broken it down into its constituent parts of greenfield and brownfield investment types. Theorizing that this practice had oversimplified and blurred the relationship of FDI on intrastate conflict onset, the authors pursued the collection of novel data in order to more completely distinguish between the two types of FDI. With this novel approach dividing FDI into its component parts, the authors break open the black box of FDI to empirically find out the extent of its diverse influence on the onset of intrastate conflict.