Abstract
ABSTRACT It is often assumed that civil wars impede foreign direct investment (FDI). Peace is therefore typically considered important for countries to attract FDI. However, scholarly evidence is inconsistent and has uncovered a complicated relationship between conflict and FDI. While studies have tended to focus on the extractive industries, this article investigates how conflict and peace can impact FDI in the tourism industry. Using Sri Lanka as a case study, the evidence suggests that the country’s civil war (1983–2009) inhibited inward flows of tourism FDI. Since the conflict ended, the tourism sector and tourism FDI rapidly expanded. However, the areas most affected by the conflict have seen limited growth in tourism and tourism FDI. High levels of militarisation – including military involvement in tourism – have stymied tourism in these areas. This suggests a more complicated relationship between FDI, civil war and peace than is typically recognised in the current scholarship.
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