Investment Dependence and Political Conflict in Third World Countries

Abstract

This research investigates the effect of international forces upon domestic political conflict by examining the relationship between foreign investment and political protest in underdeveloped states. Three conceptions of the association between foreign investment and conflict are considered. The first two focus on foreign investment as creating conflict by exacerbating deprivation. The basic difference between these views centers around whether the effects are felt most in poorer or in richer societies. In general, scholars who maintain that deprivation occurs see it as resulting from the impact of a large foreign presence on the strength of the host government and on its increased use of repression. The third, or liberal, conception sees foreign investment as reducing conflict by enhancing resource availability. The findings from the cross-national analysis of a sample of underdeveloped countries indicate that a high level of foreign investment is associated with less conflict in poorer societies and with more conflict in wealthier countries. The increased conflict in wealthier states, however, is not a product of the effect of foreign investment on governmental strength and repression, as deprivation theorists argue.