The costs of domestic political unrest

• Autores: Alex Braithwaite, Jeffrey Kucik, Jessica Maves
• Localización: International Studies Quarterly, ISSN-e 1468-2478, Vol. 58, Nº. 3, 2014, págs. 489-500
• Idioma: inglés
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• Resumen

  • Does domestic political unrest deter foreign direct investment (FDI)? And what are the longer term impacts of unrest upon the market? Most theories suggest that investors are deterred by unrest. However, empirical research returns only marginal support. We argue that these mixed results stem from the conflation of the distinct tactics and outcomes of political unrest. Violent forms of unrest increase uncertainty and risk. By comparison, nonviolent forms of unrest are shown to more frequently achieve their goals and increase the prospects for democratic change and market stability. In addition, investors avoid markets where campaigns have ended in failure, defined as the campaign not achieving their stated political aims. Failed campaigns often precipitate a cycle of unrest that create greater uncertainty over the long-term stability of a state. We find strong evidence in favor of our propositions, even after taking political motivation and non-random selection into account.