The Fatal Attraction of Civil War Economies: Foreign Direct Investment and Political Violence, A Case Study of Colombia

Civil war acutely inhibits economic growth, according to a prominent set of civil war literature. However, recent scholarship observes that foreign direct investment (FDI), considered a central vehicle of growth, is entering countries with internal armed conflicts unabated. Furthermore, some civil war economies exhibit substantial increases in FDI during conflict. According to this scholarship, FDI enters conflict zones in spite of violence. This article contrastingly adopts a critical framework acknowledging the often violent characteristics of globalized capitalism. By analyzing Colombia's oil industry (the country's largest sector of FDI), this article suggests that civil war violence can create conditions that facilitate FDI inflows. More specifically, this article posits that violence perpetrated by armed groups sympathetic to the interests of the oil industrynamely the public armed forces and right-wing paramilitarieshas facilitated FDI in Colombia's oil sector. In particular, processes of forced displacement and violence against civilian groups have served to protect economically important infrastructure and have acquired land for oil exploration. Moreover, civilian groups deemed inimical to oil interests have been violently targeted. By using disaggregate-level data on the conflict in Arauca, an important oil-producing region of Colombia, this case study indicates that intensifying levels of civil war violence in areas of economic interest are followed by increases in oil production, exploration, and investment.