This paper looks at fragile states and their characteristics in terms of
FDI (and sources of), local investment, and sectoral composition for
both where possible. It focuses in particular on post-conflict states,
and possible booms in investment associated therewith. It covers:
- Relationships found between fragility and conflict-affliction and
economic performance. This section summarises the definitions,
findings from the literature review, and some presentation of data on
- Data analysis on FDI in fragile states. This section presents the
analysis undertaken including some regressions undertaken on fragility
- The literature review presents in tabular form a summary of
interesting papers on the core questions of interest. The table
presents the most relevant findings from these papers.
It is concluded that countries with valuable and/or substantial
resources tend to attract greater amounts of investment. However
receiving investment purely for extraction may have other consequences
as the literature suggests a link to further conflict. For countries
that rely so heavily on natural resources, diversifying or developing
additional industries (such as processing for the natural resources)
will enable foreign investment to have a greater effect on development.
Holden, J.; Pagel, M. Fragile states’ economies. What does fragility mean for economic performance? EPS-PEAKS, UK (2012) 44 pp.