Foreign direct investment and security: simplifying the complexities

Abstract

The relationship between foreign direct investment and the security situation of a given country is complex and difficult to define. To further complicate matters, security is only one of many variables that drives the decision of a firm to invest in a particular country. This paper simplifies some of the complexities related to the study of this topic, especially as it relates to security, by expanding on previous research done at the country level and applying it at the regional level. It concludes that the security situation of a given country can be approximated through the the independent variable of the annual per capita murder rate and that this rate is directly related with FDI in a given area. Business leaders can use this simple analysis as a starting point to aid in the decision in which country to invest in and why.