Risky business: Foreign direct investment in the global economy

Research output: Contribution to journalArticles

Abstract

The continued movement toward trade liberalization combined with an absolute reduction in national barriers of entry have facilitated an unprecedented expansion of interstate commercial activity, witnessing year-on-year increases in the volumes of capital, goods and services traded across borders. Despite the success of this process, the recurrent problem of political risk still plagues vast swaths of the global political economy threatening assets, compromising investments, and in extreme cases impacting the stability of national economies and the economic well-being of populations. This article traces the changing nature of political risk and its impact on international trade and commerce over the last 50 years, relating the elemental features of political risk processes to the broader forces at work in the global economy.
If, as Benjamin Franklin noted "man is rarely more innocently engaged than when he is devoting his time to making money," then in the world of politics and international relations he could scarcely be more ill prepared (Subik, 1986, p. 109). Innocence is not a characteristic to which practitioners of international politics devote much time other than to note that the weak, innocent and meek accept what they must, while the powerful do what they can.
For practitioners and theorists of international relations, interstate politics are often understood as a realm of realpolitik. In this realm, the rule of law is frequently violated, morality disregarded for the pursuit of power, while civil forms of discourse and orderly legal corridors for the settlement of disputes are mostly absent. Anarchy, in other words, is a condition prevalent in the international environment, indeed more prevalent than most observers would acknowledge. In the 20thcentury, for example, an age celebrated for its achievements in science and industry, mass production of goods and services and emergence of global commerce and trade, there were more deaths due to armed conflict than in all previous centuries combined. War, insecurity, destruction, insurrection and political instability visited more places on earth more times than in all previous recorded history. Copyright © 2007 IUP, All rights reserved.
Original languageEnglish
Pages (from-to)49-73
JournalThe IUP Journal of International Relations
Volume1
Issue number2
Publication statusPublished - Jul 2007

Citation

Jarvis, D. S. L. (2007). Risky business: Foreign direct investment in the global economy. The IUP Journal of International Relations, 1(2), 49-73.

Keywords

  • Risky business
  • Foreign direct investment in the global economy
  • Political
  • Global
  • International
  • Interstate
  • Economy
  • Combined
  • Practitioners
  • Relations
  • Celebrated
  • Capital
  • Characteristic
  • Commercial
  • Continued
  • Destruction
  • Disregarded
  • Elemental
  • Emergence
  • Environment
  • Frequently
  • Facilitated
  • Expansion
  • Achievements
  • Increases
  • Innocence

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