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The effect of natural disasters on FDI attraction: a sector-based analysis over time and space

The effect of natural disasters on FDI attraction: a sector-based analysis over time and space

Neise, Thomas, Sohns, Franziska ORCID: 0000-0002-5641-7433, Breul, Moritz and Revilla-Diez, Javier (2021) The effect of natural disasters on FDI attraction: a sector-based analysis over time and space. Natural Hazards. ISSN 0921-030X (Print), 1573-0840 (Online) (doi:https://doi.org/10.1007/s11069-021-04976-3)

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Abstract

Extensive research has addressed the question of why some countries are able to attract a large amount of foreign direct investment (FDI), while others are not. Until now, this research mostly neglected natural disasters as a business risk. In the realm of natural disaster research, some studies have investigated the effect of natural disasters on FDI inflow. However, this research remains overly simplistic and conceals the complexities of the underlying relationship. As such, this article aims to provide a more deciphered perspective by considering variations across economic sectors and the dynamic effect of natural disasters. We apply hybrid panel regressions to a dataset of 181 countries over a period of 13 years across four different economic sectors. The analysis shows that the effect of natural disasters on FDI inflow varies among economic sectors. From a longitudinal perspective, the study finds a positive relationship between exposure to natural disasters and the inflow of FDI within countries 3 and 5 years after an event. Overall, the findings highlight the complex nature of the relationship between natural disasters and FDI and warn against using too simplistic approaches.

Item Type: Article
Uncontrolled Keywords: foreign direct investment, multinational enterprises, risk, hybrid panel regression, sector-specific analysis
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HD Industries. Land use. Labor > HD61 Risk Management
J Political Science > JZ International relations
Faculty / School / Research Centre / Research Group: Faculty of Business
Faculty of Business > Department of International Business & Economics
Faculty of Business > Networks and Urban Systems Centre (NUSC)
Faculty of Business > Networks and Urban Systems Centre (NUSC) > Centre for Business Network Analysis (CBNA)
Related URLs:
Last Modified: 15 Oct 2021 08:46
Selected for GREAT 2016: None
Selected for GREAT 2017: None
Selected for GREAT 2018: None
Selected for GREAT 2019: None
Selected for REF2021: None
URI: http://gala.gre.ac.uk/id/eprint/34118

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