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

Neise, Thomas ORCID logoORCID:, Sohns, Franziska ORCID logoORCID:, Breul, Moritz ORCID logoORCID: and Revilla Diez, Javier ORCID logoORCID: (2022) The effect of natural disasters on FDI attraction: a sector-based analysis over time and space. Natural Hazards, 110 (2). pp. 999-1023. ISSN 1573-0840

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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: Journal Article
Additional Information: Further information on this paper can be found at:
Keywords: Foreign direct investment, Multinational enterprises, Risk, Hybrid panel regression, Sector-specific analysis
Faculty: Faculty of Business & Law
SWORD Depositor: Symplectic User
Depositing User: Symplectic User
Date Deposited: 14 Sep 2022 15:59
Last Modified: 14 Sep 2022 16:04

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