The role of foreign direct investment by multinational corporations in Africa: An exploratory discussion

Abstract

Foreign direct investment in conflict-affected areas is a subject of debate within the realms of economic development and international human rights research. There exists a cohort of analysts that exhibit enthusiasm towards FDI in areas affected by security crisis, asserting that it serves as a catalyst for economic development and contributes positively to peace-building endeavours. Conversely, immense corpus of scholarships posits that FDI in regions affected by war has the potential to intensify instability and negatively impact economic growth. The aim of this article is to investigate if foreign direct investment by multinational corporations and security dynamics in Africa have correlation. To this end, two multinational firms with Swedish and Chinese roots were examined, along with their respective investments in South Sudan and Democratic Republic of the Congo. By using exploratory research method, the analysis highlights that these companies have been the subject of allegations from local communities, international human rights organizations, and academic circles regarding their extractive operations, involvement in human rights violations, and establishment of informal relationships with local authorities. The article suggests that to circumvent the “resource curse,” greater emphasis should be placed on the macro-level establishment of democratic maturation and political stability by non-state and state actors. Furthermore, it contends that in addressing challenges such as resource exploitation, human rights violations, and the promotion of corporate engagement in Africa’s economic progress, a comprehensive approach is more effective and functional than a fragmented emphasis on smaller-scale policy initiatives (micro).