Search

This paper integrates the credit rating agency and domestic conflict literatures, investigating the effects of non-violent and violent domestic political unrest on sovereign bond ratings. Using up to 60 developing countries and 94 unrest cases from 1996-2018, we find that while countries under domestic unrest often receive bond downgrades, non-violent unrest appears not to be responsible. Further, we use mediation analysis and show that respect for the rule of law and economic stability seem to mediate the relationship between violent and non-violent unrest and bond ratings. Given developing countries' need to issue debt, and the critical role credit rating agencies play in rating sovereign bonds, our work suggests that countries should seek to avoid violent domestic political unrest if for no other reason than to acquire lower-cost capital. [ABSTRACT FROM AUTHOR]

This paper studies the effects of foreign direct investment (FDI) on domestic terrorism. Using a cross-national, time-series analysis of 114 countries from 1991–2017, and employing structural equation modeling to test a number of mediating factors, we find that the impact of FDI on domestic terrorism depends on the host state's level of economic development. For host countries at higher-income levels, FDI boosts economic development and global integration promoting prosperity, increasing counterterrorism resources, and reducing the economic grievances that foster terrorism. Conversely, for lower-income host countries, increased FDI fuels higher domestic terrorism, as it intensifies clashes between traditional and modern elements within society, raises economic discrimination, heightens perceptions of economic insecurity, and subsequently leads to grievances directed against the state. Our results indicate a curvilinear relationship between FDI inflows and domestic terrorism, suggesting that FDI produces a double-edged sword between promoting economic development and increasing domestic terrorism in host states. [ABSTRACT FROM AUTHOR]