The fatal attraction of civil war economies: foreign direct investment and political violence. A case study of Colombia

Civil war acutely inhibits economic growth, according to a prominent set of civil war literature. However, recent scholarship observes that Foreign Direct Investment (FDI), considered a central vehicle of growth, is entering countries with internal armed conflicts unabated. Furthermore, some civil war economies exhibit substantial increases in FDI during conflict. According to this scholarship, FDI enters conflict zones in spite of violence. This article contrastingly adopts a critical framework acknowledging the often violent characteristics of globalised capitalism. By analysing Colombia’s oil industry (the country’s largest sector of FDI), this article suggests that civil war violence can create conditions that facilitate FDI inflows. More specifically, this article posits that violence perpetrated by armed groups sympathetic to the interests of the oil sector – namely, the public armed forces and right-wing paramilitaries – have facilitated FDI in Colombia’s oil sector. In particular, processes of forced displacement and violence against civilian groups have served to protect economically important infrastructure and have acquired land for oil exploration. Moreover, civilian groups deemed inimical to oil interests have been violently targeted. By using disaggregate-level data on the conflict in Arauca, an important oil producing region of Colombia, this case study indicates that intensifying levels of civil war violence in areas of economic interest are followed by increases in oil production, exploration and investment

The terror that underpins the ‘peace’: The political economy of Colombia’s paramilitary demobilisation process

Studies on terrorism have traditionally focused on non-state actors who direct violence against liberal states. Such studies have also tended to focus on political motivations and, therefore, have neglected the economic functions of terrorism. This article challenges the divorce of the political and economic spheres by highlighting how states can use terrorism to realise interconnected political and economic goals. To demonstrate this, we take the case of the paramilitary demobilisation process in Colombia and show how it relates to the US-Colombian free trade agreement (FTA). We argue that the demobilisation process fulfils a dual role. Firstly, the process aims to improve the image of the Colombian government required to pass the controversial FTA through US Congress in order to protect large amounts of US investment in the country. Secondly, the demobilisation process serves to mask clear continuities in paramilitary terror which serve mutually supportive political and economic functions for US investment in Colombia