Assessing and Measuring the Impact of Multinationals on Peace

Since the advent of the second wave of globalization after WWII, Multinational Enterprises (MNEs) play an increasingly important role in countries where their affiliates and suppliers operate. This thesis analyses some of most important impacts at economic, social and environmental level that these non-state actors have in countries receiving foreign investment and provides a contribution over the debate on the MNEs and Peace nexus. Given the considerable and diverse channels through which MNEs influence host countries, the first part of the thesis attempts to provide a comprehensive view upon the macro and the micro effects of MNEs’ interventions on Economic development, Human Capital, Institutions and the Environment of recipient countries. Empirical findings do not provide conclusive and definitive results on the direction of MNEs implications over these structural dimensions of host countries. Rather, they underline the importance of conditioning factors at domestic level (e.g., absorptive capacity of domestic firms, level of development of financial markets, initial human capital stock) playing a mediating role in the potential negative or positive impacts of MNEs in host countries. A particular focus is given to Human Rights protection within Global Value Chains and the strategies so far put in place by these major actors in responding to the alarming human rights abuses and worsening working conditions along their supply chains. The increasing anecdotal cases of MNEs implications in violent conflicts in emerging and developing countries and the lack of a universal consensus on the MNEs effects on both Negative and Positive Peace prompted a further analysis on the relation between MNEs and Peace. The second part of the thesis is therefore dedicated to the role of MNEs in Violent Conflicts and in Peace processes. The final part of the thesis assesses empirically the long-run relation existing between MNEs and Negative Peace, considering the stock of inward FDI (i.e., greenfield and M&A operations) per capita as the variable for foreign investment and the Global Peace Index (GPI) for the level of peacefulness (i.e., Negative Peace as in the Galtung definition of absence of violence or fear of violence). The results show that inward greenfield FDI and peacefulness are linked by a mutual, non-spurious, relation in the long run, whereas there is not significant relation in the short-run: a 10% increase in the stock of inward greenfield FDI per capita leads to an average 0.3-0.4% decrease in the Global Peace Index, i.e. an improvement of peacefulness at country level. However, a lower level of GPI also leads to a higher stock of inward greenfield FDI, implying a virtuous circle between the two.