Private Sector Development Finance Fuels Armed Conflict - Report

The International Finance Corporation (IFC), the private sector arm of the World Bank Group projects, is causing a significant increase in armed conflict around the world. This is according to a comprehensive study of thousands of projects undertaken by the IFC. The study focused on the period between 1994 and 2022.

The findings of the report are that a single project, on average, causes 7.6 additional armed conflict events in the year after it is introduced. These findings are consistent with other large quantitative studies that question the relationship between foreign direct investment and development.

A foreign direct investment that increases violent conflict and makes development nearly impossible appears the rule, not the exception, writes Brian Ganson, professor and head, Centre on Conflict & Collaboration, Stellenbosch University, Anne Spencer Jamison, assistant professor of International Economics, government, and business, Copenhagen Business School and Witold Jerzy Henisz, vice dean and faculty diirector, ESG Initiative; Deloitte & Touche professor of management, University of Pennsylvania.

The report recommends that current approaches to foreign investment need urgent reconsideration, with a particular focus on the risk of violent conflict.