Acceso usuarios
The aim of this article is to analyze the effect of international sanctions on foreign direct investments (FDI) of 104 developing countries (DCs) over the period 2005-2019. Based on a gravity model and a Poisson estimation of the Pseudo Maximum Likelihood (PPML), the analysis reveals that international sanctions hinder bilateral FDI inflows into developing countries. Specifically, this disinvestment is more pronounced in lower-middle and upper-middle-income countries. Likewise, the effect is greater in countries with low natural resource endowments, and this effect is generally robust to competing estimators. Also, sanctions prevent infrastructure development, hamper economic development and create instability, which in turn prevents FDI inflows.
