The Role of CIA Interventions in Determining Foreign Direct Investment Levels During the Cold War

Abstract

This paper attempts to build on the work of Berger et al. (2013) by examining the effect of CIA interventions on Foreign Direct Investment Levels during the Cold War. Using a panel data regression model, I examine the effect of interventions on data from 144 countries at both the aggregate level, as well as investment outflows from the United States. This paper fails to conclude that interventions have any significant effect on forming long-term economic relationships between countries, instead finding that the covert nature of these interventions likely restricts the economic effects due to a lack of public transparency. In other words, CIA interventions do not appear to have a stabilizing effect in the eyes of potential foreign investors. Furthermore, economic and political factors that determine the safety of an investment appear to be more dominant factors when predicting levels of Foreign Direct Investment.