HIV/AIDS: determinant and deterrent of foreign direct investment

Given the attenuating effects of HIV/AIDS on a nation’s working population, infrastructure and economy, it is likely that the virus may compromise the unindustrialized world’s developmental prospects. Scholarship on Foreign Direct Investment (FDI), a well supported channel for development, suggests that AIDS would stand as a particular deterrent to these inflows, as foreign capital owners have primarily extractive, market, and/or efficiency seeking motivations. Thus, nations with a withering labor force, national infrastructure and/or markets are unlikely to be attractive investment destinations. Prior investigations of FDI’s determinants have focused on structural factors, e.g. regime type, economic status. These studies have not considered the role of societal conditions like disease prevalence in the investment calculus. This paper addresses the current empirical void, by conducting a statistical evaluation of AIDS’ affect on foreign investment inflows. I find strong support for my hypothesis that AIDS has a negative impact on attracting FDI