The economy of military engagement: An analysis of positive externalities of US troop deployments

Since the end of the Second World War, US troops have served as a powerful tool of US foreign policy. Although there seems to be overwhelming anecdotal evidence indicating the effectiveness of US military intervention in promoting conflict resolution, democracy, and US interests abroad, little is known about the economic impact of US military interventions in countries where US troops have been deployed. This study examines critical factors in determining international Foreign Direct Investment (FDI) in countries where US troops are deployed. Using data from approximately 95 countries from 1982 to 2012 the study estimates complimentary effects of the presence of US troops on international foreign direct investments. It finds that US troops have a positive effect on international foreign direct investment in those countries to which they are deployed. These findings suggest that US foreign policy makers might augment or complement US foreign policy applied to those countries affected with the results found in this research. For instances where US troops deploy anyway (e.g., continuing or traditional allied training missions) the complimentary effect is of no additional cost