The Effect of Terrorist Incidents on Capital Flows
AbstractCurrent literature shows a significant negative impact of terrorism on countries economies. We explore this relationship in more detail. Using an unbalanced panel of over 160 countries for up to 25 years and the Global Terrorism Database (GTD) we show a decrease in FDI as a consequence of terrorism. We also find evidence that FDI flows are more sensitive to terrorism than either portfolio investments or external debt flows. Finally, we test the hypothesis that terrorism has negative spill-over effects on FDI flows into neighboring countries and find evidence that cultural but not geographical closeness matters.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3998.
Date of creation: 2012
Date of revision:
FDI; terrorism; lending; portfolio investment;
Other versions of this item:
- Randall K. Filer & Dragana Stanisic, 2013. "The Effect of Terrorist Incidents on Capital Flows," CERGE-EI Working Papers wp480, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
- F20 - International Economics - - International Factor Movements and International Business - - - General
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