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Terrorism as a Determinant of Attracting FDI in Tourism: Panel Analysis

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  • Maja Nikšić Radić

    () (Department of International Economics and Development, Faculty of Tourism and Hospitality Management, University of Rijeka, 51410 Opatija, Croatia)

Abstract

The aim of this paper is to investigate whether terrorism is one of the important determinants affecting the investment decisions of foreign investors in tourism on a panel of 50 countries over the period 2000 to 2016. In addition to terrorism, the importance of three other theoretically significant determinants of attracting foreign direct investment ( FDI ) in tourism are explored—the previous level of FDI in tourism, the level of GDP and the international tourist arrivals. To obtain more reliable research results, the initial model is extended with certain control variables. The study uses system-GMM estimator for dynamic panel data models. The research results of a narrower and a wider model indicate that terrorism has no significant effect on the FDI inflow in tourism while international tourist arrivals significantly affect the future FDI in tourism in both models. Furthermore, the research results entail certain political connotations. In order to attract foreign investors in tourism, the most important factor is to ensure a stable macroeconomic environment with a competitive position in the Doing Business list and what better business conditions. Attention should also be focused on the security and preventive counter-terrorism, which will ensure that potential destinations reflect confidence, have a growth rate of tourist arrivals and, consequently, attract foreign investors.

Suggested Citation

  • Maja Nikšić Radić, 2018. "Terrorism as a Determinant of Attracting FDI in Tourism: Panel Analysis," Sustainability, MDPI, Open Access Journal, vol. 10(12), pages 1-17, December.
  • Handle: RePEc:gam:jsusta:v:10:y:2018:i:12:p:4553-:d:187252
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    Cited by:

    1. Maja Nikšić Radić & Daniel Dragičević & Marina Barkiđija Sotošek, 2019. "Causality between Terrorism and FDI in Tourism: Evidence from Panel Data," Economies, MDPI, Open Access Journal, vol. 7(2), pages 1-19, May.

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    More about this item

    Keywords

    terrorism; FDI in tourism; SYS-GMM estimator;
    All these keywords.

    JEL classification:

    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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