IDEAS home Printed from https://ideas.repec.org/a/sae/jocore/v67y2023i9p1647-1674.html

The Double-Edged Sword of Foreign Direct Investment on Domestic Terrorism

Author

Listed:
  • Glen Biglaiser
  • Lance Y Hunter
  • Ronald J McGauvran

Abstract

This paper studies the effects of foreign direct investment (FDI) on domestic terrorism. Using a cross-national, time-series analysis of 114 countries from 1991–2017, and employing structural equation modeling to test a number of mediating factors, we find that the impact of FDI on domestic terrorism depends on the host state’s level of economic development. For host countries at higher-income levels, FDI boosts economic development and global integration promoting prosperity, increasing counterterrorism resources, and reducing the economic grievances that foster terrorism. Conversely, for lower-income host countries, increased FDI fuels higher domestic terrorism, as it intensifies clashes between traditional and modern elements within society, raises economic discrimination, heightens perceptions of economic insecurity, and subsequently leads to grievances directed against the state. Our results indicate a curvilinear relationship between FDI inflows and domestic terrorism, suggesting that FDI produces a double-edged sword between promoting economic development and increasing domestic terrorism in host states.

Suggested Citation

  • Glen Biglaiser & Lance Y Hunter & Ronald J McGauvran, 2023. "The Double-Edged Sword of Foreign Direct Investment on Domestic Terrorism," Journal of Conflict Resolution, Peace Science Society (International), vol. 67(9), pages 1647-1674, October.
    • Handle: RePEc:sae:jocore:v:67:y:2023:i:9:p:1647-1674
    DOI: 10.1177/00220027231153584
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/00220027231153584
    Download Restriction: no
    File URL: https://libkey.io/10.1177/00220027231153584?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Muhammad Tariq Majeed & Eatzaz Ahmad, 2009. "An Analysis of Host Country Characteristics that Determine FDI in Developing Countries: Recent Panel Data Evidence," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 14(2), pages 71-96, Jul-Dec.
    2. repec:bla:kyklos:v:49:y:1996:i:3:p:331-52 is not listed on IDEAS
    3. Alan B. Krueger, 2007. "Introduction to What Makes a Terrorist: Economics and the Roots of Terrorism," Introductory Chapters, in: What Makes a Terrorist: Economics and the Roots of Terrorism, Princeton University Press.
    4. Walter Enders & Todd Sandler, 1996. "Terrorism and Foreign Direct Investment in Spain and Greece," Kyklos, Wiley Blackwell, vol. 49(3), pages 331-352, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Omer Majeed & Günther G. Schulze, 2025. "FDI and the Geography of Terror," Discussion Paper Series 53 JEL Classification: F2, Department of International Economic Policy, University of Freiburg, revised Dec 2025.
    2. Edmund Ntom Udemba & Uju Violet Alola & Yizhi QIN, 2025. "Achieving sustainable economic development amidst conflicts: a study of the role of ease of doing business in development plan," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-16, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Peter Egger & Martin Gassebner, 2015. "International terrorism as a trade impediment?," Oxford Economic Papers, Oxford University Press, vol. 67(1), pages 42-62.
    2. Friedrich Schneider & Tilman Brück & Daniel Meierrieks, 2010. "The Economics of Terrorism and Counter-Terrorism: A Survey (Part II)," Discussion Papers of DIW Berlin 1050, DIW Berlin, German Institute for Economic Research.
    3. Sandler, Todd & Enders, Walter, 2004. "An economic perspective on transnational terrorism," European Journal of Political Economy, Elsevier, vol. 20(2), pages 301-316, June.
    4. Uchenna Efobi & Simplice Asongu & Ibukun Beecroft, 2018. "Aid, Terrorism, and Foreign Direct Investment: Empirical Insight Conditioned on Corruption Control," International Economic Journal, Taylor & Francis Journals, vol. 32(4), pages 610-630, October.
    5. Machin, Stephen & Ivandic, Ria & Kirchmaier, Tom, 2019. "Jihadi Attacks, Media and Local Hate Crime," CEPR Discussion Papers 13743, Centre for Economic Policy Research.
    6. Abadie, Alberto & Dermisi, Sofia, 2008. "Is terrorism eroding agglomeration economies in Central Business Districts? Lessons from the office real estate market in downtown Chicago," Journal of Urban Economics, Elsevier, vol. 64(2), pages 451-463, September.
    7. Bisharat Hussain Chang & Khalil Ahmed Channa & Emmanuel Uche & Osamah Ibrahim Khalaf & Osamah Waheed Ali, 2022. "Analyzing the impacts of terrorism on innovation activity: A cross country empirical study," Advances in Decision Sciences, Asia University, Taiwan, vol. 26(Special), pages 124-161, December.
    8. Apolte, Thomas & Gerling, Lena, 2015. "Youth bulges, insurrections, and politico-economic institutions: Theory and empirical evidence," CIW Discussion Papers 3/2015, University of Münster, Center for Interdisciplinary Economics (CIW).
    9. repec:acf:journl:y::id:549 is not listed on IDEAS
    10. M. Najeeb Shafiq & Karen Ross, 2010. "Educational Attainment and Attitudes Towards War in Muslim Countries Contemplating War: The Cases of Jordan, Lebanon, Pakistan, and Turkey," Journal of Development Studies, Taylor & Francis Journals, vol. 46(8), pages 1424-1441.
    11. Lakdawalla, Darius & Zanjani, George, 2005. "Insurance, self-protection, and the economics of terrorism," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1891-1905, September.
    12. Bönte Werner & Procher Vivien D. & Malik Faisal S., 2024. "Terror in the City: Local Terrorism and Firm Exports," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 24(4), pages 1073-1100.
    13. Randall K. Filer & Dragana Stanišić, 2016. "The Effect of Terrorist Incidents on Capital Flows," Review of Development Economics, Wiley Blackwell, vol. 20(2), pages 502-513, May.
    14. Fotini Economou & Christis Hassapis & Nikolaos Philippas & Mike Tsionas, 2017. "Foreign Direct Investment Determinants in OECD and Developing Countries," Review of Development Economics, Wiley Blackwell, vol. 21(3), pages 527-542, August.
    15. Pınar Derin-Güre, 2014. "Development, immigration and terrorism," Chapters, in: Robert E.B. Lucas (ed.), International Handbook on Migration and Economic Development, chapter 15, pages 425-462, Edward Elgar Publishing.
    16. Seung-Whan Choi & Shali Luo, 2013. "Economic Sanctions, Poverty, and International Terrorism: An Empirical Analysis," International Interactions, Taylor & Francis Journals, vol. 39(2), pages 217-245, April.
    17. Procasky, William J. & Ujah, Nacasius U., 2016. "Terrorism and its impact on the cost of debt," Journal of International Money and Finance, Elsevier, vol. 60(C), pages 253-266.
    18. Khusrav Gaibulloev & Todd Sandler & Donggyu Sul, "undated". "Reevaluating Terrorism and Economic Growth: Dynamic Panel Analysis and Cross-Sectional Dependence," Economics Working Papers 02-03/2013, School of Business Administration, American University of Sharjah.
    19. Apolte, Thomas, 2014. "Youth bulges, insurrections, and politico-economic institutions," CIW Discussion Papers 2/2014, University of Münster, Center for Interdisciplinary Economics (CIW).
    20. Gardeazabal, Javier, 2010. "Methods for Measuring Aggregate Costs of Conflict," DFAEII Working Papers 1988-088X, University of the Basque Country - Department of Foundations of Economic Analysis II.
    21. Thomas Gries & Tim Krieger & Daniel Meierrieks, 2011. "Causal Linkages Between Domestic Terrorism and Economic Growth," Defence and Peace Economics, Taylor & Francis Journals, vol. 22(5), pages 493-508, June.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:jocore:v:67:y:2023:i:9:p:1647-1674. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://pss.la.psu.edu/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.