IDEAS home Printed from https://ideas.repec.org/a/taf/defpea/v34y2023i6p827-844.html
   My bibliography  Save this article

Does Terrorism Affect Foreign Greenfield Investments?

Author

Listed:
  • Federico Carril-Caccia
  • Juliette Milgram-Baleix
  • Jordi Paniagua

Abstract

This work assesses the impact of terrorism suffered by a country on the capacity to attract foreign greenfield investments. To this end, we estimate a theoretically consistent structural gravity equation which accounts for several well-known estimation biases such as ‘home bias’, endogeneity and multilateral resistance. This specification makes it possible to identify the effect of a country-specific time-varying characteristic such as terrorism on bilateral foreign direct investment. We exploit a dataset that covers domestic and foreign investment of 182 countries in the period 2006-2016 on both the extensive and intensive margins. Our study finds that foreign investors are reluctant to invest in countries affected by terrorism and also reduce the amount of their investments in such cases. Sensitivity to terrorism is higher for foreign than for domestic investors. Terrorist attacks have a more intense impact on foreign investors’ decision-making when they are international or when these violent acts hurt governments. However, our results also evidence that good governance appears to be an effective tool for counterbalancing these damages in the eyes of foreign investors.

Suggested Citation

  • Federico Carril-Caccia & Juliette Milgram-Baleix & Jordi Paniagua, 2023. "Does Terrorism Affect Foreign Greenfield Investments?," Defence and Peace Economics, Taylor & Francis Journals, vol. 34(6), pages 827-844, August.
    • Handle: RePEc:taf:defpea:v:34:y:2023:i:6:p:827-844
    DOI: 10.1080/10242694.2022.2067812
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/10242694.2022.2067812
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/10242694.2022.2067812?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

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


    Cited by:

    1. Bradley, Sebastien & Carril-Caccia, Federico & Yotov, Yoto, 2023. "Reassessing the Effects of Corporate Income Taxes on Mergers and Acquisitions Using Empirical Advances in the Gravity Literature," School of Economics Working Paper Series 2023-8, LeBow College of Business, Drexel University.

    More about this item

    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:taf:defpea:v:34:y:2023:i:6:p:827-844. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/GDPE20 .

    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.