The Effect of Terrorist Incidents on Capital Flows
The current 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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- de Sousa, José & Mirza, Daniel & Verdier, Thierry, 2010.
"Terrorism Networks and Trade: Does the Neighbor Hurt?,"
CEPR Discussion Papers
7946, C.E.P.R. Discussion Papers.
- De Sousa, José & Mirza, Daniel & Verdier, Thierry, 2010. "Terrorism Networks and Trade: Does the Neighbor Hurt?," CEPREMAP Working Papers (Docweb) 1017, CEPREMAP.
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CEPR Discussion Papers
4427, C.E.P.R. Discussion Papers.
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DFAEII Working Papers
2005-19, University of the Basque Country - Department of Foundations of Economic Analysis II.
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