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FDI and Terrorism in the developing Asian countries: A panel data analysis

Author

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  • Kechagia, Polyxeni
  • Metaxas, Theodore

Abstract

Foreign Direct Investment (FDI) inflows are distributed among the geographical regions and play a crucial role on the social, political and financial condition of the recipient country. Certain areas manage to attract more FDI and therefore underdeveloped, developing and transition economies make efforts so as to absorb increased FDI inflows and to improve the political and socioeconomic conditions, focusing on the political stability, the external conflicts and the terrorist attacks. The purpose of the present paper is to empirically investigate and discuss the correlation between FDI inflows and terrorism in the developing Asian countries during the period 1996 – 2015. We aim at evaluating the impact of terrorism on the FDI inflows in the Asian developing economies, taking into consideration that they ranked first among the top FDI recipient countries in 2015, focusing on the cases of 5 countries of the region. We conduct a literature review on previous empirical studies and we present an empirical model to investigate the interaction between terrorist attacks and FDI inflows, using a panel data analysis. We argue that terrorism has a negative impact on the FDI inflows of the studied countries. The contribution of the essay refers to the fact that it includes both fatalities and injuries occurring from international terrorist attacks and it is not limited solely on the case of a single country.

Suggested Citation

  • Kechagia, Polyxeni & Metaxas, Theodore, 2017. "FDI and Terrorism in the developing Asian countries: A panel data analysis," MPRA Paper 80945, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:80945
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    References listed on IDEAS

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    Cited by:

    1. Farina Khan & Kashif Abbass & Wu Qun & Muhammad Asif, 2024. "Investigating capital flight in South Asian countries: The dual influence of terrorism and corruption," PLOS ONE, Public Library of Science, vol. 19(3), pages 1-19, March.
    2. Jonathan E. Ogbuabor & Ekene ThankGod Emeka & Emmanuel O. Nwosu, 2023. "Effects of terrorism and economic policy uncertainty on economic complexity in Africa: A study of the moderating role of governance institutions," South African Journal of Economics, Economic Society of South Africa, vol. 91(4), pages 528-557, December.
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    4. Ekene ThankGod Emeka & Jonathan E. Ogbuabor & Davidmac O. Ekeocha, 2024. "Terrorism and economic complexity in Africa: The unconditional impact of military expenditure," African Development Review, African Development Bank, vol. 36(1), pages 139-152, March.

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    Keywords

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    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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