The effect of terrorist incidents on capital flows

0459429 - NHÚ 2017 RIV US eng J - Journal Article
Filer, R. K. - Stanišić, Dragana
The effect of terrorist incidents on capital flows.
Review of Development Economics. Roč. 20, č. 2 (2016), s. 502-513. ISSN 1363-6669. E-ISSN 1467-9361
Institutional support: RVO:67985998
Keywords : foreign direct-investment * macroeconomic consequences * transnational terrorism
Subject RIV: AH - Economics
Impact factor: 0.459, year: 2016

Previous work has shown that terrorism has significant negative impact on countries’ economies. We explore this relationship in more detail. Using an unbalanced panel of more than 160 countries for up to 25 years and the Global Terrorism Database (GTD) we show a decrease in foreign direct investment (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.
Permanent Link: http://hdl.handle.net/11104/0259624