The Effect of Terrorist Incidents on Capital Flows
- Resource Type
- Authors
- Randall K. Filer; Dragana Stanisic
- Source
- Review of Development Economics. 20:502-513
- Subject
- business.industry
05 social sciences
Geography, Planning and Development
Closeness
International economics
International trade
Monetary economics
Foreign direct investment
Development
Portfolio investment
External debt
0506 political science
Spillover effect
Global terrorism
0502 economics and business
Terrorism
050602 political science & public administration
Economics
050207 economics
Capital flows
business
- Language
- ISSN
- 1363-6669
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. (This abstract was borrowed from another version of this item.)