FDI and Terrorism in developing Asia: Approaches and Discussion

Metaxas, Theodore and Kechagia, Polyxeni (2017): FDI and Terrorism in developing Asia: Approaches and Discussion.

Abstract

International capital flows have a significant social, political and financial impact on the trading countries. These flows are distributed among the geographical regions and as a result over the past decades underdeveloped, developing and transition economies made efforts and proceeded to reforms so as to absorb more foreign capital inflows. A determinant factor of foreign capital inflows is the host country’s political stability. We focus on external conflicts and terrorist attacks, taking into consideration the remarkable increase in total terrorist attacks in recent decades. In addition, we focus on a specific type of foreign capital flows and therefore we study the foreign direct investment (FDI) inflows. We perform a literature review on empirical studies that examined the interaction between FDI and terrorist attacks. The purpose of the essay is to investigate and discuss the correlation between FDI and terrorism in developing economies during the period 1970 – 2015 in the developing Asian countries. We aim at evaluating the impact of terrorism on the FDI inflows in the region. The contribution of the essay refers to the fact that it covers a larger period of time compared to past studies and that it includes both fatalities and injuries occurring from international terrorist attacks. We argue that terrorist attacks have a negative impact on FDI inflows in the region.

• Item Type: MPRA Paper
• Language: English
• Keywords: Foreign Direct Investment, Developing Countries, International Conflicts, Terrorism, Asia
• Subjects: F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements; F - International Economics > F5 - International Relations, National Security, and International Political Economy > F51 - International Conflicts ; Negotiations ; Sanctions; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O53 - Asia including Middle East; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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