Foreign Direct Investment, Aid and Terrorism: Empirical Insight Conditioned on Corruption Control

African Governance and Development Institute WP/15/007

23 Pages Posted: 29 Mar 2015

See all articles by Uchenna Efobi

Uchenna Efobi

Covenant University

Simplice Asongu

African Governance and Development Institute

Ibukun Beecroft

Covenant University

Date Written: March 27, 2015

Abstract

This study checks the effect of foreign aid on terrorism and FDI, conditioned on domestic levels of corruption-control (CC). The empirical evidence is based on a sample of 78 countries for the period 1984-2008. The following findings are established: the negative effect of terrorism on FDI is apparent only in higher levels of CC; foreign aid dampens the negative effect of terrorism on FDI only in higher levels of CC; when foreign aid is subdivided into its bilateral and multilateral components, the result is mixed. While our findings are in accordance with the stance that bilateral aid is effective in reducing the adverse impact of transnational terrorism, the position that only multilateral aid is effective at mitigating the adverse impact of domestic terrorism on FDI is not confirmed because multilateral aid also curbs the adverse effect of transnational terrorism on FDI. Moreover, multilateral aid also decreases the adverse effect of unclear and total terrorisms on FDI. Policy implications are discussed.

Keywords: Foreign investment; Foreign aid; Terrorism

JEL Classification: D74; F21; F35

Suggested Citation

Efobi, Uchenna and Asongu, Simplice and Beecroft, Ibukun, Foreign Direct Investment, Aid and Terrorism: Empirical Insight Conditioned on Corruption Control (March 27, 2015). African Governance and Development Institute WP/15/007. Available at SSRN: https://ssrn.com/abstract=2586355 or http://dx.doi.org/10.2139/ssrn.2586355

Uchenna Efobi (Contact Author)

Covenant University ( email )

P.M.B. 1023
Km 10 Idiroko road
Ota, Ogun State 234
Nigeria
+48036273494 (Phone)

Simplice Asongu

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

Ibukun Beecroft

Covenant University ( email )

Canaanland
Km 10 Idiroko road
Ota, 24001
Nigeria
+2348135537772 (Phone)

HOME PAGE: http://covenantuniversity.edu.ng/Profiles/Beecroft-Ibukun#.U-orX5F0U6U

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
183
Abstract Views
805
rank
173,338
PlumX Metrics