Trade, Aid and Terror

International Journal of Development Issues, 16(1), pp. 2-24 (2017).

25 Pages Posted: 18 Sep 2015 Last revised: 5 Apr 2017

See all articles by Simplice Asongu

Simplice Asongu

African Governance and Development Institute

Oasis Kodila-Tedika

University of Kinshasa - Department of Economics

Date Written: June 16, 2015

Abstract

This study assesses the role of foreign aid in reducing the hypothetically negative impact of terrorism on trade using a panel of 78 developing countries with data for the period 1984-2008. The empirical evidence is based on interactive GMM estimations with forward orthogonal deviations. Bilateral, multilateral and total aid dynamics are employed whereas terrorism entails: domestic, transnational, unclear and total terrorism dynamics. The following findings have been established. First, while bilateral aid has no significant effect on trade, multilateral and total aids have positive impacts. Second total terrorism, domestic terrorism and transnational terrorism increase trade with increasing order of magnitude. Third, corresponding negative marginal effects on the interaction between foreign aid (bilateral and total) and terrorism display thresholds that are within range. Unexpected signs are clarified and policy implications discussed.

Keywords: Trade Openness, Foreign Aid; Terrorism; Development

JEL Classification: F40; F23; F35; O40

Suggested Citation

Asongu, Simplice and Kodila-Tedika, Oasis, Trade, Aid and Terror (June 16, 2015). International Journal of Development Issues, 16(1), pp. 2-24 (2017). . Available at SSRN: https://ssrn.com/abstract=2661450 or http://dx.doi.org/10.2139/ssrn.2661450

Simplice Asongu

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

Oasis Kodila-Tedika (Contact Author)

University of Kinshasa - Department of Economics ( email )

Kinshasa
Democratic Republic of the Congo

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