Aid in Modulating the Impact of Terrorism on FDI: No Positive Thresholds, No Policy

Forthcoming: Forum for Social Economics. DOI: 10.1080/07360932.2018.1434676

AGDI WP/17/061

25 Pages Posted: 5 Feb 2018 Last revised: 7 Feb 2018

See all articles by Simplice Asongu

Simplice Asongu

African Governance and Development Institute

Uchenna Efobi

Covenant University

Ibukun Beecroft

Covenant University

Date Written: January 27, 2017

Abstract

We investigate how foreign aid dampens the effects of terrorism on FDI using interactive quantile regressions. The empirical evidence is based on 78 developing countries for the period 1984-2008. Bilateral and multilateral aid variables are used, while terrorism dynamics entail: domestic, unclear, transnational and total number of terrorist attacks. The main finding is that foreign aid cannot be used as a policy tool to effectively address a hypothetically negative effect of terrorism on FDI. The positive threshold we cannot establish is important for policy makers because it communicates a cut-off point at which foreign aid completely neutralizes the negative effect of terrorism on FDI. From the conditioning information set, we also establish for the most part that the effects of GDP growth, infrastructural development and trade openness are an increasing function of FDI. Policy implications are discussed.

Keywords: FDI; Foreign aid; Terrorism; Quantile regression

JEL Classification: C52; D74; F23; F35; O40

Suggested Citation

Asongu, Simplice and Efobi, Uchenna and Beecroft, Ibukun, Aid in Modulating the Impact of Terrorism on FDI: No Positive Thresholds, No Policy (January 27, 2017). Forthcoming: Forum for Social Economics. DOI: 10.1080/07360932.2018.1434676. Available at SSRN: https://ssrn.com/abstract=3111488

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

Uchenna Efobi

Covenant University ( email )

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

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

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