Terrorist Activities and Capital Flows of Developed Countries

Tomislav Galović (), Heri Bezić () and Petar Mišević ()
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Tomislav Galović: Faculty of Economics, University of Rijeka, Croatia
Heri Bezić: Faculty of Economics, University of Rijeka, Croatia
Petar Mišević: Croatian Chamber of Commerce, Zagreb, Croatia

Acta Oeconomica, 2018, vol. 68, issue 3, 337-352

Abstract: The main aim of this paper is to measure the consequences of terrorist activities on capital flows of the developed countries. Capital flows are interpreted as FDI inflows and outflows. The methodology is based on the dynamic panel data models (System-2 step-GMM estimator) using a sample of 36 developed countries all over the world from 2000 to 2016. The key results indicate that the terrorist incidents have different impact on capital flows of the developed countries compared to impacts of economic and institutional variables. All the variables used in the paper show the level of their impact on capital flows. The results indicate that terrorist activities weaken economic activity of a country, while minimising capital flows in certain situations. The recommendations and proposals are given based on the results of research.

Keywords: developed countries; capital flows; international competitiveness; terrorist activities (search for similar items in EconPapers)
JEL-codes: F21 F52 F59 F62 (search for similar items in EconPapers)
Date: 2018
Note: Research has been fully supported by the University of Rijeka under the project number 18.02.2.2.01 and 13.02.1.3.13.
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