Does Terrorism Hamper Foreign Greenfield Investment Inflows? Empirical Evidence from MENA Countries

Faris Alshubiri () and Abdullah AlGhazali ()
Additional contact information
Faris Alshubiri: Dhofar University
Abdullah AlGhazali: Dhofar University

Asia-Pacific Financial Markets, 2025, vol. 32, issue 2, No 14, 742 pages

Abstract: Abstract The present study aimed to investigate whether terrorism hampered foreign greenfield investment inflows in 14 MENA countries from 2011 to 2021. One-step system generalized method of moments, the instrumental variable of a two-stage least squares regression estimator, and instrumental variables of generalized method of moments were used in this study for more robustness. The findings showed a significant negative relationship existed between terrorism and foreign greenfield investment inflows. Meanwhile, a significant positive relationship exists between the interaction variable that captured the joint effect of terrorism and military expenditures on the foreign greenfield investment inflows. To increase the reliability of the results, the main model was extended with control variables; significant positive relationships between adjusted net national income per capita, the consumer price index, and the GDP growth rate and foreign greenfield investment inflows were identified. Meanwhile, significant negative relationships existed between military expenditure, trade openness, and foreign greenfield investment inflows. The findings showed that foreign investors were reluctant to invest in MENA countries affected by terrorism and reduced the amount of their investments. Furthermore, the results indicated that terrorism renders foreign investors attractive in host countries and negatively impacts foreign greenfield investment projects, trade openness, and military expenditure. To attract foreign investors, policymakers should focus on developing a stable macroeconomic environment and anti-terrorism measures to improve security, which will ensure sustainable economic growth.

Keywords: International terrorism; Foreign greenfield investments; Panel data technique; S-GMM analysis; IV-GMM analysis; IV-2SLS analysis; MENA countries; C23; F21; G28; D74; O53 (search for similar items in EconPapers)
Date: 2025
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10690-024-09468-5 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:apfinm:v:32:y:2025:i:2:d:10.1007_s10690-024-09468-5

Ordering information: This journal article can be ordered from
http://www.springer.com/finance/journal/10690/PS2

DOI: 10.1007/s10690-024-09468-5

Access Statistics for this article

Asia-Pacific Financial Markets is currently edited by Jiro Akahori

More articles in Asia-Pacific Financial Markets from Springer, Japanese Association of Financial Economics and Engineering
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().