Terrorism and investment in Africa: Exploring the role of military expenditure

Iheonu Chimere O. () and Ichoku Hyacinth E. ()
Additional contact information
Iheonu Chimere O.: University of Nigeria, Department of Economics, Nsukka, University Road, Enugu 410001, Nigeria
Ichoku Hyacinth E.: University of Nigeria, Department of Economics, Nsukka, University Road, Enugu 410001, Nigeria

Economics and Business Review, 2022, vol. 8, issue 2, 92-112

Abstract: The aim of this study is to investigate the influence of military expenditure on the relationship between terrorism and investment in twenty-four African countries for the period 2001 to 2018. The study utilizes fixed effects regression with Driscoll and Kraay standard error and cushions the effect of simultaneity and reverse causality using the lags of the regressors as instruments. The empirical results reveal the negative effect of terrorism on both domestic investment and foreign direct investment (FDI). The study further reveals a negative net effect of military expenditure on the relationship between terrorism and investment. Furthermore, it was discovered that a threshold of 2% to 5% of military expenditure in GDP is required for military expenditure to offset the negative effect of terrorism on FDI. The study recommends that counter-terrorism initiatives be tailored more towards inclusive growth policies, increasing access to education, and improving the quality of governance.

Keywords: terrorism; military expenditure; domestic investment; FDI (search for similar items in EconPapers)
JEL-codes: C23 C26 E20 H12 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.18559/ebr.2022.2.6 (text/html)

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:vrs:ecobur:v:8:y:2022:i:2:p:92-112:n:4

DOI: 10.18559/ebr.2022.2.6

Access Statistics for this article

Economics and Business Review is currently edited by Tadeusz Kowalski

More articles in Economics and Business Review from Sciendo
Bibliographic data for series maintained by Peter Golla ().