Taxing Impact of Terrorism on Global Economic Openness of Developed and Developing Countries

Abubakr Saeed (), Yuhua Ding (), Shawkat Hammoudeh () and Ishtiaq Ahmad ()
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Abubakr Saeed: Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan
Yuhua Ding: Lebow College of Business, Drexel University, Philadelphia, USA
Shawkat Hammoudeh: Lebow College of Business, Drexel University, Philadelphia, USA
Ishtiaq Ahmad: Faculty of Economics and Business, University of Debrecen, Hungary

Acta Oeconomica, 2018, vol. 68, issue 3, 311-335

Abstract: This study examines the relationship between terrorism and economic openness that takes into account both the number and intensity of terrorist incidents and the impact of government military expenditures on trade-GDP and foreign direct investment-GDP ratios for both developed and developing countries. It uses the dynamic GMM method to account for endogeneity in the variables. Deaths caused by terrorism have a significant negative impact on FDI flows, and the number of terrorist attacks is also found to be significant in hampering the countries’ ability to trade with other nations. The study also demonstrates that the developing countries exhibit almost similar results to our main analysis. The developed countries exhibit a negative impact of terrorism, but the regression results are not significant.

Keywords: FDI; terrorism; military spending; developed and developing countries (search for similar items in EconPapers)
JEL-codes: D74 H56 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (2)

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