Trade, Aid and Terror

Simplice Asongu and Oasis Kodila-Tedika

No 15/028, Research Africa Network Working Papers from Research Africa Network (RAN)

Abstract: Purpose- This study assesses the role of foreign aid in reducing the hypothetically negative impact of terrorism on trade using a panel of 78 developing countries with data for the period 1984-2008. Design/methodology- The empirical evidence is based on interactive GMM estimations with forward orthogonal deviations. Bilateral, multilateral and total aid dynamics are employed whereas terrorism entails: domestic, transnational, unclear and total terrorism dynamics. Findings- The following findings have been established. First, while bilateral aid has no significant effect on trade, multilateral aid and total aid have positive impacts. Second total terrorism, domestic terrorism and transnational terrorism increase trade with increasing order of magnitude. Third, corresponding negative marginal effects on the interaction between foreign aid (bilateral and total) and terrorism display thresholds that are within range. Fourth, there is scant evidence of positive net effects. Overall the findings broadly indicate that foreign aid is a necessary but not a sufficient policy tool for completely dampening the effects of terrorism on trade. Originality/value- There is a growing policy interest in the relationship between terrorism and international development outcomes.

Keywords: Trade Openness, Foreign Aid; Terrorism; Development (search for similar items in EconPapers)
JEL-codes: F23 F35 F40 O40 (search for similar items in EconPapers)
Pages: 27
Date: 2015-06
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http://publications.resanet.org/RePEc/abh/abh-wpaper/Trade-Aid-and-Terror.pdf Revised version, 2017 (application/pdf)

Related works:
Journal Article: Trade, aid and terror (2017)
Working Paper: Trade, Aid and Terror (2015)
Working Paper: Trade, Aid and Terror (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:abh:wpaper:15/028

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