FDI and the Geography of Terror

Omer Majeed () and Günther G. Schulze ()
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Günther G. Schulze: Department of International Economic Policy, University of Freiburg

Discussion Paper Series from Department of International Economic Policy, University of Freiburg

Abstract: This study uncovers a powerful, yet overlooked geographic dimension to ter rorism’s macroeconomic impact. Our findings reveal that terror’s harm to FDI is profoundly shaped by attack location. Using Pakistan as a case study we show that assaults on economic and political centers cause far greater damage to FDI than attacks in peripheral areas. From 2001–2021, terrorism cost Pakistan $8.1 billion in lost FDI, eroding nearly 30% of its foreign capital stock. These results carry broad relevance, highlighting how localized violence can generate systemic, uneven macroeconomic consequences, which supports geographically calibrated policy responses to terror.

Keywords: terror; FDI; time series analysis; economic geography; core-periphery; Pakistan. (search for similar items in EconPapers)
Pages: 61 pages
Date: 2025-12, Revised 2025-12
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Persistent link: https://EconPapers.repec.org/RePEc:fre:wpaper:53

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