Economics at your fingertips  

Terrorism and Foreign Direct Investment: An Empirical Analysis of SAARC Countries

Mumtaz Shah and Mehreen Faiz

MPRA Paper from University Library of Munich, Germany

Abstract: The current state of terrorism has posed serious challenges to stability of macroeconomic environment causing the displacement of foreign direct investment (FDI). This study aims to find the impact of terrorism along with other important location variables such as market size, economic growth, exchange rate, infrastructure and trade openness on FDI inflows in five SAARC member nations, namely, Bangladesh, India, Nepal, Pakistan and Sri Lanka. Utilising a panel econometric estimation model on annual data from 1980-2012 the results of the study showed a significant positive impact of market size, trade openness, infrastructure availability and economic growth on inward FDI in these SAARC countries. Whereas, exchange rate volatility exhibited a negative relationship with FDI inflows. The results revealed that terrorism has statistically significant and negative rapport with FDI inflows. This empirically establishes the fact that terrorism is a serious threat to FDI and economic growth for the economies in this region.

Keywords: FDI; Terrorism; Infrastructure; Market Size; Macroeconomic Stability; Economic Development. (search for similar items in EconPapers)
JEL-codes: C23 F13 F14 F21 F23 (search for similar items in EconPapers)
Date: 2015-07-30
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12) Track citations by RSS feed

Published in City University Research Journal 2.5(2015): pp. 219-233

Downloads: (external link) original version (application/pdf)

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:

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().

Page updated 2019-03-31
Handle: RePEc:pra:mprapa:82008