Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/191323
Authors: 
Asongu, Simplice
Efobi, Uchenna Rapuluchukwu
Beecroft, Ibukun
Year of Publication: 
2017
Series/Report no.: 
AGDI Working Paper WP/17/061
Abstract: 
We investigate how foreign aid dampens the effects of terrorism on FDI using interactive quantile regressions. The empirical evidence is based on 78 developing countries for the period 1984-2008. Bilateral and multilateral aid variables are used, while terrorism dynamics entail: domestic, unclear, transnational and total number of terrorist attacks. The main finding is that foreign aid cannot be used as a policy tool to effectively address a hypothetically negative effect of terrorism on FDI. The positive threshold we cannot establish is important for policy makers because it communicates a cut-off point at which foreign aid completely neutralizes the negative effect of terrorism on FDI. From the conditioning information set, we also establish for the most part that the effects of GDP growth, infrastructural development and trade openness are an increasing function of FDI. Policy implications are discussed.
Subjects: 
FDI
Foreign aid
Terrorism
Quantile regression
JEL: 
C52
D74
F23
F35
O40
Document Type: 
Working Paper
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