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

Author

Listed:
  • 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)

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.

Suggested Citation

  • Abubakr Saeed & Yuhua Ding & Shawkat Hammoudeh & Ishtiaq Ahmad, 2018. "Taxing Impact of Terrorism on Global Economic Openness of Developed and Developing Countries," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 68(3), pages 311-335, September.
    • Handle: RePEc:aka:aoecon:v:68:y:2018:i:3:p:311-335
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    Cited by:

    1. Federico Carril-Caccia & Juliette Milgram Baleix & Jordi Paniagua, 2019. "Does Terrorism Affect Foreign Direct Investment?," Working Papers 1913, Department of Applied Economics II, Universidad de Valencia.
    2. Federico Carril-Caccia & Juliette Milgram Baleix & Jordi Paniagua, 2022. "Does terrorism affect greenfield investment? A structural gravity approach," ThE Papers 22/06, Department of Economic Theory and Economic History of the University of Granada..

    More about this item

    Keywords

    FDI; terrorism; military spending; developed and developing countries;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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