Does Terrorism Hamper Foreign Greenfield Investment Inflows? Empirical Evidence from MENA Countries

IF 2.5 Q2 ECONOMICS Asia-Pacific Financial Markets Pub Date : 2024-07-06 DOI:10.1007/s10690-024-09468-5
Faris Alshubiri, Abdullah AlGhazali
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Abstract

The present study aimed to investigate whether terrorism hampered foreign greenfield investment inflows in 14 MENA countries from 2011 to 2021. One-step system generalized method of moments, the instrumental variable of a two-stage least squares regression estimator, and instrumental variables of generalized method of moments were used in this study for more robustness. The findings showed a significant negative relationship existed between terrorism and foreign greenfield investment inflows. Meanwhile, a significant positive relationship exists between the interaction variable that captured the joint effect of terrorism and military expenditures on the foreign greenfield investment inflows. To increase the reliability of the results, the main model was extended with control variables; significant positive relationships between adjusted net national income per capita, the consumer price index, and the GDP growth rate and foreign greenfield investment inflows were identified. Meanwhile, significant negative relationships existed between military expenditure, trade openness, and foreign greenfield investment inflows. The findings showed that foreign investors were reluctant to invest in MENA countries affected by terrorism and reduced the amount of their investments. Furthermore, the results indicated that terrorism renders foreign investors attractive in host countries and negatively impacts foreign greenfield investment projects, trade openness, and military expenditure. To attract foreign investors, policymakers should focus on developing a stable macroeconomic environment and anti-terrorism measures to improve security, which will ensure sustainable economic growth.

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恐怖主义是否阻碍外国绿地投资流入?中东和北非国家的经验证据
本研究旨在调查恐怖主义是否阻碍了 2011 年至 2021 年 14 个中东和北非国家的外国绿地投资流入。为提高稳健性,本研究采用了一步系统广义矩量法、两阶段最小二乘回归估计工具变量和广义矩量法工具变量。研究结果表明,恐怖主义与外国绿地投资流入量之间存在显著的负相关关系。同时,衡量恐怖主义和军费开支对外国绿地投资流入量共同影响的交互变量之间存在显著的正相关关系。为了提高结果的可靠性,利用控制变量对主模型进行了扩展;结果发现,调整后的人均国民净收入、消费价格指数和国内生产总值增长率与外国绿地投资流入量之间存在显著的正相关关系。同时,军费开支、贸易开放度与外国绿地投资流入量之间存在明显的负相关关系。研究结果表明,外国投资者不愿在受恐怖主义影响的中东和北非国家投资,并减少了投资额。此外,研究结果表明,恐怖主义削弱了外国投资者在东道国的吸引力,并对外国绿地投资项目、贸易开放度和军费开支产生了负面影响。为吸引外国投资者,决策者应重点发展稳定的宏观经济环境和反恐措施,以改善安全状况,从而确保经济的可持续增长。
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来源期刊
CiteScore
3.00
自引率
0.00%
发文量
34
期刊介绍: The current remarkable growth in the Asia-Pacific financial markets is certain to continue. These markets are expected to play a further important role in the world capital markets for investment and risk management. In accordance with this development, Asia-Pacific Financial Markets (formerly Financial Engineering and the Japanese Markets), the official journal of the Japanese Association of Financial Econometrics and Engineering (JAFEE), is expected to provide an international forum for researchers and practitioners in academia, industry, and government, who engage in empirical and/or theoretical research into the financial markets. We invite submission of quality papers on all aspects of finance and financial engineering. Here we interpret the term ''financial engineering'' broadly enough to cover such topics as financial time series, portfolio analysis, global asset allocation, trading strategy for investment, optimization methods, macro monetary economic analysis and pricing models for various financial assets including derivatives We stress that purely theoretical papers, as well as empirical studies that use Asia-Pacific market data, are welcome. Officially cited as: Asia-Pac Financ Markets
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