Impact of Terrorism on Foreign Direct Investment in Nigeria

Ukwueze, Ezebuilo R.; Asogwa, Henry T.; Nwodo, Ozoemena Stanley; Ogbonna, Oliver E.

doi:10.1108/978-1-78769-919-920191020

Cited by 4 publications

(3 citation statements)

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Section: Model Results and Discussionmentioning

confidence: 99%

“…Foreign direct investment (FDI) in Nigeria has also dropped significantly over the years due to terrorism. Such a drop is disadvantageous for the firms that depend on some form of backward or forward linkages with FDI activities (Ukwueze et al, 2019). Second, some of the Nigerian government's laws and regulations in response to terrorism have had disruptive effects on several economic activities.…”

Section: Baseline Resultsmentioning

confidence: 99%

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Empirical evidence of the relationship between terrorism and firm financial performance in Nigeria

Okafor

Calderon

2022

IJOEM

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PurposeThis paper investigates the relationship between terrorism and firm financial performance in Nigeria. The country has become one of the riskiest countries in Sub-Saharan Africa due to the intensity of recent terror attacks. Also, there is a growing focus on the importance of firms, given firms' economic contribution towards growth, employment and economic and industrial transformation. However, no study has tried establishing a relationship between terrorism and firm financial performance. Therefore, providing empirical proof of this relationship is the primary purpose and motivation of this paper.Design/methodology/approachData from the World Bank Enterprise Survey (WBES) and the Global Terrorism Database (GTD) were used for this study. The baseline analysis was estimated using the pooled ordinary least squares regression technique. For robustness checks, the fixed effects technique was used to control for heterogeneity across the authors' sample of firms and unobserved factors that are time-invariant, while the IV technique was employed to control for any potential endogeneity.FindingsThe results obtained from the regression analysis were robust to different econometric estimations and approaches. Terrorism was found to have a consistent and significant negative impact on firm financial performance. Furthermore, the marginal effect of terrorism on firm performance was more substantial when state-level terrorism data were used.Originality/valueStudies often focus on the impact of political instability (which is a measure subjectively based on perception) on foreign direct investment or on the activities of multinational corporations. The authors' research is new in supplying evidence of the relationship between terrorism (an objective measure) and the financial performance of manufacturing firms in Nigeria. Methodologically, this study also employed spatially distributed incidents of terrorism within the country. This is because incidents of terrorism are often spatially distributed within a country (i.e. province or state). This will provide new evidence of the effects of within-country variations of terrorism on firm financial performance.

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Section: Model Results and Discussionmentioning

confidence: 99%

Section: Baseline Resultsmentioning

confidence: 99%

Empirical evidence of the relationship between terrorism and firm financial performance in Nigeria

Okafor

Calderon

2022

IJOEM

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“…Despite this low performance in the development of the financial sector in the continent characterised by frequent terrorist attacks, studies on the effect of terrorism in Africa have neglected it impact on financial development. In fact, studies have rather focused on its impact on: capital flight (Efobi and Asongu, 2016;Asongu and Amankwah-Amoah, 2016); financial flows (Onanuga et al, 2020); governance (Asongu and Nwachukwu, 2017a); public debt (AbidandSekrafi, 2020); FDI (Efobi, Asongu, and Beecroft, 2018;Ukwueze et al, 2019); agriculture (Noubissi and Njangang, 2020); regional integration (Elu and Price, 2014) and trade (Asongu and Leke, 2019). Accordingly, the extant literature that has established the link between terrorism and financial development in Africa is sparse.…”

Section: Introductionmentioning

confidence: 99%

The terrorism-finance nexus contingent on globalisation and governance dynamics in Africa

Asongu

Nchofoung²

2021

SSRN Journal

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This study empirically verifies the effect of terrorism on financial development and how globalisation and governance modulate the incidence of terrorism on financial development in Africa. Two terrorism indicators are adopted for this study, namely, the: number of terrorism incidences and number of terrorism deaths. The methodology involves the pooled data technique running from 1996-2018 for 34 African countries. The results from the POLS, Driscoll-Kraay and the Newey-West standard error corrections show that terrorism is detrimental to financial development. From the interactive regressions, three major tendencies are apparent. First, terrorism dynamics consistently have an unconditional negative effect on financial development. Second, the globalization and government dynamics modulate the terrorism dynamics to broadly induce a negative net effect on financial development. Third, policy thresholds at which the modulating variables reverse the net effect on financial development from negative to positive are: (i) 71.61572 trade (% of GDP) and 13.97872 FDI (% of GDP) for the incidence of terror and (ii) 1.16201 trade (% of GDP) for terror deaths. The computed thresholds make economic sense and worthwhile in terms of policy implications because they are within statistical range. The result is robust to alternative measures of terrorism and financial development. Policy implications are discussed.

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Analysis of the Relationship Between Military Expenditure and Investment in the Economic Community of West African States: A Heterogeneous Panel Data Approach

Efayena,

Olele

2024

Studia Universitatis „Vasile Goldis” Arad – Economics Series

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West Africa has been grappling with various security challenges prompting governments’ intervention via military expenditure both at the country and regional level. Given the sporadic surge in military expenditure in the region and the potential effect such expenditure may exert on investment which is a sin qua non to the development process of any economy or region, this study utilizes the augmented mean group (AMG) approach and the Granger non-causality test in investigating the impact and causal relationship between investment and military expenditure in the Economic Community of West African States (ECOWAS) between 1980 and 2020. With country-specific cross-dependence and heterogeneity adequately accounted for, the study found that military expenditure has a dampening impact on investment at both the panel and country levels; unemployment adversely impacts investment; whereas economic growth stimulates investment (catalytic effect) in the ECOWAS, although at differing levels of significance. The study also established a long-run relationship among the variables; with only economic growth Granger causing investment. The study thus recommends that country-specific and regional-based military policies be established to glean economic growth through viable investment.

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Impact of Terrorism on Foreign Direct Investment in Nigeria

Cited by 4 publications

References 10 publications

Empirical evidence of the relationship between terrorism and firm financial performance in Nigeria

Empirical evidence of the relationship between terrorism and firm financial performance in Nigeria

The terrorism-finance nexus contingent on globalisation and governance dynamics in Africa

Analysis of the Relationship Between Military Expenditure and Investment in the Economic Community of West African States: A Heterogeneous Panel Data Approach

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