Economics and Business Review

Submit manuscript
Journal metrics
Indexed in:
Volume 8 (22) Number 2 pp. 92-112

Chimere O. Iheonu1, Hyacinth E. Ichoku1

1University of Nigeria, Department of Economics, Nsukka, Nigeria.

Terrorism and investment in Africa: Exploring the role of military expenditure

Abstract:

The aim of this study is to investigate the influence of military expenditure on the relationship between terrorism and investment in twenty-four African countries for the period 2001 to 2018. The study utilizes fixed effects regression with Driscoll and Kraay standard error and cushions the effect of simultaneity and reverse causality using the lags of the regressors as instruments. The empirical results reveal the negative effect of terrorism on both domestic investment and foreign direct investment (FDI). The study further reveals a negative net effect of military expenditure on the relationship between terrorism and investment. Furthermore, it was discovered that a threshold of 2% to 5% of military expenditure in GDP is required for military expenditure to offset the negative effect of terrorism on FDI. The study recommends that counter-terrorism initiatives be tailored more towards inclusive growth policies, increasing access to education, and improving the quality of governance.

pub/2022_2_92.pdf Full text available in Adobe Acrobat format:
http://www.ebr.edu.pl/volume22/issue2/2022_2_92.pdf
Keywords: terrorism, military expenditure, domestic investment, FDI.

DOI: 10.18559/ebr.2022.2.6

For citation:

MLA Iheonu, Chimere O., and Hyacinth E. Ichoku. "Terrorism and investment in Africa: Exploring the role of military expenditure." Economics and Business Review EBR 22.2 (2022): 92-112. DOI: 10.18559/ebr.2022.2.6
APA Iheonu, C. O., & Ichoku, H. E. (2022). Terrorism and investment in Africa: Exploring the role of military expenditure. Economics and Business Review EBR 22(2), 92-112 DOI: 10.18559/ebr.2022.2.6
ISO 690 IHEONU, Chimere O., ICHOKU, Hyacinth E.. Terrorism and investment in Africa: Exploring the role of military expenditure. Economics and Business Review EBR, 2022, 22.2: 92-112. DOI: 10.18559/ebr.2022.2.6