Fuel Exports, Aid and Terrorism

Multinational Business Review, 25(3), pp. 239-267 (September, 2017).

31 Pages Posted: 13 May 2017 Last revised: 5 Oct 2017

See all articles by Simplice Asongu

Simplice Asongu

African Governance and Development Institute

Jacinta Nwachukwu

Coventry University

Date Written: January 12, 2017

Abstract

This study employs interactive quantile regressions to assess the conditional role of foreign aid in reducing the potentially negative effect of terrorism on fuel exports in 78 developing countries for the period 1984-2008. Bilateral and multilateral aid indicators are used whereas terrorism includes: domestic, transnational, unclear and total terrorism dynamics. Interactive quantile regressions are used. The following findings are established. First, the effects of terrorism are both positive and negative across quantiles and specifications, with the impact most apparent in the highest and lowest quantiles. Second, while bilateral aid consistently decreases (increases) fuel exports at the top (bottom) quantiles, multilateral aid regularly decreases fuel exports in the top quantiles. Third, for negative thresholds in the 50th quartile and 90th decile, interaction effects between bilateral aid and terrorism dynamics are overwhelmingly not significant. Conversely, for transnational terrorism, the interaction effects between multilateral aid and terrorism dynamics significantly have negative thresholds. The hypothesis of a positive threshold is only confirmed for transnational terrorism and multilateral aid at the 90th decile. Justifications for unexpected signs and implications for fuel export policy and the management of multinational companies are discussed. This study contributes to the literature on the role of external flows in reducing the negative externalities of terrorism on development outcomes.

Keywords: Exports; Foreign Aid; Terrorism; Natural Resources; Development

JEL Classification: F40; F23; F35; Q34 ; O40

Suggested Citation

Asongu, Simplice and Nwachukwu, Jacinta, Fuel Exports, Aid and Terrorism (January 12, 2017). Multinational Business Review, 25(3), pp. 239-267 (September, 2017)., Available at SSRN: https://ssrn.com/abstract=2967337

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

Jacinta Nwachukwu

Coventry University ( email )

Priory Street
Coventry, CV1 5FB
United Kingdom

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