Research Article 36
Journal of Finance & Economics Research - Volume 8, Issue 1 2023
By Fahim Qazi, Khalid M. Iraqi
10.20547/jfer2308101
Keywords: Terrorism, Peace Index, Foreign Direct Investment, South Asian countries, Panel regression, Co-integration, FMOLS regression.

This research investigates the impact of terrorism and the peace index on foreign direct investment (FDI) in South Asian countries, comprising eight economies. The study initially examines the individual effects of terrorism, GDP, inflation, population, and trade openness on FDI in the South Asian countries. Subsequently, it explores the influence of the peace index, GDP, inflation, population, and trade openness on FDI in the same economies. The data covers from 2011 to 2021. The panel-regression framework is employed as the primary technique for data analysis. Moreover, to examine the integration among the variables under consideration, Pedroni co-integration and FMOLS regression methods are applied. The outcomes of the articles support the initial aim of the study by noting down a considerable nexus of both peace and terrorism as well as relative economic proxies in driving FDI of South Asian economies. The result strongly suggests that terrorism in the countries is one of the pioneering factor for the prediction of FDI. The study concludes that increase in terrorism shrinkages the flow of FDI while improvement in peace index enhances FDI. Likewise, other indicators such as inflation, trade openness and GDP also increase FDI.

Submission Date: 2 Oct, 2022 Reviews Completed: 26 Dec, 2022
Acceptance Date: 13 Jan, 2023 Publication Date: 20 Jan, 2023