Impacts of violent extremism on Foreign Direct Investments in the Lake Chad Basin Countries (LCBCs)

IseOlorunkanmi, Ojo Joseph and Rotimi, Mathew E. and Victor, Ahmed Ayodele and Nweke-Love, Henry C. (2023) Impacts of violent extremism on Foreign Direct Investments in the Lake Chad Basin Countries (LCBCs). Journal of Social Sciences and Public Policy, 15 (2). pp. 94-117. ISSN 2277 - 0038

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Abstract

The LCBCs are those countries that are situated within the Lake Chad area with distinctive characteristics such as small, open, and developing economies. The study pooled time series and cross-sectional data within the Panel Structural Vector Autoregressive (P-SVAR) model framework to examine how FDI responded to terrorism in LCBCs. Using World Bank’s and World Development Indicators' (WDI) datasets, the data were sampled at the same frequency, following the Kalman filter technique. The study investigated the extent to which the inflow of FDI is determined by the level of political or institutional quality. It also used a panel VAR model in a dataset of the LCBCs spanning 2000 to 2019 to explore the extent to which violent extremism in the form of terrorism affected FDI. The findings reveal that FDI significantly responds to terrorism and that terrorism increased military expenditure. It revealed that there is a significant positive relationship between terrorism and military expenditure.

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