E3S Web Conf.
Volume 157, 2020Key Trends in Transportation Innovation (KTTI-2019)
|Number of page(s)||10|
|Section||Environmental Issues in Regional Planning|
|Published online||20 March 2020|
Effect of terrorism activities on capital flight in the Middle East
Allameh Tabataba’i University, Dehkade-ye Olympik, West Hemmat Highway, Tehran, 1489 684511, Iran
2 Payame Noor University, Minn City, Artesh Blvd, Thran, 193 954697, Iran
3 Chamran University, Golestan Blvd, Ahvaz, 6135 783151, Iran
* Corresponding author: firstname.lastname@example.org
Behavioral economics has proven that negative emotions can influence investors’ decisions. One of the factors that have a negative impact on investors’ sentiment is terrorism as the new face of violence with economic consequences. The link between terrorism and capital outflow is a theoretical framework that explains how violence affects capital flight of a country. With this in mind, the purpose of this study is to investigate the effect of terrorist activities on capital flight in the Middle East countries during the period 2000-2016 using the Spatial Econometric Panel Data Approach. The results of this study show that terrorism and its spatial effects have a significant and positive impact on capital flight in the Middle East countries. Also, gross domestic production (GDP) and trade openness have negative effects on capital outflow. This study has important implications for policymakers in countries facing terrorist activity and investors’ trust building.
© The Authors, published by EDP Sciences, 2020
This is an Open Access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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