The Effects Of Terrorist Activities On Foreign Direct Investment: Nonlinear Evidence

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In this paper, the authors examine the relationship between Foreign Direct Investment and terrorist incidents that took place in Turkey for the period from 1991:12 to 2003:12. This research contributes to the literature by checking for a possible non-linear relationship between terrorism and Foreign Direct Investment. The data used to measure the intensity of terrorism were collected from the newspapers of Turkey, and therefore are limited to the direct signals given to the market. Empirical evidence from both linear and non-linear models confirms that terrorism has a large significant negative impact on foreign direct investment.