INSTITUTIONAL QUALITY, NATURAL DISASTERS, TERRORIST ATTACKS and FDI INFLOWs

Abstract

This paper aims to investigate whether the relationships between natural disasters and terrorist attacks are significantly related to FDI inflow, and the role of institutional quality in it, after the radical change in the global FDI landscape. by using a panel data model with data on 127 countries in total for the years 1996 until 2019. Although many papers have inquired into the effect of natural disasters and terror attacks on the FDI inflow; this paper is the first to look into how institutional quality moderates this flow, and reflects the results for Emerging Market Countries. The results indicate that while natural disasters are harmful to FDI inflow, terror attacks do not have an impact. Further, through rule of law, voice and accountability, and corruption difference, there is no real difference between ECMs and non-ECMs regarding the results of natural disasters and terror attacks, which means institutional quality do not reduce the harm of those events on FDI inflow.