Terrorism and Its Impact on Foreign Economic Activity in Sub-Saharan Africa

Brenda J. Lutz¹, James M. Lutz^2
(1. Decision Sciences and Theory Institute, Indiana University, USA;
2. Department of Political Science, Indiana University-Purdue University at Fort Wayne, USA)

Abstract: It was anticipated that terrorism incidents would have a negative impact on foreign investment and tourism in the sub-Saharan African countries. At the aggregate level, however, such was not the case. The lack of support for the basic hypothesis could reflect data limitations in the terrorism database, the initially low levels of tourism and foreign investment in sub-Saharan Africa, and the potential for dissidents to use other forms of violence against the governments in power. A country analysis for South Africa, however, did provide support for the idea that terrorism had negative effects on investment and tourism.

Key words: terrorism; foreign investment; tourism; Africa

JEL codes: F21, F29