The Influence of terrorism on Foreign Direct Investment

Abstract

In the process of globalization, the spread of terrorism has brought risks and uncertainties to multinational enterprises. In order to find out the influence of terrorism, this research use the Chinese multinational enterprises’(MNEs) 2089 investments in 125 countries to studies the impact of terrorist events on their investment decisions. The research find that the the more people affected by the terrorism in one country, the less subsidiaries set up in the countries. Terrorist events have brought severe challenges to investment. Governments of countries should improve their own security protection systems, while enterprises should also strengthen the risk management system.