| Summary: | The doctoral thesis investigates the differential responses of foreign investments to terrorist incidents across various host countries. While existing literature has explored the relationship between terrorism and FDI, few studies have systematically examined cross-national variations in the impact of terrorism on foreign direct investment (FDI). The thesis addresses this gap by exploring the factors that contribute to this heterogeneity and establishing a theoretical framework to comprehend the global differences in terrorism’s impact on FDI inflows. The central argument posits that while terrorism can be detrimental to FDI, its actual impact diminishes when offset by factors such as credibility and political involvement. Using a combination of quantitative and qualitative methods, including two extensive games, several empirical analyses, and a comparative case study in Yemen, the thesis finds that terrorism can exert a negative influence on inward FDI. Nevertheless, the negative impact is mitigated by a higher level of institutional credibility in host countries, manifested through a better institutional environment, stronger property rights protection, more bilateral investment treaties, and political involvement from home countries, particularly China, as measured by joining the BRI membership and frequent foreign visits of Chinese leaders. The thesis contributes to the literature by explaining the heterogeneity of terrorism’s influence through a theoretical framework of FDI determinants, unpacking the effect of political involvement in shaping investment incentives, and exploring the influence of investments from China on regional securities.
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