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Conditional linkages between iron ore exports, foreign aid and terrorism

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Abstract

We employ interactive quantile regressions to assess conditional linkages between foreign aid, iron ore exports and terrorism from a panel of 78 developing countries for the period of 1984–2008. The following main findings are established. First, it is primarily in the countries with the highest level of iron ore exports that terrorism affects exports. Second, bilateral aid has an impact on iron ore exports, while the evidence for such a relationship between multilateral aid and iron ore exports is limited. Third, there is limited support for the main hypothesis motivating this line of inquiry, notably that foreign aid can be used to mitigate a potentially negative effect of terrorism on resource exports. The results suggest that bilateral aid is more relevant at mitigating the negative effects of domestic and total terrorism on iron ore exports.

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Notes

  1. According to the April 15 World Bank publication on attainment of the MDG extreme poverty target (of halving poverty in 2015 from 1990), many developing countries still have a long way to go before reaching the extreme poverty target (Caulderwood 2015; World Bank 2015; Asongu and Kodila-Tedika 2015b).

  2. It is important to note that iron ore exports can be affected by other factors like (i) disappointing trade from steel importers and (ii) tightening of credit to steel mills (see Forbes 2014).

  3. The adopted countries include Albania, Costa Rica, India, Namibia, Syria, Algeria, Cote d’Ivoire, Indonesia, Nicaragua, Tanzania, Angola, Dominican Republic, Iran, Niger, Thailand, Argentina, Ecuador, Jamaica, Nigeria, Togo, Bahrain, Egypt, Jordan, Pakistan, Trinidad and Tobago, Bangladesh, El Salvador, Kenya, Panama, Tunisia, Bolivia, Ethiopia, Lebanon, Papua New Guinea, Turkey, Botswana, Gabon, Libya, Paraguay, Uganda, Brazil, Gambia, Madagascar, Peru, Uruguay, Burkina Faso, Ghana, Malawi, Philippines, Venezuela, Cameroon, Guatemala, Malaysia, Saudi Arabia, Vietnam, Chile, Guinea, Mali, Senegal, Yemen, China, Guinea-Bissau, Malta, Sierra Leone, Zambia, Colombia, Guyana, Mexico, South Africa, Zimbabwe, Congo, D. Republic, Haiti, Morocco, Sri Lanka, Congo Republic, Honduras, Mozambique and Sudan.

  4. The position on conflicting donor interest is consistent with the conclusions of Asongu (2014d): “Aid is the outcome of bargaining in a kind of political market made up of donor aid bureaucracies, multilateral aid agencies and recipient government officials. Indeed, donors pursue multiple goals and these vary over time. For instance, economic gains seem important in Japanese aid, global welfare improvement in Nordic aid and political goals in French aid. Hence, few would object to the inference that our findings may also be explained by a motivation of the French to maintain their colonial legacies and influence in Africa” (p. 472).

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Authors and Affiliations

  1. African Governance and Development Institute, P.O. Box 8413, Yaoundé, Cameroon

    Simplice A. Asongu

  2. School of Economics, Finance and Accounting, Faculty of Business and Law, Coventry University, Priory Street, Coventry, CV1 5FB, UK

    Jacinta C. Nwachukwu

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  1. Simplice A. Asongu
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  2. Jacinta C. Nwachukwu
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Correspondence to Simplice A. Asongu.

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Asongu, S.A., Nwachukwu, J.C. Conditional linkages between iron ore exports, foreign aid and terrorism. Miner Econ 29, 57–70 (2016). https://doi.org/10.1007/s13563-016-0088-1

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