BRICS and the Economics of Terrorism

Abstract

This article investigates the effect of security perceptions on inward foreign direct investment (FDI) in the BRICS countries. To do so, it traces correlations between annual changes in BRICS countries’ scores in the Global Terrorism Index (GTI) and new FDI influxes over the 2008–2018 period. I note differences in correlations between GTI and new FDI; for Brazil, Russia, India, China and South Africa, the Pearson r correlation scores were ?0.903, ?0.7783, ?0.2793, ?0.2766, and -0.6309, respectively. Thus, the apparent role of low terrorism as a prerequisite for new FDI influxes is most demonstrable for Brazil, Russia, and South Africa. It is less significant for India and China, though still adversely correlated. The article discusses the causes of these intra-BRICS differences through the prism of the prevalent literature and case-specific factors and explores their implications. Examining whether terrorism is enough of an economic threat to justify allowing potentially intrusive BRICS-wide cooperation, this study’s findings imply that terrorism has not been a weighty enough threat to garner policy support behind such cooperation in the time studied.