Terrorism, Regulatory Quality, and Economic Complexity in Selected African Countries

This study conducts an investigation on the moderation role of regulatory quality on the terrorism and economic complexity nexus. It is based on 35 African countries using data for the period 2010–2023 based on the Dynamic System Generalized Method of Moments (DS-GMM) analysis. The study found that terrorism had a negative effect on economic complexity. This implies that rise in terrorism incidences is detrimental to economic complexity in African countries. In addition, regulatory quality had a positive effect on economic complexity. Moreover, foreign direct investment inflows, infrastructure, and tourism have positive and significant effect on economic complexity while human capital had a negative effect on economic complexity. This is a pointer that while foreign direct investment inflows, quality infrastructure, and tourism contributes positively to economic complexity, the productivity capacity of human capital to contribute to the attainment of economic complexity in African countries has been dampened by terrorism. Also, terrorism, when interacted with regulatory quality had a negative effect on economic complexity. This is an indication that the more African countries improve regulatory quality, the more they are likely to reduce the negative effect of terrorism on economic complexity.