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Causality between terrorism and economic growth

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Author Info

  • Daniel Meierrieks

    ()
    (Department of Economics, University of Paderborn)

  • Thomas Gries

    (Department of Economics, University of Paderborn)

Abstract

This article analyzes the causal relationship between terrorism and economic growth, running a series of tests for Granger non–causality with panel data for a maximum of 160 countries from 1970 to 2007. The authors find that the causal relationship between terrorism and growth is heterogeneous over time and across space. They argue that the temporal causal heterogeneity can be explained by shifting geographical and ideological patterns in terrorism associated with the end of the Cold War. Different causal mechanics across countries are ascribed to a variety of country–specific factors (the level of politico–economic development, a country’s cultural affiliation, the intensity and persistence of terrorist activity, and the level of political instability). These factors govern a country’s robustness to shocks from terrorism and the extent to which terrorism is motivated by economic factors. For the Cold War era, economic growth is found to have swayed terrorism for Latin American countries in intermediate development positions that were politically unstable and experienced strong terrorist activity. For the post–Cold War era, terrorism is found to be detrimental to growth for African and Islamic countries with low levels of political openness, high levels of political instability, and strong terrorist activity. The study’s findings help to better understand the conflicting evidence on the terrorism–economy nexus and to give more solid counter-terrorism advice.

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Bibliographic Info

Article provided by Peace Research Institute Oslo in its journal Journal of Peace Research.

Volume (Year): 50 (2013)
Issue (Month): 1 (January)
Pages: 91-104

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Handle: RePEc:sae:joupea:v:50:y:2013:i:1:p:91-104

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Web page: http://www.prio.no/

Related research

Keywords: economic growth; institutional capacity; macroeconomic resiliency; panel causality; terrorism;

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Cited by:
  1. Kis-Katos, Krisztina & Liebert, Helge & Schulze, Günther G., 2012. "On the Heterogeneity of Terror," IZA Discussion Papers 6596, Institute for the Study of Labor (IZA).
  2. Eugen Dimant & Tim Krieger & Margarete Redlin, 2013. "A Crook is a Crook … But is He Still a Crook Abroad? - On the Effect of Immigration on Destination-Country Corruption," Working Papers CIE 71, University of Paderborn, CIE Center for International Economics.

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