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Growth and Fiscal Consequences of Terrorism in Nigeria

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  • Chuku Chuku
  • Dominic Abang
  • Ima-Abasi Isip

Abstract

In spite of government counter-terrorism expenditure and efforts, the incidence of terrorism in Nigeria appears to be rising. This paper examines the growth and fiscal consequences of terrorism in Nigeria by estimating the terrorism–macroeconomy relation using different measures of terror incidence. The results show that terrorism has an economically and statistically significant negative impact on growth; although this impact is considerably small and short-lived, manifesting only after a lag of about three years. Specifically, the cost of terrorism to Nigeria, in terms of lost GDP per annum, is estimated at 0.82%. Moreover, there is evidence that terrorism leads to the reallocation of economic activity away from private investment spending to government spending; that is, terrorism crowds out investment at a higher rate than its potential to crowd in government spending. Lastly, terrorism alters the composition of government expenditure – with the defence component of government expenditure rising vis-a-vis other expenditure items. The results are robust to allowing for dynamic interactions between terrorism and macroeconomic aggregates.

Suggested Citation

  • Chuku Chuku & Dominic Abang & Ima-Abasi Isip, 2019. "Growth and Fiscal Consequences of Terrorism in Nigeria," Defence and Peace Economics, Taylor & Francis Journals, vol. 30(5), pages 549-569, July.
    • Handle: RePEc:taf:defpea:v:30:y:2019:i:5:p:549-569
    DOI: 10.1080/10242694.2017.1389583
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    Citations

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    Cited by:

    1. Muhammad Tahir, 2020. "Terrorism and its Determinants: Panel Data Evidence from 94 Countries," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 15(1), pages 1-16, March.
    2. Abdulkarim Yusuf & Saidatulakmal Mohd, 2023. "Growth and Fiscal Effects of Insecurity on the Nigerian Economy," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 35(4), pages 743-769, August.
    3. Posso, Alberto, 2023. "Terrorism, banking, and informal savings: Evidence from Nigeria," Journal of Banking & Finance, Elsevier, vol. 150(C).
    4. Nektarios A. Michail, 2021. "The impact of conflict on the exchange rate of developing economies," Review of Development Economics, Wiley Blackwell, vol. 25(2), pages 916-930, May.
    5. Zheng, Mingbo & Feng, Gen-Fu & Jang, Chyi-Lu & Chang, Chun-Ping, 2021. "Terrorism and green innovation in renewable energy," Energy Economics, Elsevier, vol. 104(C).

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