Growth Consequences of Terrorism in Western Europe
This paper presents panel estimates for 18 Western Europe countries to ascertain the separate impacts of domestic and transnational terrorism on income per capita growth for 1971-2004. The paper merges domestic and transnational terrorist events in order to attribute growth impacts to the two broad categories of terrorism. Each additional transnational terrorist incident per million persons reduces economic growth by about 0.4 percentage points. Domestic terrorism has a much smaller effect on growth that is about half this size. Terrorism's negative impact on growth is related to the scale of terrorism in the sample countries in order to give a better idea of what is the average consequence in most sample countries. These negative impacts are shown to stem from domestic and transnational terrorism's adverse influence on investment shares. Counterterrorism efforts also augment government spending, which crowds out growth-promoting investment. We show that the pathway by which domestic and transnational terrorism influences growth differs. For example, transnational terrorism works more through the crowding out of investment, while domestic terrorism works more through the increase in government expenditure increases. A host of sensitivity tests are performed to support our empirical model. Policy recommendations conclude the paper - e.g., measures to curb transnational terrorist attacks have a higher economic payoff than similar measures to reduce domestic terrorist events. Since transnational terrorism has a larger impact on income per capita growth than does domestic terrorism, West European efforts to curb transnational terrorism will have a greater economic dividend than efforts to limit domestic terrorism. Copyright 2008 The Authors. Journal compilation 2008 Blackwell Publishing Ltd.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 61 (2008)
Issue (Month): 3 (August)
|Contact details of provider:|| Web page: http://www.blackwellpublishing.com/journal.asp?ref=0023-5962|
|Order Information:||Web: http://www.blackwellpublishing.com/subs.asp?ref=0023-5962|
When requesting a correction, please mention this item's handle: RePEc:bla:kyklos:v:61:y:2008:i:3:p:411-424. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.