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Terror in the City: Local Terrorism and Firm Exports

Author

Listed:
  • Bönte Werner

    (Schumpeter School of Business and Economics, University of Wuppertal, Gaußstraße 20, 42119 Wuppertal, Germany)

  • Procher Vivien D.

    (Philipps-Universität Marburg, Resaarch Group Entrepreneurship and Innovative Business Models, Am Plan 1 und 2, 35037 Marburg, Germany)

  • Malik Faisal S.

    (Jackstädt Center of Entrepreneurship and Innovation Research, University of Wuppertal, Gaußstraße 20, 42119 Wuppertal, Germany)

Abstract

In this paper, we examine the relationship between terrorism and exports at the firm-level. We use a panel data of 301 firms listed on the Pakistan Stock Exchange and records of terrorist attacks in Pakistani cities from 1999 to 2014. By calculating city-level terrorism indices, the study reveals significant variations in the frequency of terrorist incidents both between cities and within cities over different time periods. Our panel regressions show that firm exports are correlated with terrorist attacks in the cities where the firms are located, and these correlations are statistically significant even when terrorism is lagged up to six years. Interregional spillover effects of terrorism are less pronounced. While a negative correlation can be found between firm exports and our terrorism indices, the correlation with domestic sales tends to be statistically insignificant. The findings shed light on the persistent link between local terrorism and firms’ international and domestic operations.

Suggested Citation

  • Bönte Werner & Procher Vivien D. & Malik Faisal S., 2024. "Terror in the City: Local Terrorism and Firm Exports," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 24(4), pages 1073-1100.
    • Handle: RePEc:bpj:bejeap:v:24:y:2024:i:4:p:1073-1100:n:1005
    DOI: 10.1515/bejeap-2023-0304
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    More about this item

    Keywords

    terrorism; firm exports; interregional spillovers; emerging economy; enterprises; panel data;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • D20 - Microeconomics - - Production and Organizations - - - General

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