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The Adverse Effect of Transnational and Domestic Terrorism on Growth in Africa

Author

Listed:
  • Khusrav Gaibulloev

    (Department of Economics, Kazakhstan Institute of Management, Economics and Strategic Research)

  • Todd Sandier

    () (School of Economic, Political & Policy Sciences, University of Texas at Dallas)

Abstract

This article investigates the adverse effects of domestic and transnational terrorism on income per capita growth for 51 African countries for 1970-2007, while accounting for cross-sectional (spatial) dependence and conflict (i.e. internal conflicts and external wars). The findings of the fixed-effects panel estimator suggest that transnational terrorism has a significant, but modest, marginal impact on income per capita growth. These results hold for two different terrorism event datasets. However, domestic terrorist events do not affect income per capita growth. Our findings differ from those in an earlier study on the impact of transnational terrorism on African growth, because we uncover a much more moderate effect. In our study, regional impacts and terrorism-conflict interactions effects are also distinguished. Moreover, our sample countries and period are more extensive. Our article contains a host of robustness checks involving macroeconomic and political variables that find virtually identical results. Alternative terrorist variables are also used, with little qualitative change in the findings. The absence of a domestic terrorism impact is surprising because there were many more domestic than transnational terrorist incidents in Africa. To promote growth, host and donor countries must direct scarce counter-terrorism resources to protect against transnational terrorism in particular. The modest impact of transnational terrorism on African growth means that developing countries’ economies have been more resilient to terrorism than has been generally thought.

Suggested Citation

  • Khusrav Gaibulloev & Todd Sandier, 2011. "The Adverse Effect of Transnational and Domestic Terrorism on Growth in Africa," Journal of Peace Research, Peace Research Institute Oslo, vol. 48(3), pages 355-371, May.
  • Handle: RePEc:sae:joupea:v:48:y:2011:i:3:p:355-371
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Bassil Charbel, 2014. "The Effect of Terrorism on Tourism Demand in the Middle East," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 20(4), pages 1-16, December.
    2. Bandyopadhyay, Subhayu & Sandler, Todd, 2014. "Immigration policy and counterterrorism," Journal of Public Economics, Elsevier, pages 112-123.
    3. Simplice A. Asongu, 2012. "Law and Finance in Africa," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, pages 385-408.
    4. Efobi, Uchenna & Asongu, Simplice, 2016. "Terrorism and capital flight from Africa," International Economics, Elsevier, vol. 148(C), pages 81-94.
    5. Bandyopadhyay, Subhayu & Sandler, Todd, 2014. "Immigration policy and counterterrorism," Journal of Public Economics, Elsevier, pages 112-123.
    6. Khusrav Gaibulloev & Todd Sandler & Donggyu Sul, "undated". "Reevaluating Terrorism and Economic Growth: Dynamic Panel Analysis and Cross-Sectional Dependence," Economics Working Papers 02-03/2013, School of Business Administration, American University of Sharjah.
    7. Bandyopadhyay, Subhayu & Sandler, Todd & Younas, Javed, 2016. "Trade and Terrorism: A Disaggregated Approach," Working Papers 2016-1, Federal Reserve Bank of St. Louis, revised 30 Jan 2017.
    8. Bassil Charbel, 2013. "Macroeconomic Consequences of War and Terrorism in Lebanon," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 19(3), pages 415-429, December.
    9. Khusrav Gaibulloev & Javed Younas, 2016. "Conflicts and domestic bank lending," Public Choice, Springer, vol. 169(3), pages 315-331, December.
    10. Jovanovic, Mario, 2011. "Financial Uncertainty in Germany and its Impact on Western European Terrorism," Ruhr Economic Papers 296, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    11. Mazhar Yasin MUGHAL & Amar Iqbal ANWAR, 2013. "Foreign Financial Flows and Terrorism In Developing Countries," Working Papers 2013-2014_1, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Sep 2013.
    12. Chuku Chuku & Isip Ima-Abasi & Abang Dominic, 2017. "Working Paper 284 - Growth and Fiscal Consequences of Terrorism in Nigeria," Working Paper Series 2410, African Development Bank.
    13. Bandyopadhyay, Subhayu & Sandler, Todd, 2014. "The effects of terrorism on trade: a factor supply approach," Review, Federal Reserve Bank of St. Louis, vol. 96(3), pages 229-241.
    14. Uchenna EFOBI & Simplice Asongu, 2015. "How Terrorism Explains Capital Flight from Africa," Working Papers 15/034, African Governance and Development Institute..

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