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Causality between terrorism and economic growth

Author

Listed:
  • 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.

Suggested Citation

  • Daniel Meierrieks & Thomas Gries, 2013. "Causality between terrorism and economic growth," Journal of Peace Research, Peace Research Institute Oslo, vol. 50(1), pages 91-104, January.
  • Handle: RePEc:sae:joupea:v:50:y:2013:i:1:p:91-104
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    Citations

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    Cited by:

    1. Simplice Asongu & Uchenna R. Efobi & Ibukun Beecroft, 2017. "Aid in Modulating the Impact of Terrorism on FDI: No Positive Thresholds, No Policy," Working Papers 17/061, African Governance and Development Institute..
    2. Simplice Asongu & Uchenna EFOBI & Ibukun BEECROFT, 2015. "FDI, Aid, Terrorism: Conditional Threshold Evidence from Developing Countries," Working Papers 15/019, African Governance and Development Institute..
    3. Ernest Ogbozor, 2016. "Causes and Consequence of Violent Extremism in Northeast Nigeria," HiCN Working Papers 227, Households in Conflict Network.
    4. Kis-Katos, Krisztina & Liebert, Helge & Schulze, Günther G., 2014. "On the heterogeneity of terror," European Economic Review, Elsevier, vol. 68(C), pages 116-136.
    5. Simplice Asongu & Oasis Kodila-Tedika, 2017. "Trade, aid and terror," International Journal of Development Issues, Emerald Group Publishing, vol. 16(1), pages 2-24, April.
    6. Simplice A. Asongu & Jacinta C. Nwachukwu, 2016. "Conditional linkages between iron ore exports, foreign aid and terrorism," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 29(2), pages 57-70, December.
    7. Friedrich Schneider & Tilman Brück & Daniel Meierrieks, 2015. "The Economics Of Counterterrorism: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 29(1), pages 131-157, February.
    8. Simplice Asongu & Jacinta C. Nwachukwu, 2017. "Fuel Exports, Aid and Terrorism," Working Papers 17/016, African Governance and Development Institute..
    9. Ghulam Akhmat & Khalid Zaman & Tan Shukui & Faiza Sajjad, 2014. "Exploring the root causes of terrorism in South Asia: everybody should be concerned," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(6), pages 3065-3079, November.
    10. Simplice Asongu & Jacinta C. Nwachukwu, 2015. "Fighting Terrorism: Empirics on Policy Harmonization," Working Papers 15/024, African Governance and Development Institute..
    11. Khusrav Gaibulloev & Javed Younas, 2016. "Conflicts and domestic bank lending," Public Choice, Springer, vol. 169(3), pages 315-331, December.
    12. Simplice Asongu & John Ssozi, 2017. "When is Foreign Aid Effective in Fighting Terrorism? Threshold Evidence," International Economic Journal, Taylor & Francis Journals, vol. 31(3), pages 370-389, July.
    13. Jetter, Michael, 2017. "Terrorism and the Media: The Effect of US Television Coverage on Al-Qaeda Attacks," IZA Discussion Papers 10708, Institute for the Study of Labor (IZA).
    14. repec:eee:ecanpo:v:55:y:2017:i:c:p:106-123 is not listed on IDEAS
    15. Alice Y. Ouyang & Ramkishen S. Rajan, 2017. "Impact of Terrorism on Cross-Border Mergers and Acquisitions (M&As): Prevalence, Frequency and Intensity," Open Economies Review, Springer, vol. 28(1), pages 79-106, February.
    16. Asongu, Simplice A. & Tchamyou, Vanessa S. & Minkoua N., Jules R. & Asongu, Ndemaze & Tchamyou, Nina P., 2018. "Fighting terrorism in Africa: Benchmarking policy harmonization," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 492(C), pages 1931-1957.
    17. Michael Jetter, 2017. "Mediated Terrorism: US News and Al-Qaeda Attacks," CESifo Working Paper Series 6804, CESifo Group Munich.
    18. Krieger, Tim & Meierrieks, Daniel, 2014. "The Roots of Islamist Armed Struggle, 1968-2007," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100579, Verein für Socialpolitik / German Economic Association.
    19. Eugen Dimant & Tim Krieger & Margarete Redlin, 2015. "A Crook is a Crook … But is He Still a Crook Abroad? On the Effect of Immigration on Destination-Country Corruption," German Economic Review, Verein für Socialpolitik, vol. 16(4), pages 464-489, November.
    20. Meierrieks, Daniel & Krieger, Tim, 2015. "Modernization and Islamist Conflict," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113142, Verein für Socialpolitik / German Economic Association.
    21. Serfraz, Ayesha, 2017. "What is the effect of foreign direct investment inflows on economic growth in Pakistan? An empirical analysis in the light of religious sectarianism as catalyst for terrorism," Discussion Papers 59, University of Hamburg, Centre for Economic and Sociological Studies (CESS/ZÖSS).
    22. Redlin, Margarete & Gries, Thomas & Meierrieks, Daniel, 2014. "Oppressive Governments, US Closeness, and Anti-US Terrorism," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100588, Verein für Socialpolitik / German Economic Association.

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