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Terrorism, Innovation, and Economic Channels: Insights from a Panel ARDL Model

Author

Listed:
  • Salim Bagadeem

    (Faculty of Business Studies, Arab Open University, Riyadh, Saudi Arabia)

  • Hussein Moselhy Sayed Ahmed

    (Department of Business Administration, College of Business, University of Bisha, Bisha 61922, Saudi Arabia)

  • Mohamed Osman

    (Dubai Business School, University of Dubai, Dubai, UAE)

  • Haitham M. Alzoubi

    (School of Business, Skyline University College, Sharjah, UAE5Applied Science Research Center, Applied Science Private University, Amman, Jordan)

  • Kai-Yin Woo

    (Department of Economics and Finance, Hong Kong Shue Yan University, Hong Kong)

  • Bisharat Hussain Chang

    (Department of Business Administration, Sukkur IBA University, Sukkur, Pakistan)

Abstract

The impact of terrorism on economic growth has received widespread attention, whereas the linkage between terrorism and innovation remains underexplored mainly as it provides mixed findings in the existing literature. This study contributes to the existing literature by investigating the various channels, such as trade openness, foreign direct investment (FDI), and domestic investment through which terrorism affects innovation. Moreover, it contributes to the literature by using the Panel ARDL model, which has not been used in the given context. To this end, we analyze panel data from 57 nations from 1985 to 2023, by using the Panel ARDL model, and panel quantile regression methods. Our findings indicate that terrorism has significant negative effects on innovation activities. The Panel ARDL results reveal that terrorism has a significant negative impact on innovation in both the short and long run, with trade openness, FDI, and domestic investment serving as crucial mediating channels. These results highlight that a stable economic environment is crucial in innovation-related activities, as terrorism creates a significant barrier to investment and trade.

Suggested Citation

  • Salim Bagadeem & Hussein Moselhy Sayed Ahmed & Mohamed Osman & Haitham M. Alzoubi & Kai-Yin Woo & Bisharat Hussain Chang, 2025. "Terrorism, Innovation, and Economic Channels: Insights from a Panel ARDL Model," Annals of Financial Economics (AFE), World Scientific Publishing Co. Pte. Ltd., vol. 20(01), pages 1-37, March.
    • Handle: RePEc:wsi:afexxx:v:20:y:2025:i:01:n:s2010495225500022
    DOI: 10.1142/S2010495225500022
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    Keywords

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    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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