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“The Economic Costs of Separatist Terrorism in Turkey”

  • Firat Bilgel

    ()

    (Department of Economics, Okan University Tuzla Campus Akfirat 34959 Istanbul Turkey.)

  • Burhan Can Karahasan

    ()

    (Department of Economics, Okan University Tuzla Campus Akfirat 34959 Istanbul Turkey.)

Turkey has been suffering from separatist terrorism and the political conflict it implies since the mid-1980s, both of which are believed to have a negative impact on economic welfare. This article investigates the economic costs of PKK (Kurdistan Workers’ Party) terrorism, particularly in the Eastern and Southeastern provinces of Turkey by invoking the synthetic control method. We create a synthetic control group that mimics the socioeconomic characteristics of the provinces exposed to terrorism before the PKK terrorism emerged in the mid-1980s. We then compare the real GDP of the synthetic provinces without terrorism to the actual provinces with terrorism for the period 1975-2001. Causal inference is carried out by comparing the real per capita GDP gap between the synthetic and actual provinces and the intensity of terrorist activity as measured by the number of terrorism casualties. We find that after the emergence of terrorism, the per capita real GDP in Eastern and Southeastern Anatolia declined by about 6.6 percent relative to a comparable synthetic Eastern and Southeastern Anatolia without terrorism.

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File URL: http://www.ub.edu/irea/working_papers/2013/201322.pdf
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Paper provided by University of Barcelona, Regional Quantitative Analysis Group in its series AQR Working Papers with number 201314.

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Length: 43 pages
Date of creation: Nov 2013
Date of revision: Nov 2013
Handle: RePEc:aqr:wpaper:201314
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  1. Andreas Freytag & Jens J. Krüger & Daniel Meierrieks, 2010. "The Origins of Terrorism: Cross-Country Estimates on Socio-economic Determinants of Terrorism," Economics of Security Working Paper Series 27, DIW Berlin, German Institute for Economic Research.
  2. Eldor, Rafi & Melnick, Rafi, 2004. "Financial markets and terrorism," European Journal of Political Economy, Elsevier, vol. 20(2), pages 367-386, June.
  3. Mete Feridun & Selami Sezgin, 2008. "Regional Underdevelopment And Terrorism: The Case Of South Eastern Turkey," Defence and Peace Economics, Taylor & Francis Journals, vol. 19(3), pages 225-233.
  4. Mehmet Yaya, 2009. "Terrorism And Tourism: The Case Of Turkey," Defence and Peace Economics, Taylor & Francis Journals, vol. 20(6), pages 477-497.
  5. Thomas Gries & Tim Krieger & Daniel Meierrieks, 2011. "Causal Linkages Between Domestic Terrorism and Economic Growth," Defence and Peace Economics, Taylor & Francis Journals, vol. 22(5), pages 493-508, June.
  6. Blomberg, S. Brock & Hess, Gregory D. & Weerapana, Akila, 2004. "Economic conditions and terrorism," European Journal of Political Economy, Elsevier, vol. 20(2), pages 463-478, June.
  7. Abadie, Alberto & Gardeazabal, Javier, 2008. "Terrorism and the world economy," European Economic Review, Elsevier, vol. 52(1), pages 1-27, January.
  8. Ferhan Gezici & Geoffrey Hewings, 2003. "Spatial Analysis of Regional Inequalities in Turkey," ERSA conference papers ersa03p99, European Regional Science Association.
  9. Mete Feridun, 2011. "Impact of terrorism on tourism in Turkey: empirical evidence from Turkey," Applied Economics, Taylor & Francis Journals, vol. 43(24), pages 3349-3354.
  10. Pinar Derin-Güre & Adem Yavuz Elveren, 2014. "Does Income Inequality Derive the Separatist Terrorism in Turkey?," Defence and Peace Economics, Taylor & Francis Journals, vol. 25(3), pages 311-327, June.
  11. Tim Krieger & Daniel Meierrieks, 2008. "What causes terrorism?," Working Papers CIE 12, University of Paderborn, CIE Center for International Economics.
  12. Enders, Walter & Sandler, Todd, 1996. "Terrorism and Foreign Direct Investment in Spain and Greece," Kyklos, Wiley Blackwell, vol. 49(3), pages 331-52.
  13. Eckstein, Zvi & Tsiddon, Daniel, 2004. "Macroeconomic consequences of terror: theory and the case of Israel," Journal of Monetary Economics, Elsevier, vol. 51(5), pages 971-1002, July.
  14. Chen, Andrew H. & Siems, Thomas F., 2004. "The effects of terrorism on global capital markets," European Journal of Political Economy, Elsevier, vol. 20(2), pages 349-366, June.
  15. Alpay Filiztekin, 2009. "Regional unemployment in Turkey," Papers in Regional Science, Wiley Blackwell, vol. 88(4), pages 863-878, November.
  16. Nitsch, Volker & Schumacher, Dieter, 2004. "Terrorism and international trade: an empirical investigation," European Journal of Political Economy, Elsevier, vol. 20(2), pages 423-433, June.
  17. Tavares, Jose, 2004. "The open society assesses its enemies: shocks, disasters and terrorist attacks," Journal of Monetary Economics, Elsevier, vol. 51(5), pages 1039-1070, July.
  18. Mete Feridun & Muhammad Shahbaz, 2010. "Fighting Terrorism: Are Military Measures Effective? Empirical Evidence From Turkey," Defence and Peace Economics, Taylor & Francis Journals, vol. 21(2), pages 193-205.
  19. Bahar Araz-Takay & K. Peren Arin & Tolga Omay, 2009. "The Endogenous And Non-Linear Relationship Between Terrorism And Economic Performance: Turkish Evidence," Defence and Peace Economics, Taylor & Francis Journals, vol. 20(1), pages 1-10.
  20. Julide Yıldırım & Nadir Öcal, 2006. "Income Inequality and Economic Convergence in Turkey," Transition Studies Review, Springer, vol. 13(3), pages 559-568, October.
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