Do Workers’ Remittances Increase Terrorism? Evidence from South Asian Countries

This study investigates the influence of workers’ remittances on terrorism in 5 South Asian countries. The panel data comprised of 20 years from the period of 1994 to 2013 is used. The advanced econometric techniques i.e, CIPS unit root test, bootstrap cointegration, Pedroni co-integration, FMOLS, fixed effect model and heterogeneous panel causality technique have been applied. The results suggest that the workers’ remittances have a significant positive impact on the terrorism in South Asian countries. The results also indicate that the control variables, i.e., Inflation, unemployment, and population size also have a significant positive relationship with terrorism. The result of causality shows that unidirectional causality exists of remittance, population, and inflation with unemployment, however, bidirectional causality exists between unemployment and terrorism.The sample size is restricted to South Asian countries only so the result cannot be generalized to other countries. This study will help the policymakers of the region, to make necessary amendments in law so that remittance amount does not be accessible to the group to use in terrorist activities. On a larger perspective, only two studies have been carried out that examines the relationship between terrorism and remittance. One study is conducted in the sub-Saharan region by Elu and Price (2011), and the other one is conducted on panel data by Mascarenhas and Sandler (2014). No study to the best of our knowledge has been done in the South Asian context, so this study is conducted to analyze the impact of workers’ remittance on terrorism in South Asian countries.