Macroeconomic Impacts of Terrorist Activities in Developed and Developing Countries

Abstract

There are many channels through which terrorism can influence macroeconomic variables, such as economic growth and international trade. However, the intensity of the consequences of terrorist events on the economy may be varied across countries based on the economic structure. Therefore, it is not unusual for the impacts of terrorism to vary across the developed and developing nations. Against this backdrop, this study assesses the influences of conflicts and terrorist activities on the growth of per capita gross domestic product (GDP) in 21 developed and 23 developing countries from 1970 to 2015. The stochastic properties of the variables are looked into by carrying out panel-specific Augmented Dicky-Fuller (ADF) and Phillips-Peron (PP) unit root test followed by estimating the dynamic regressions equations in structured balanced panel frameworks for selected developed and developing economies separately. This study draws on data from various sources namely, Global Terrorism Database (GTD) and World Development Indicators (WDI; World Bank). Our empirical findings imply that terrorist activities have a significant growth-limiting effect, and the extent and significance of impacts are higher in case of developing economies.

Citation

Chaudhury, A.R. and Sinha, M. (2019), "Macroeconomic Impacts of Terrorist Activities in Developed and Developing Countries", Das, R.C. (Ed.) The Impact of Global Terrorism on Economic and Political Development, Emerald Publishing Limited, Leeds, pp. 49-60. https://doi.org/10.1108/978-1-78769-919-920191006