The effects of terrorism on economic growth: Panel data approach

Abstract

The aim of this study is to examine the effects of terrorism on economic growth experienced worldwide. More precisely these terrorist incidents and its effects on economic growth in most countries are classified according to income groups. In this respect, we conduct a panel study (FE and RE models) to analyze the number of terrorist incidents in these countries and the data range from 2000 to 2015 covering a total of 115 countries. The result of the study is in line with other findings in the literature. Those terrorist attacks are causing a negative impact on the economic growth in most countries, particularly in low-income countries. Generally speaking, the findings show that low-income countries are affected about three times more than high-income countries as a result of these terrorist attacks.