Causal Linkages Between Domestic Terrorism and Economic Growth

We use the Hsiao–Granger method to test for terrorism–growth causality for seven Western European countries. In bivariate settings, the impact of economic performance on domestic terrorism is very strong. In trivariate settings, the impact of performance on terrorism diminishes. In general, we find that economic performance leads terrorist violence in robust ways only for three out of seven countries. Terrorism is almost never found to causally influence growth in bivariate and trivariate specifications. Our findings indicate that the role of economic performance in determining terrorist violence appears to have been important for some countries, whereas all attacked economies have been successful in adjusting to the threat of terrorism.     

A note on the causal relationship between defence spending and growth in Greece: 1955–93

The causal relationship between economic growth and defence spending has attracted considerable attention and has been the subject of many empirical studies. This paper investigates the existence of a causal link between military expenditure and economic growth in the case of Greece for the period 1955–93. By European Union standards, Greece allocates substantial human and material resources to defence. At the same time, Greece is the poorest European Union member facing chronic economic problems. Using the concept of Granger‐causality, the findings reported herein suggest that neither variable Granger‐causes the other disclosing thereof the absence of any causal ordering between them.     

The nexus between military expenditures and economic growth in the BRICS and the US: an empirical note

This empirical note re-examines the causal linkages between military expenditures and economic growth for the BRICS countries (Brazil, Russia, India, China, and South Africa) and that for the USA during the period 1988–2012. Results of Granger causality tests show that military expenditures influence economic growth in the USA, economic growth influences military expenditures in both Brazil and India, a feedback between military expenditures and economic growth in Russia, and no causal relation exists between military expenditures and economic growth in China and South Africa. The findings of this study can provide important policy implications for the BRICS countries and also for the USA.     

The impact of political instability on the economic growth of ECOWAS member countries

This study contributes to the literature on political instability and economic growth by specifically investigating the impact of political instability on the economic growth of member countries of the Economic Community of West African States (ECOWAS). West Africa is regarded as the riskiest sub-region within the African continent. To achieve this objective, this study employed panel data techniques (fixed effects and generalised method of moments) on a sample of 15 ECOWAS member countries for the period 2005–2012. The findings from the analyses showed that terrorism, poor governance, social unrest, youth unemployment, death rate and natural resource rent have negative relationships with economic growth. The findings and policy implications deduced from this study could not have been any timelier considering the recent escalation of instability in West African countries and their fragile growth prospects.     

Does Income Inequality Derive the Separatist Terrorism in Turkey?

Separatist terrorism has been a severe problem for Turkey since the mid-1980s. The conventional wisdom contends that economic deprivation in southeastern Turkey is the fundamental reason for the long-running battle against the Kurdish rebels. Considering that there is limited empirical literature on the roots of terrorism in Turkey, yielding conflicting results about the claim that the main cause of terrorism is deprived economic conditions, this study aims to answer whether there is a causal relationship between income inequality and separatist terrorism in Turkey. To this end, the Global Terrorism Data Base for the period of 1973–2006, two Theil indices of pay inequality as proxy for income inequality, and the vector autoregression and Autoregressive Moving Average (ARMA) methods are utilized. The results support the early findings that income inequality, a particular focus in this paper and an essential indicator of economic deprivation, is not a main cause of escalation of separatist terrorism in Turkey.     

THE LONG‐RUN RELATIONSHIP BETWEEN DEFENCE EXPENDITURES AND GDP IN TAIWAN

Using the Solow–Swan growth model and the time‐trend included in the aggregate production function, this study applies the multivariate cointegration approach to re‐investigate the long‐run and causal relationships between defence expenditures and GDP while controlling for capital and labour input in Taiwan during the 1955–2002 period. It examines the long‐run causal relationship using the weak exogeneity test and utilizes general impulse response functions to determine whether a shock to defence expenditures affects economic growth or vice versa. Our findings provide substantive evidence in favour of the existence of a long‐run equilibrium cointegrated relationship between defence expenditures, GDP, labour and capital stock. The results of the weak exogeneity test indicate that a bi‐directional causal relationship exists in the long‐run between defence expenditures and GDP. Thus, the main policy implication that emerges from the long‐run results is that increasing defence expenditures in Taiwan is an effective means to boost overall economic performance and, with this improved economy, it should then be able to increase its defence expenditures further. Lastly, from our dynamic vector error correction model estimations, it is found that defence expenditures are a major means of adjusting for disequilibria that occur within the system.     

Book review

This paper investigates the economic roots of separatist terrorism in Turkey. The political conventional wisdom is that poverty in highly Kurdish‐populated, south‐eastern Turkey is one of the most important causes of separatist terrorism and Turkish–Kurdish conflict in Turkey. Therefore, many economic policies have been implemented to improve the economic conditions in the south‐eastern part of the country. Using the Global Terrorism Database and Vector Autoregression (VAR) methodology, I find that there is no causal relationship between economic conditions in south‐eastern Turkey and separatist terrorism. Therefore policy‐makers should be cautious in using economic measures to prevent separatist terrorism in Turkey.     

Civil wars and economic growth: A regional comparison

The paper examines the impact of civil wars on income per-capita growth at home and in neighbors for four regional groupings of countries: Africa, Asia, Latin America, and a pooled Asian and Latin American sample. Both macroeconomic and civil-war influences on growth differ by region. With the use of a distance measure, we demonstrate that the spatial reach from the negative consequences of a civil war are region and time period specific. Generally, there was less dispersion in Africa than in Asia and Latin America. Moreover, Africa demonstrates a greater ability to recover from the adverse effects of civil wars than the other regions tested.     

DEFENSE SPENDING AND ECONOMIC GROWTH IN TURKEY: A LINEAR AND NON‐LINEAR GRANGER CAUSALITY APPROACH

This paper uses linear and non‐linear Granger causality methods to determine the causal relationship between defense spending and economic growth in Turkey for the period 1949–2004. The innovative feature of this paper is that it provides evidence regarding the nonlinear causal dependence between military spending and economic growth in Turkey. The empirical results contribute to the empirical literature by indicating support for both linear and non‐linear causality between military expenditures and economic development and they may prove useful in theoretical and empirical research by regulators and policy makers.     

Thirty Years of Conflict and Economic Growth in Turkey: A Synthetic Control Approach

Abstract

This study seeks to estimate the causal effects of PKK separatist terrorism on economic development in Turkey using the synthetic control method. By creating a synthetic control group that reproduces the Turkish Gross Domestic Product (GDP) before PKK terrorism emerged in the late 1980s, we compare the GDP of the synthetic Turkey and the actual for the period 1955–2008. Our study finds that the Turkish per capita GDP would have been higher by about $2600 had it not been exposed to terrorism. This translates into an average of 21.4% higher per capita GDP over a period of 21 years.     

Ethnic groups,political exclusion and domestic terrorism

This study examines whether the exclusion of ethnic groups from political power is an important contributing factor to domestic terrorism. To empirically test this question, we employ a negative binomial regression estimation on 130 countries during the period from 1981 to 2005. We find that countries in which certain ethnic populations are excluded from political power are significantly more likely to experience domestic terrorist attacks and to suffer from terrorist casualties; furthermore, ethnic group political exclusion is a more consistent and substantive predictor of domestic terrorist activity than general political repression or economic discrimination.     

FIGHTING TERRORISM: ARE MILITARY MEASURES EFFECTIVE? EMPIRICAL EVIDENCE FROM TURKEY

The present article aims at investigating the causal relationship between defense spending and terrorism in Turkey using the Autoregressive Distributed Lag (ARDL) bounds testing procedure and Granger‐causality analysis. The findings reveal that there exists a unidirectional causality running form terrorist attacks to defense spending as expected, but not vice versa. In the light of this finding it can be inferred that military anti‐terrorism measures alone are not sufficient to prevent terrorism.     

Military Spending and Economic Growth in the Middle East Countries: Bootstrap Panel Causality Test

This study revisits the causal relationship between military spending and economic growth in 10 Middle East countries via a panel causality analysis that accounts for cross-sectional dependence and heterogeneity across countries. Our results indicate unidirectional causality from military spending to growth for Turkey; one-way causality from economic growth to military spending for Egypt, Kuwait, Lebanon, and Syria; bidirectional causality for Israel; and no causality in either direction for Jordan, Oman, and Saudi Arabia. The empirical evidence does not provide consistent results regarding the causal relationship between defense expenditure and economic growth in these countries.     

Does Military Spending Really Matter for Economic Growth in China and G7 Countries: The Roles of Dependency and Heterogeneity

This study revisits the causal linkages between military spending and economic growth in China and G7 countries (i.e. Canada, France, Germany, Italy, Japan, the UK, and the USA) by focusing country-specific analysis for the period 1988–2010. The panel causality analysis, which accounts for both cross-country dependency and heterogeneity across countries, is employed in this study. Our results find evidence of the neutrality hypothesis for Italy, France, and Germany, the military spending–growth detriment hypothesis for both Canada and the UK, and one-way Granger causality running from economic growth to military spending for China. Furthermore, we find a feedback between military spending and economic growth in both Japan and the USA. Thus, our results do not support that one size fits all.     

The Impact of Military Spending on Economic Growth: The Case of North Cyprus

The present study aims at investigating the causal relationship between defence expenditures and economic growth in the case of North Cyprus using the Autoregressive Distributed Lag (ARDL) bounds testing approach to cointegration and Granger causality tests for the period from 1977 to 2007. The results suggest that the variables in question are in a long-run equilibrium relationship and that there exists a strong, positive unidirectional causality running from defence expenditures to economic growth.     

An intervention analysis of terrorism: The spanish eta case

In this paper we evaluate what terrorism policies have worked best in handling the Spanish ETA terrorism using time series data from 1968 to 2000. We consider the political, deterrence and economic effects, and conclude that their influence on terrorism incidents is mixed. A parsimonious model shows that the behaviour of different terrorism incidents is distinct and the lagged effect is a primary concern. A policy to manage this case is devised.     

Reward,punishment or inducement? US economic and military aid, 1946–1996

If the US has wielded power as global hegemon, then there should be evidence of a linkage between American resources and the ability to influence behavior. However, there is widespread disagreement on how this power is manifested (see Krause, ). Methodological and epistemological issues have hampered empirical studies of US hegemonic behavior. For example, does the US reward past behavior or does it offer inducements for future behavior? We document and discuss these issues in terms of the aid–foreign policy compliance nexus. The empirical portion of our paper tests whether US military and non‐military aid are correlated with foreign policy similarity. The main merits of our study are that: (1) we test a new measure of foreign policy similarity developed by Signorino and Ritter () and compiled by Gartzke et al. (); (2) we relax the causality issue and test using vector autoregression (VAR) for 76 developing countries; and (3) our time horizon is a minimum of 30 years for each country. Our central finding is that aid is most often used as a reward. More specifically, foreign policy similarity leads to greater economic aid for most African countries, foreign policy similarity leads to greater military aid for a majority of Latin American states, and there are no overarching patterns for Asia and the Middle East. We discuss the implications of our findings in the context of the bargaining and structural approaches to statecraft.     

DOES DEFENCE SPENDING STIMULATE ECONOMIC GROWTH IN INDIA? A REVISIT

This study reinvestigates the effect of defence spending on economic growth using Zivot and Andrews and Lee and Strazicich, structural unit root tests and the autoregressive distributed lag bounds testing approach to cointegration in augmented version of Keynesian model for India. Study confirmed long run relationship among variables studied show that economic growth is positively affected by defence spending (also negative impact after a threshold point), investment and trade openness while negatively by interest rate. Granger causality analysis revealed bidirectional causal relationship between defence spending and economic growth as probed by variance decomposition approach.     

TERRORISM AND TOURISM: THE CASE OF TURKEY

Using a time series method called ‘transfer function’, this paper examines the effect of terrorism on tourism in Turkey. The results indicate that there exists a negative but small impact of terrorism, which is observed within approximately one year. However, terrorist attacks in Turkey have accounted for a reduction of six million foreign tourists over the last nine years. Moreover, the economic cost of terrorism in the tourism industry was more than $700 million in 2006. However, terrorist attacks in continental Europe and America, and an active war involving a neighboring country, had no effects on tourism in Turkey.     

Growth and Fiscal Consequences of Terrorism in Nigeria

Abstract

In spite of government counter-terrorism expenditure and efforts, the incidence of terrorism in Nigeria appears to be rising. This paper examines the growth and fiscal consequences of terrorism in Nigeria by estimating the terrorism–macroeconomy relation using different measures of terror incidence. The results show that terrorism has an economically and statistically significant negative impact on growth; although this impact is considerably small and short-lived, manifesting only after a lag of about three years. Specifically, the cost of terrorism to Nigeria, in terms of lost GDP per annum, is estimated at 0.82%. Moreover, there is evidence that terrorism leads to the reallocation of economic activity away from private investment spending to government spending; that is, terrorism crowds out investment at a higher rate than its potential to crowd in government spending. Lastly, terrorism alters the composition of government expenditure – with the defence component of government expenditure rising vis-a-vis other expenditure items. The results are robust to allowing for dynamic interactions between terrorism and macroeconomic aggregates.