Economic Growth and Terrorism in the Middle East: A Heterogeneous Panel Causality Approach


Ünsal Y., Çinar I. T.

Ekonomik ve Sosyal Araştırmalar Dergisi, vol.18, no.1, pp.17-27, 2022 (Peer-Reviewed Journal)

  • Publication Type: Article / Article
  • Volume: 18 Issue: 1
  • Publication Date: 2022
  • Journal Name: Ekonomik ve Sosyal Araştırmalar Dergisi
  • Journal Indexes: TR DİZİN (ULAKBİM)
  • Page Numbers: pp.17-27
  • Anadolu University Affiliated: Yes

Abstract

This study aims to examine the relationship between terrorism and economic growth for a panel of fifteen Middle Eastern countries for the 2003-2019 period. Panel data analysis has the advantage of providing more information, more variability, and less collinearity in the data compared to single-country time series analysis. Besides this advantage, most of the cross-country panel data studies in the terrorism and economic growth literature assume that the terrorist activities are homogeneous across countries. We used the Dumitrescu-Hurlin panel causality test accounting for cross-sectional heterogeneity, which is widely ignored in most panel data studies on terrorism and economic growth nexus. Dumitrescu-Hurlin causality test results reveal in favor of a uni-directional causal relationship between terrorism and economic growth in the Middle East for the overall panel. We also find that this uni-directional relationship is ruled by the strong country-specific influence of Iraq.