The economic impact of terrorism: A new model and its application to Pakistan

Socioeconomic Determinants of Terrorism

“…The findings also suggest that political instability is associated with an increase in terrorism (Kingma et al, ; Malik & Zaman, ; Nasir et al, ; Piazza, ). In contrast to Estrada et al (), this study reveals that there is a positive and significant relationship between higher school enrollment rates and an increase in terrorism (Nasir et al, ; Oyefusi, ; Russell & Miller, ). The extent of the informal sector was also shown to relate to an increase in terrorism.…”

“…Previous research suggests various determinants/factors which may relate to terrorism in both developed and developing countries. However, the theoretical and empirical literature, in the past decade in particular, is inconclusive about the relationship between socioeconomic indicators and terrorism (Market impact: Governance: Asongu & Nwachukwu, ; Halkos et al, ; Orbaneja et al, ; Economic impact: Abadie & Gardeazabal, ; Blomberg et al, ; Estrada et al, ; Ismail & Amjad, ; Malik & Zaman, ; Shahbaz, ; Shahbaz et al, ). A number of socioeconomic indicators associated with terrorism in the literature are discussed in this section.…”

“…The impact of terrorism on an economy can best be explained by rational choice theory (Estrada et al, ). Zimmermann (:S157) argues that:

In terms of Weber’s distinction, deterrence can only be directed against purposive rational actions where the goal is not to be achieved at any price (value‐rational action) but with rational calculation.

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Relationship Between Terrorism and Macroeconomic Variables: Especially Import of Crude Oil and Natural Gas in Turkey

“…Taking Consideration of hypotheses, the study failed to reject the null hypothesis (H0) because it is statistically insignificant at 5% level of significance, though there is a correlation between terrorism and macroeconomic variables. Furthermore, it is noticeable that, normally, increasing terrorism decreases import of crude oil and natural gas (Estrada, et al, 2015), but, here, a positive correlation exist between them, means rising terrorism increases import of crude oil and natural gas in Turkey. Actually it is a good sign for Turkey's economy but, on the other hand, it creates a dispute about their economic policies which generates a platform for questioning.…”

“…Finally, the import of crude oil and natural gas has a negative relation with terrorism because of country's instability which increases the bargaining power of supplier. Normally, terrorism restricts import demand (Estrada, et al, 2015) There are some studies which have made analysis about terrorism, economic development as well as macroeconomic variables. Among these, a handful studies have focused on the relationship between macroeconomic variables-especially import of crude oil and natural gas-and terrorism.…”