Intercontinental and regional evaluation of terrorism and its economic effects

Abstract

Terrorism dates back to the uprising against the Roman Empire in first century BC and the term entered Western literature during the eighteenth century. Conceptually, it has emerged as a security problem in a national and international context. However, terrorism is not only a security problem but also has significance on political, social, cultural, psychological, and especially economical aspects. A weak economic structure of a country makes it easier for terrorist organizations to manipulate its society in a certain direction. Issues such as economic growth, foreign trade, employment, foreign investments, and public expenditures are first affected by terror incidents, and thereafter are known to have medium- and long-term effects. In general, it is observed that developed countries are less affected from terror incidents than developing countries. In this context, in this study, regional assessments will be made using the following indicators: the Global Terror Index (GTI), gross domestic product (GDP), export, foreign investments, and public expenditure. Regional and intercontinental assessments will be implemented using spatial econometric techniques. The GeoDa package program will assess the diversity in terrorism between continents. Our main hypothesis is that terrorism's economic effect is more in developing countries and the Middle East than among other developed countries. The other aim of the study is to determine which terrorism is more effective and which economic indicator is more affected and gives the best result about effects of the terrorism on the countries and continents. This study predominantly tries to examine whether terror incidents are most influential on the economies in the Middle East region.