The impact of the terrorism on economic growth: The case of Turkey

Terrorism takes a special and paradoxical place among various forms of criminal acts. Terrorism causes not just human deaths and material damages, but also affects the economic variables of the country where terrorist activities take place in the short and long term. The actual direct losses from terrorism are unsignificant, being several times less even comparing to the number of auto accident victims. However, nowadays terrorism acts are perceived as the most dangerous threat to society, destabilizing its socio-political and economic life. The study is aimed to analyse impact of the terrorism on the economic growth, paying particular attention to the case of Turkey. Contemporary Turkey is confronting the onrush of terrorism incidents happening in the country. As the multicultural country playing the role of the bridge between Europe and Asia, Turkey is strongly afflicted by numerous religious, ethnic and political long-lasting conflicts, that obviously makes the country more assailable to the terrorism. There are some studies claimıng that the effect of terorism on economic growth is ınsıgnıfıcant (Latif and Aslam, 2014), and others prove that there is a long-term negative effect of terrorism on economic growth (Shahzad, 2015). The Solow new classical model of economic growth is used in the theoretical background of the study. The model was conducted basing on long-term cointegration analysis by using Turkey annual data from Global Terrorism Database covering the period from 1970 to 2017. The results of the study have shown that terrorism has a highly significant negative impact on the gross domestic product of Turkey when looking at the long-term run.