Terror in the City: Local Terrorism and Firm Exports

Bönte Werner (), Procher Vivien D. () and Malik Faisal S. ()
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Bönte Werner: Schumpeter School of Business and Economics, University of Wuppertal, Gaußstraße 20, 42119 Wuppertal, Germany
Procher Vivien D.: Philipps-Universität Marburg, Resaarch Group Entrepreneurship and Innovative Business Models, Am Plan 1 und 2, 35037 Marburg, Germany
Malik Faisal S.: Jackstädt Center of Entrepreneurship and Innovation Research, University of Wuppertal, Gaußstraße 20, 42119 Wuppertal, Germany

The B.E. Journal of Economic Analysis & Policy, 2024, vol. 24, issue 4, 1073-1100

Abstract: In this paper, we examine the relationship between terrorism and exports at the firm-level. We use a panel data of 301 firms listed on the Pakistan Stock Exchange and records of terrorist attacks in Pakistani cities from 1999 to 2014. By calculating city-level terrorism indices, the study reveals significant variations in the frequency of terrorist incidents both between cities and within cities over different time periods. Our panel regressions show that firm exports are correlated with terrorist attacks in the cities where the firms are located, and these correlations are statistically significant even when terrorism is lagged up to six years. Interregional spillover effects of terrorism are less pronounced. While a negative correlation can be found between firm exports and our terrorism indices, the correlation with domestic sales tends to be statistically insignificant. The findings shed light on the persistent link between local terrorism and firms’ international and domestic operations.

Keywords: terrorism; firm exports; interregional spillovers; emerging economy; enterprises; panel data (search for similar items in EconPapers)
JEL-codes: D20 F23 L10 L20 R10 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1515/bejeap-2023-0304

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