NON-LINEAR EFFECTS OF TERRORISM ON ECONOMIC GROWTH IN PAKISTAN: ACCOUNTING FOR CAPITAL PER WORKER AND STRUCTURAL BREAKS

Ronald Kumar, Syed Jawad Hussain Shahzad, Peter Josef Stauvermann () and Nikeel Kumar ()
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Peter Josef Stauvermann: Department of Global Business and Economics, Changwon National University, Republic of Korea (South Korea)
Nikeel Kumar: School of Accounting and Finance, The University of the South Pacific, Fiji

The Singapore Economic Review (SER), 2023, vol. 68, issue 02, 629-650

Abstract: In this study, we examine the asymmetric effects of terrorism and economic growth in Pakistan over the period 1970–2016, while considering the role of capital per worker and structural breaks. We use the non-linear ARDL approach to establish the long-run association and to estimate the short-run and long-run effects accordingly. The results indicate the presence of asymmetries in both long and short run. Moreover, 1% decrease in terrorism results in an increase of per capita income by 0.02% in the long run and 0.001% in the short run. Assuming symmetry, the long run capital share is 0.47. In asymmetric relation, a 1% increase in capital share increases output by 0.55%, whereas a 1% decrease in capital stock decreases output by 0.26%. The break effects show that the years 1993 and 2004 have negative effects on growth. The vector error correction model-based causality results indicate a unidirectional causality from terrorism to per capita income. Overall, the results highlight that terrorism is growth retarding.

Keywords: Terrorism; economic growth; structural breaks; non-linear ARDL; causality; Pakistan (search for similar items in EconPapers)
JEL-codes: C22 F43 H12 N15 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1142/S0217590819500140

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