Abstract:

In this study, the effect of terrorism, which occurs in four Middle East countries (Turkey, Saudi Arabia, Egypt and Iran), on GDP was tested for the period 2003-2016 using panel data analysis. Terror increases the level of uncertainty in an economy, reduces capital accumulation and consequently affects financial markets negatively. The difference of this study from the previous studies is that it reveals the effects of terrorism occurring in the four countries that are conflicting in terms of political and military interests on the economic growth. Also unlike other studies in the literature, the study included the Iranian economy in the analysis. Fixed and random effective econometric regression models were established in the study and it was concluded that it was necessary to use the Hausman test and the random effects model. As a result of the study, it was found that terrorism had a higher and negative effect on the GDP growth.   

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