The Impact of Terrorism and Conflicts on Growth in Asia, 1970–2004
 This paper quantifies the impact of terrorism and conflicts on income per capita growth in Asia for 1970–2004. Our panel estimations show that transnational terrorist attacks had a significant growth-limiting effect. Transnational terrorism reduces growth by crowding in government expenditures. An internal conflict has the greatest growth concern, about twice that of transnational terrorism. For developing Asian countries, intrastate and interstate wars have a much greater impact than terrorism does on the crowding-in of government spending.
Policy recommendations indicate the need for rich Asian countries to assist their poorer neighbors in coping with the negative growth consequences of political violence. Failure to assist may result in region-wide repercussions. Conflict and terrorism in one country can create production bottlenecks with region-wide economic consequences. International and nongovernmental organizations as well as developed Western countries and regions could assist at-risk Asian countries with attack prevention and post-attack recovery.
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The views expressed in this paper are the views of the authors and do not necessarily reflect the views or policies of the Asian Development Bank Institute (ADBI), the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.
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