Terrorism, Tourism and Economic Growth: A Vector Autoregression (VAR) Analysis

This research paper is design to investigate the dynamics of interrelationships between/among Terrorism, Tourism, and GDP growth in Nigeria. This study used number of terrorist attack, and number of international tourist arrivals as proxy for Terrorism and Tourism respectively. Time series techniques including Unit Root Test, VAR test for serial correlation and ARCH, CUSUM test for stability, Impulse Response Function were used with data from 1st Quarter 1981 to 4th Quarter 2013. The results of the unit root tests are reported in Table 2. The results indicate that Terrorism, Tourism, and GDP growth are stationary at level. The CUSUM-test showed that all the residuals are stable over long run coefficient and short run dynamics. The results indicate the absence of any instability of the coefficients because the plots of the CUSUM statistics fall inside the critical bands of the 5% confidence intervals of parameter stability. The Impulse Response Function analysis showed that an innovation into terrorism tends to decrease in GDP growth. Thus, there is an urgent need for the government to stop the activities of the terrorists if Nigeria is to promote her economic growth.