Terrorist Incidents and Trade

Employing a trade flow data from 1990 to 2013 within 50 countries, this study estimates terrorism effects on trade. The trading countries are grouped as trading partners (a) within developing countries (i.e. South-South), (b) within developed countries (North-North) or (c) within developed and developing countries (i.e. North-South). The analysis shows that all the standard gravity-type variables carry expected sign while the terrorism effect on trade is recorded significant on statistical grounds and negative when South trades with North.