Analyzing The Impacts of Terrorism on Innovation Activity: A Cross-Country Empirical Study

Purpose: Many studies have analyzed the impact of terrorism on economic growth, but the terrorism-innovation nexus is very rare in academic literature. Hence, this study aims to theoretically and empirically examine the effect of terrorism on innovation activity. Study design/methodology/approach: We employ OLS, system GMM, and quantile regression on a panel dataset of 31 economies for 1990-2022. Findings: The study's findings indicate that terrorism negatively and significantly impacts innovation activity. Various robustness checks further support the results of this study. Moreover, the study findings also identify possible channels, such as domestic investment, foreign direct investment, and trade openness, through which terrorism affects innovation activity. Originality/value: The outcomes of this study will not only provide policy recommendations for sustainable national innovation and offer a better understanding of the subject matter.