The Impact of Terrorism and Governance on Economic Growth in Iraq: Evidence from 2004 to 2024

This study analyzes the complex interactions among terrorism, governance, and economic growth in Iraq during a two-decade span (2004–2024). The research uses diverse econometric models, such as Granger Causality, Co-integration, and Vector Autoregression (VAR), to examine the effects of political stability, government expenditure, oil revenues, and terrorism on Iraq's economic performance. The results indicate a substantial inverse correlation between terrorism and economic growth, with increased terrorist activity resulting in pronounced decreases in GDP, oil revenues, and general economic performance. Governance, marked by low political stability and fragile institutional frameworks, intensifies the adverse impacts of terrorism, obstructing economic development. The research underscores the necessity of diversifying Iraq's economy beyond oil reliance and tackling income disparity to promote sustained stability and progress. The findings provide critical insights for policymakers, highlighting the necessity for extensive reforms that enhance governance, mitigate terrorism, and foster sustainable economic development in Iraq.