Thirty Years of Conflict and Economic Growth in Turkey: A Synthetic Control Approach

Bilgel, Firat and Burhan Can Karahasan (2018). Defence and Peace Economics


The Kurdistan Worker’s Party (PKK) is a militant and political organization with roots in Turkey and Iraq. PKK separatist terrorism has impacted economic development in Turkey. Over the period 1955­–2008, it is estimated that, had the country not been exposed to terrorism, per capita GDP would have been higher by about $2,600 a year—a total increase of about 21.4 percent over the time period.

Social scientists have studied the relationship between political conflict and economic development for decades. Terrorism is one aspect of political conflict that impairs economic development. Economic losses resulting from terrorism can be seen in declining tourism revenues, increased economic uncertainty, and loss of active population due to military conscription.

Through comparing the growth in GDP of countries similar to Turkey, it is possible to develop a “synthetic” GDP—a prediction of what Turkey’s GDP would have looked like without exposure to terrorism. This synthetic, or predicted, GDP closely follows Turkey’s actual GDP until the outbreak of PKK terrorism. However, after the outbreak of PKK terrorism, Turkey’s actual GDP begins to lag behind the predicted GDP.

The size of the economic cost of terrorism for Turkey is substantial. It is important for social and political measures to focus on bringing an end to conflict. Prior peace attempts have brought stability, but without full commitment to these measures, each peace phase ends with a progression of violence and instability, while prosperity and economic development remain behind.