Economy

This paper examined the question whether economic deprivation leads to terrorism in Nigeria. The study covered the period 1970 to 2012. It employed the econometric methodology of vector error correction model and testing the results using stationarity test and co-integration. The Ordinary Least Square (OLS) estimation method was used as an essential component of the estimation techniques. The results show that government expenditure has a significant inverse relationship with terrorism while the degree of openness of the economy, GDP per capita, interest rate and macroeconomic policy index have positive relationships with the occurrence of terrorism both in the long run and short run. Some key policy implication of these results are that the rapid economic growth experienced by Nigeria should be made to show improvements in social welfare and macroeconomic policy inconsistencies should be minimized. Similarly, policy reversalsshould be properly checked for both short and long run effects on the economy.