Does Terrorism Have Economic Roots?

This paper investigates the roots of international, domestic, and separatist terrorism using a new, extensive, multi-country panel data set obtained from MIPT (Memorial Institute of Prevention of Terrorism). I augment the MIPT data by recording the target country and the terrorist's country of origin. I also classify each terrorist incident as international, domestic or separatist. International terrorism refers to terrorism committed by foreign nationals. Domestic terrorism refers to terrorism committed by domestic nationals. Separatist terrorism is committed by domestic nationals engaged in separatist causes. Using a panel data analysis with country fixed effects, I find striking results at considerable odds with the literature. Whereas the previous literature finds that terrorism is unrelated to economic conditions, I find that the richer the country, the fewer the terrorist attacks committed abroad by the country's nationals. Similarly, I find that when a country is richer, the country's nationals commit fewer terrorist attacks at home. I build an entirely new data set with regional GDP of separatist regions and find that the higher the GDP of the separatist region, the fewer the terrorist attacks committed by native separatists.