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International Terrorism, Political Instability and the Escalation Effect

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  • Campos, Nauro F.
  • Gassebner, Martin

Abstract

What are the main causes of international terrorism? The lessons from the surge of academic research that followed 9/11 remain elusive. The careful investigation of the relative roles of economic and political conditions did little to change the fact that existing econometric estimates diverge in size, sign and significance. In this paper we present a new rationale (the escalation effect) stressing domestic political instability as the main reason for international terrorism. Econometric evidence from a panel of more than 130 countries (yearly from 1968 to 2003) shows this to be a much more promising avenue for future research than the available alternatives.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7226.

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Date of creation: Mar 2009
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Handle: RePEc:cpr:ceprdp:7226

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Keywords: escalation; international terrorism; political instability; terrorism;

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References

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  1. Nauro F. Campos & Jeffrey B. Nugent, 2000. "Who is Afraid of Political Instability?," William Davidson Institute Working Papers Series 326, William Davidson Institute at the University of Michigan.
  2. Guimarães, Paulo, 2008. "The fixed effects negative binomial model revisited," Economics Letters, Elsevier, vol. 99(1), pages 63-66, April.
  3. Alberto Abadie, 2004. "Poverty, Political Freedom, and the Roots of Terrorism," NBER Working Papers 10859, National Bureau of Economic Research, Inc.
  4. Dreher, Axel & Gassebner, Martin, 2008. "Does political proximity to the U.S. cause terror?," Economics Letters, Elsevier, vol. 99(1), pages 27-29, April.
  5. Paul Collier & Anke Hoeffler, 2004. "Greed and Grievance in Civil War," Development and Comp Systems 0409007, EconWPA.
  6. Axel Dreher & Justina A. V. Fischer, 2008. "Decentralization as a disincentive for transnational terror? An empirical test," KOF Working papers 08-185, KOF Swiss Economic Institute, ETH Zurich.
  7. Chamberlain, Gary, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 225-38, January.
  8. Atin Basuchoudhary & William Shughart, 2010. "On Ethnic Conflict And The Origins Of Transnational Terrorism," Defence and Peace Economics, Taylor & Francis Journals, vol. 21(1), pages 65-87.
  9. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
  10. Azam, Jean-Paul & Delacroix, Alexandra, 2004. "Aid and the Delegated Fight against Terrorism," IDEI Working Papers 324, Institut d'Économie Industrielle (IDEI), Toulouse, revised Jul 2005.
  11. Blomberg, S. Brock & Hess, Gregory D. & Weerapana, Akila, 2004. "Economic conditions and terrorism," European Journal of Political Economy, Elsevier, vol. 20(2), pages 463-478, June.
  12. Peter Kurrild-Klitgaard & Mogens Justesen & Robert Klemmensen, 2006. "The political economy of freedom, democracy and transnational terrorism," Public Choice, Springer, vol. 128(1), pages 289-315, July.
  13. Bruno S. Frey & Simon Luechinger & Alois Stutzer, 2004. "Calculating Tragedy: Assessing the Costs of Terrorism," CESifo Working Paper Series 1341, CESifo Group Munich.
  14. Azam, Jean-Paul & Thelen, Véronique, 2007. "The Roles of Foreign Aid and Education in the War on Terror," IDEI Working Papers 449, Institut d'Économie Industrielle (IDEI), Toulouse.
  15. Llussá, Fernanda & Tavares, José, 2007. "Economics and Terrorism: What We Know, What We Should Know and the Data We Need," CEPR Discussion Papers 6509, C.E.P.R. Discussion Papers.
  16. Tavares, Jose, 2004. "The open society assesses its enemies: shocks, disasters and terrorist attacks," Journal of Monetary Economics, Elsevier, vol. 51(5), pages 1039-1070, July.
  17. Eli Berman & David D. Laitin, 2008. "Religion, Terrorism and Public Goods: Testing the Club Model," NBER Working Papers 13725, National Bureau of Economic Research, Inc.
  18. Bruno S. Frey & Simon Luechinger, . "How to Fight Terrorism: Alternatives to Deterrence," IEW - Working Papers 137, Institute for Empirical Research in Economics - University of Zurich.
  19. Enders, Walter, 2007. "Terrorism: An Empirical Analysis," Handbook of Defense Economics, Elsevier.
  20. Ana Bela Santos Bravo & Carlos Manuel Mendes Dias, 2006. "An Empirical Analysis Of Terrorism: Deprivation, Islamism And Geopolitical Factors," Defence and Peace Economics, Taylor & Francis Journals, vol. 17(4), pages 329-341.
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Citations

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Cited by:
  1. Kis-Katos, Krisztina & Liebert, Helge & Schulze, Günther G., 2012. "On the Heterogeneity of Terror," IZA Discussion Papers 6596, Institute for the Study of Labor (IZA).
  2. Friedrich Schneider & Tilman Brück & Daniel Meierrieks, 2011. "The Economics of Terrorism and Counter-Terrorism: A Survey (Part I)," Economics of Security Working Paper Series 44, DIW Berlin, German Institute for Economic Research.
  3. Martin Gassebner & Simon Luechinger, 2011. "Lock, Stock, and Barrel: A Comprehensive Assessment of the Determinants of Terror," CESifo Working Paper Series 3550, CESifo Group Munich.
  4. Azam, Jean-Paul & Thelen, Véronique, 2012. "Where to Spend Foreign Aid to Counter Terrorism," TSE Working Papers 12-316, Toulouse School of Economics (TSE).
  5. Axel Dreher & Andreas Fuchs, 2011. "Does terror increase aid?," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 86, Courant Research Centre PEG.
  6. Malik, Zahra & Zaman, Khalid, 2013. "Macroeconomic consequences of terrorism in Pakistan," Journal of Policy Modeling, Elsevier, vol. 35(6), pages 1103-1123.
  7. Dreher, Axel & Krieger, Tim & Meierrieks, Daniel, 2011. "Hit and (they will) run: The impact of terrorism on migration," Economics Letters, Elsevier, vol. 113(1), pages 42-46, October.

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