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The (Hidden) Financial Flows of Terrorist and Transnational Crime Organizations: A Literature Review and Some Preliminary Empirical Results

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Author Info

  • Friedrich Schneider
  • Raul Caruso

Abstract

The financial means of international terror and transnational organized crime organizations are analyzed. First, some short remarks about the organization of international terror organizations are made. Second and in a much more detailed way a literature review is provided about the financing of terrorist and transnational organized crime organizations, their sources and the various methods they use. Third, an attempt is made to estimate the financial means of terror organizations with the help of a latent estimation approach (MIMIC procedure). The figures show that Al Qaeda and other terror organizations have sufficient financial means. Fourth, some remarks are made about the negative effects of terror on the economy in highly developed countries and some strategies are presented to combat (the financing) of terrorism.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.386645.de/diw_econsec0052.pdf
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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Economics of Security Working Paper Series with number 52.

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Length: 34 p.
Date of creation: 2011
Date of revision:
Handle: RePEc:diw:diweos:diweos52

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Related research

Keywords: Financial flows of terrorist organizations; financial flows of transnational organized crime; Hawala banking; money laundering; transnational organized crime; terrorist organizations; kinds of terrorist financing;

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References

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  1. Bruno S. Frey & Simon Luechinger & Alois Stutzer, . "Calculating Tragedy: Assessing the Costs of Terrorism," IEW - Working Papers 205, Institute for Empirical Research in Economics - University of Zurich.
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  3. John Page & Sonia Plaza, 2006. "Migration Remittances and Development: A Review of Global Evidence," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 15(2), pages 245-336, December.
  4. Freytag, Andreas & Krüger, Jens J. & Meierrieks, Daniel & Schneider, Friedrich, 2011. "The origins of terrorism: Cross-country estimates of socio-economic determinants of terrorism," European Journal of Political Economy, Elsevier, vol. 27(S1), pages S5-S16.
  5. Gould, Eric D. & Stecklov, Guy, 2009. "Terror and the Costs of Crime," CEPR Discussion Papers 7181, C.E.P.R. Discussion Papers.
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  7. Alan B. Krueger & Jitka Maleckova, 2003. "Education, Poverty and Terrorism: Is There a Causal Connection?," Journal of Economic Perspectives, American Economic Association, vol. 17(4), pages 119-144, Fall.
  8. Abadie, Alberto, 2004. "Poverty, Political Freedom, and the Roots of Terrorism," Working Paper Series rwp04-043, Harvard University, John F. Kennedy School of Government.
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  10. Kaul, Inge & Conceicao, Pedro & Le Goulven, Katell & Mendoza, Ronald U. (ed.), 2003. "Providing Global Public Goods: Managing Globalization," OUP Catalogue, Oxford University Press, number 9780195157413, September.
  11. Pierre-Emmanuel Ly, 2007. "The charitable activities of terrorist organizations," Public Choice, Springer, vol. 131(1), pages 177-195, April.
  12. Friedrich Schneider, 2004. "Shadow Economies around the World: What do we really know?," IAW Discussion Papers 16, Institut für Angewandte Wirtschaftsforschung (IAW).
  13. Vito Tanzi, 1996. "Money Laundering and the International Financial System," IMF Working Papers 96/55, International Monetary Fund.
  14. Friedrich Schneider & Ursula Windischbauer, 2008. "Money laundering: some facts," European Journal of Law and Economics, Springer, vol. 26(3), pages 387-404, December.
  15. Drakos, Konstantinos & Kutan, Ali M., 2001. "Regional effects of terrorism on tourism: Evidence from three Mediterranean countries," ZEI Working Papers B 26-2001, ZEI - Center for European Integration Studies, University of Bonn.
  16. Abadie, Alberto & Gardeazabal, Javier, 2005. "Terrorism and the World Economy," DFAEII Working Papers 2005-19, University of the Basque Country - Department of Foundations of Economic Analysis II.
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  21. Konstantinos Drakos, 2009. "Cross-Country Stock Market Reactions to Major Terror Events: The Role of Risk Perception," Economics of Security Working Paper Series 16, DIW Berlin, German Institute for Economic Research.
  22. 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.
  23. William Shughart, 2006. "An analytical history of terrorism, 1945–2000," Public Choice, Springer, vol. 128(1), pages 7-39, July.
  24. John Walker & Brigitte Unger, 2009. "Measuring Global Money Laundering: "The Walker Gravity Model"," Review of Law & Economics, De Gruyter, vol. 5(2), pages 2.
  25. Caruso, Raul & Schneider, Friedrich, 2009. "Al Qaeda and Jihadist Terrorism in the Light of Contest Theory, Empirical Evidence for the period 2004-2008," MPRA Paper 15856, University Library of Munich, Germany.
  26. Caruso, Raul & Schneider, Friedrich, 2011. "The socio-economic determinants of terrorism and political violence in Western Europe (1994–2007)," European Journal of Political Economy, Elsevier, vol. 27(S1), pages S37-S49.
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Cited by:
  1. repec:diw:diwdiw:diwepb17 is not listed on IDEAS
  2. Stefan Haigner & Friedrich Schneider & Florian Wakolbinger, 2012. "Combating Money Laundering and the Financing of Terrorism: A Survey," Economics of Security Working Paper Series 65, DIW Berlin, German Institute for Economic Research.
  3. Michael Brzoska & Raphael Bossong & Eric van Um, 2011. "Security Economics in the European Context: Implications of the EUSECON Project," Economics of Security Working Paper Series 58, DIW Berlin, German Institute for Economic Research.

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