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International Terrorism, Political Instability and the Escalation Effect

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Author Info
Campos, Nauro F. () (Brunel University)
Gassebner, Martin () (ETH Zurich)

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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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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4061.

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Length: 43 pages
Date of creation: Mar 2009
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Handle: RePEc:iza:izadps:dp4061

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

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Find related papers by JEL classification:
C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
F59 - International Economics - - International Relations and International Political Economy - - - Other
H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
P48 - Economic Systems - - Other Economic Systems - - - Other Economic Systems: Political Economy; Legal Institutions; Property Rights

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References listed on IDEAS
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  1. Bruno S. Frey & Simon Luechinger, . "How to Fight Terrorism: Alternatives to Deterrence," IEW - Working Papers iewwp137, Institute for Empirical Research in Economics - IEW. [Downloadable!]
  2. 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. [Downloadable!] (restricted)
  3. 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. [Downloadable!]
    Other versions:
  4. Enders, Walter, 2007. "Terrorism: An Empirical Analysis," Handbook of Defense Economics, Elsevier. [Downloadable!] (restricted)
  5. 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. [Downloadable!] (restricted)
  6. Jean-Paul Azam & Alexandra Delacroix, 2006. "Aid and the Delegated Fight Against Terrorism," Review of Development Economics, Blackwell Publishing, vol. 10(2), pages 330-344, 05. [Downloadable!] (restricted)
  7. Dreher, Axel & Gassebner, Martin, 2008. "Does political proximity to the U.S. cause terror?," Economics Letters, Elsevier, vol. 99(1), pages 27-29, April. [Downloadable!] (restricted)
  8. Ana Bela Santos Bravo & Carlos Manuel Mendes Dias, 2006. "An Empirical Analysis Of Terrorism: Deprivation, Islamism And Geopolitical Factors," Defence and Peace Economics, Taylor and Francis Journals, vol. 17(4), pages 329-341, August. [Downloadable!] (restricted)
  9. Chamberlain, Gary, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Blackwell Publishing, vol. 47(1), pages 225-38, January. [Downloadable!] (restricted)
  10. Paul Collier & Anke Hoeffler, 2004. "Greed and Grievance in Civil War," Development and Comp Systems 0409007, EconWPA. [Downloadable!]
    Other versions:
  11. Bruno S. Frey & Simon Luechinger & Alois Stutzer, 2007. "Calculating Tragedy: Assessing The Costs Of Terrorism," Journal of Economic Surveys, Blackwell Publishing, vol. 21(1), pages 1-24, 02. [Downloadable!] (restricted)
    Other versions:
  12. Campos, Nauro F. & Nugent, Jeffrey B., 2002. "Who is afraid of political instability?," Journal of Development Economics, Elsevier, vol. 67(1), pages 157-172, February. [Downloadable!] (restricted)
    Other versions:
  13. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July. [Downloadable!] (restricted)
  14. 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. [Downloadable!] (restricted)
  15. Guimarães, Paulo, 2008. "The fixed effects negative binomial model revisited," Economics Letters, Elsevier, vol. 99(1), pages 63-66, April. [Downloadable!] (restricted)
  16. Alberto Abadie, 2006. "Poverty, Political Freedom, and the Roots of Terrorism," American Economic Review, American Economic Association, vol. 96(2), pages 50-56, May. [Downloadable!]
    Other versions:
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