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Trade and the Spillovers of Transnational Terrorism

Author

Listed:
  • José de Sousa
  • Daniel Mirza
  • Thierry Verdier

Abstract

We examine the impact of transnational terrorism diffusion on security and international trade. To counter the diffusion of transnational terrorism, targeted governments implement security measures against countries where terror could potentially diffuse. Since security measures raise trade costs, we argue that countries, close enough to those from where terror originates, should experience negative spillovers on their trade. We find evidence for this hypothesis in our data. We show that the closer a country is to a source of terrorism, the higher the negative spillovers on its trade.

Suggested Citation

  • José de Sousa & Daniel Mirza & Thierry Verdier, 2009. "Trade and the Spillovers of Transnational Terrorism," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 145(IV), pages 453-461, December.
  • Handle: RePEc:ses:arsjes:2009-iv-7
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    File URL: http://www.sjes.ch/papers/2009-IV-7.pdf
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    References listed on IDEAS

    as
    1. Anne-Célia Disdier & Keith Head, 2008. "The Puzzling Persistence of the Distance Effect on Bilateral Trade," The Review of Economics and Statistics, MIT Press, vol. 90(1), pages 37-48, February.
    2. Mirza, Daniel & Verdier, Thierry, 2008. "International trade, security and transnational terrorism: Theory and a survey of empirics," Journal of Comparative Economics, Elsevier, vol. 36(2), pages 179-194, June.
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    Citations

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    Cited by:

    1. Sami Bensassi & Inmaculada Martínez-Zarzoso, 2012. "How Costly is Modern Maritime Piracy to the International Community?," Review of International Economics, Wiley Blackwell, vol. 20(5), pages 869-883, November.
    2. Alice Y. Ouyang & Ramkishen S. Rajan, 2017. "Impact of Terrorism on Cross-Border Mergers and Acquisitions (M&As): Prevalence, Frequency and Intensity," Open Economies Review, Springer, vol. 28(1), pages 79-106, February.
    3. Simplice A. Asongu & Jacinta C. Nwachukwu, 2016. "Conditional linkages between iron ore exports, foreign aid and terrorism," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 29(2), pages 57-70, December.
    4. Peter Egger & Martin Gassebner, 2015. "International terrorism as a trade impediment?," Oxford Economic Papers, Oxford University Press, vol. 67(1), pages 42-62.
    5. Bandyopadhyay, Subhayu & Sandler, Todd & Younas, Javed, 2016. "Trade and Terrorism: A Disaggregated Approach," Working Papers 2016-1, Federal Reserve Bank of St. Louis, revised 30 Jan 2017.
    6. Bassil Charbel, 2013. "Macroeconomic Consequences of War and Terrorism in Lebanon," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 19(3), pages 415-429, December.
    7. Pham, Cong S. & Doucouliagos, Chris, 2017. "An Injury to One Is an Injury to All: Terrorism's Spillover Effects on Bilateral Trade," IZA Discussion Papers 10859, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    Terrorism; trade; security;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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