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Terrorism From Within: An Economic Model of Terrorism

Author

Listed:
  • S. Brock Blomberg

    (Wellesley College)

  • Gregory D. Hess

    (Claremont McKenna College)

  • Akila Weerapana

    (Wellesley College)

Abstract

In this paper, we develop and explore the implications of an economic model that links the incidence of terrorism in a country to the economic circumstances facing that country. We briefly sketch out a theory, in the spirit of Tornell (1998), that describes terrorist activities as being initiated by groups that are unhappy with the current economic status quo, yet unable to bring about drastic political and institutional changes that can improve their situation. Such groups with limited access to opportunity may find it rational to engage in terrorist activities. The result is then a pattern of reduced economic activity and increased terrorism. In contrast, an alternative environment can emerge where access to economic resources is more abundant and terrorism is reduced. Our empirical results are consistent with the theory. We find that for democratic, high income countries, economic contractions (i.e. recessions) can provide the spark for increased probabilities of terrorist activities.

Suggested Citation

  • S. Brock Blomberg & Gregory D. Hess & Akila Weerapana, 2002. "Terrorism From Within: An Economic Model of Terrorism," Claremont Colleges Working Papers 2002-14, Claremont Colleges.
  • Handle: RePEc:clm:clmeco:2002-14
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    File URL: http://www.claremontmckenna.edu/rdschool/papers/2002-14.pdf
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    References listed on IDEAS

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    1. Lapan, Harvey E. & Sandler, Todd, 1993. "Terrorism and signalling," European Journal of Political Economy, Elsevier, vol. 9(3), pages 383-397, August.
    2. Lapan, Harvey E & Sandler, Todd, 1988. "To Bargain or Not to Bargain: That Is the Question," American Economic Review, American Economic Association, pages 16-21.
    3. Todd Sandler & Håvard Hegre, 2002. "Economic analysis of civil wars," Defence and Peace Economics, Taylor & Francis Journals, vol. 13(6), pages 429-433.
    4. Aaron Tornell, 1998. "Reform from Within," NBER Working Papers 6497, National Bureau of Economic Research, Inc.
    5. S. Brock Blomberg & Gregory D. Hess, 2002. "The Temporal Links between Conflict and Economic Activity," Journal of Conflict Resolution, Peace Science Society (International), vol. 46(1), pages 74-90, February.
    6. Hess, Gregory D & Orphanides, Athanasios, 1995. "War Politics: An Economic, Rational-Voter Framework," American Economic Review, American Economic Association, vol. 85(4), pages 828-846, September.
    7. Enders, Walter & Sandler, Todd & Parise, Gerald F, 1992. "An Econometric Analysis of the Impact of Terrorism on Tourism," Kyklos, Wiley Blackwell, vol. 45(4), pages 531-554.
    8. repec:cup:apsrev:v:80:y:1986:i:02:p:541-566_18 is not listed on IDEAS
    9. Grossman, Herschel I, 1991. "A General Equilibrium Model of Insurrections," American Economic Review, American Economic Association, vol. 81(4), pages 912-921, September.
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    Cited by:

    1. Edna Carolina Sastoque Ramírez & Mario García Molina, 2007. "Pasiones e intereses: las causas de la guerra civil de 1876-1877 en el Estado Soberano de Santander," DOCUMENTOS DE TRABAJO UEC 003962, UNIVERSIDAD EXTERNADO DE COLOMBIA.
    2. Tilman Brück & Bengt-Arne Wickström, 2004. "The Economic Consequences of Terror: A Brief Survey," HiCN Working Papers 03, Households in Conflict Network.
    3. Shahbaz, Muhammad, 2013. "Linkages between inflation, economic growth and terrorism in Pakistan," Economic Modelling, Elsevier, vol. 32(C), pages 496-506.
    4. Tim Krieger & Daniel Meierrieks, 2011. "What causes terrorism?," Public Choice, Springer, vol. 147(1), pages 3-27, April.
    5. Donato Masciandaro, 2008. "Offshore financial centres: the political economy of regulation," European Journal of Law and Economics, Springer, vol. 26(3), pages 307-340, December.
    6. Shahbaz, Muhammad & Shabbir, Shahbaz Muhammad, 2011. "Is hike in inflation responsible for rise in terrorism in Pakistan?," MPRA Paper 31236, University Library of Munich, Germany, revised 29 May 2011.

    More about this item

    Keywords

    Growth; Terrorism; Political Economy;

    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H8 - Public Economics - - Miscellaneous Issues

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