Terrorism Networks and Trade: Does the Neighbor Hurt?
In this paper, we study the impact of transnational terrorism diffusion on security and trade. We set up a simple theoretical model predicting that the closer a country is to a source of terrorism, the higher the negative spillovers on its trade. The idea is that security measures, which impede trade, are directed both against the source country of terror and its neighbor countries where terrorism may diffuse. In contrast, we demonstrate that countries located far rom terror could benefit from an increase in security by trading more. Taken to the test, we empirically document these predictions. We find (1) a direct negative impact of transnational terrorism on trade; (2) an indirect negative impact emanating from terrorism of neighbor countries; and (3) that trade is increasing with remoteness to terror. These results are robust to various definitions of the neighboring relationships among countries.
|Date of creation:||Aug 2010|
|Contact details of provider:|| Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.|
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
|Order Information:|| Email: |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- S. Brock Blomberg & Gregory D. Hess, 2006.
"How Much Does Violence Tax Trade?,"
The Review of Economics and Statistics,
MIT Press, vol. 88(4), pages 599-612, November.
- Daniel Mirza & Thierry Verdier, 2008.
"International trade, security and transnational terrorism: Theory and a survey of empirics,"
- 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.
- James E. Anderson & Douglas Marcouiller, 1997.
"Trade and Security,I: Anarchy,"
NBER Working Papers
6223, National Bureau of Economic Research, Inc.
- Robert C. Feenstra & John Romalis & Peter K. Schott, 2002. "U.S. Imports, Exports, and Tariff Data, 1989-2001," NBER Working Papers 9387, National Bureau of Economic Research, Inc.
- James E. Anderson & Yoto V. Yotov, 2010.
"The Changing Incidence of Geography,"
American Economic Review,
American Economic Association, vol. 100(5), pages 2157-2186, December.
- James E. Anderson & Yoto V. Yotov, 2008. "The Changing Incidence of Geography," NBER Working Papers 14423, National Bureau of Economic Research, Inc.
- James E. Anderson & Yoto V. Yotov, 2008. "The Changing Incidence of Geography," Boston College Working Papers in Economics 698, Boston College Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:7946. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.