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Understanding Terrorism from an Economic perspective


  • Haldar, Tanushree


Terrorism has emerged as a major threat to the contemporary society. Nation States are reliant on their counter-terrorism laws for checking terrorism and deterring terrorists. To understand the effectiveness of these counter terrorism laws, it is important to first understand the behaviour of terrorists, so as to comprehend what actions can dissuade terrorist’s behaviour and decision to propagate violence. This paper will first look at behaviour of terrorist in decision making from an economic perspective, then will try to explore if there are any economic determinant of terrorism and finally, since the cost of terrorism is huge in terms of life, property etc, will discuss the status of counter-terrorism legislations in India. In the study it has been shown that terrorists are rational in decision making. It has also been found that economic determinants are not significant in determining terrorism; however, to a certain extent education does have a positive relation with participation in terrorism. Terrorism has huge cost, and hence it is essential to have counter-terrorist legislations. These legislations provides power to the state to deny operating space to terrorists and their supporters, deter them from carrying out terrorist acts, ensure the basic rights of the people, and uphold the Fundamental Rights enshrined in the Constitution.

Suggested Citation

  • Haldar, Tanushree, 2013. "Understanding Terrorism from an Economic perspective," MPRA Paper 47152, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:47152

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    References listed on IDEAS

    1. S. Brock Blomberg & Gregory D. Hess & Akila Weerapana, 2004. "An Economic Model of Terrorism," Conflict Management and Peace Science, Peace Science Society (International), vol. 21(1), pages 17-28, February.
    2. Alberto Abadie, 2006. "Poverty, Political Freedom, and the Roots of Terrorism," American Economic Review, American Economic Association, vol. 96(2), pages 50-56, May.
    3. Alan B. Krueger & Jörn-Steffen Pischke, 1997. "A Statistical Analysis of Crime against Foreigners in Unified Germany," Journal of Human Resources, University of Wisconsin Press, vol. 32(1), pages 182-209.
    4. Efraim Benmelech & Claude Berrebi, 2007. "Human Capital and the Productivity of Suicide Bombers," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 223-238, Summer.
    5. 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.
    6. Sandler, Todd & Enders, Walter, 2004. "An economic perspective on transnational terrorism," European Journal of Political Economy, Elsevier, vol. 20(2), pages 301-316, June.
    7. Bryan Caplan, 2006. "Terrorism: The relevance of the rational choice model," Public Choice, Springer, vol. 128(1), pages 91-107, July.
    8. Cauley, Jon & Im, Eric Iksoon, 1988. "Intervention Policy Analysis of Skyjackings and Other Terrorist Incidents," American Economic Review, American Economic Association, vol. 78(2), pages 27-31, May.
    9. Bruno S. Frey & Simon Luechinger, 2007. "Terrorism: Considering New Policies," Chapters,in: The Economic Costs and Consequences of Terrorism, chapter 2 Edward Elgar Publishing.
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    More about this item


    Terrorism; Terrorist behaviour; Rational behaviour; Economic determinants of terrorism; Counter-terrorism laws; Deterrence.;

    JEL classification:

    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • K49 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Other

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