NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Does Poverty Cause Terrorism?

"Countries in an intermediate range of political rights experience a greater risk of terrorism than countries either with a very high degree of political rights or than severely authoritarian countries with very low levels of political rights."

After the terrorist attacks of September 11, 2001, politicians and policy experts drew a quick and intuitive line between terrorism and poverty. Much of the existing academic literature on conflict suggested that poverty increased the likelihood of political coups and civil war, so conflating terrorism with poor economic conditions seemed logical. Indeed, just a few weeks following 9/11, then U.S. Trade Representative Robert Zoellick spoke out on the need to liberalize international trade -- and thus reduce poverty -- as a means to fight terrorism.

In Poverty, Political Freedom, and the Roots of Terrorism (NBER Working Paper No. 10859) Alberto Abadie explores this link in greater detail and finds that the risk of terrorism is not significantly higher for poorer countries, once other country-specific characteristics are considered. In particular, Abadie finds that a country's level of political freedom better explains the presence of terrorism.

Unlike other recent studies on the causes of terrorism, Abadie's work explores not only transnational instances of terrorism but also domestic ones. This difference is telling: In 2003, the MIPT Terrorism Knowledge Base reported only 240 cases of transnational terrorism compared to 1,536 instances of domestic terrorism. Furthermore, Abadie suggests that the determinants of transnational and domestic terrorism may differ. "Much of modern-day transnational terrorism seems to generate from grievances against rich countries," he writes. "In addition, in some cases terrorist groups may decide to attack property or nationals of rich countries in order to gain international publicity. As a result, transnational terrorism may predominantly affect rich countries. The same is not necessarily true for domestic terrorism."

While many studies have relied on measures of terrorism-related casualties or terrorist incidences as a proxy for the risk of terrorism, Abadie uses country-level ratings on terrorist risk from the Gglobal Tterrorism Iindex of the World Market Research Center, an international risk-rating agency. The index assesses terrorism risk in 186 countries and territories. In order to measure poverty, Abadie uses World Bank data on per capita gross domestic product as well as the United Nations Human Development Index and or the Gini coefficient (a measure of country-level income inequality). He also uses Freedom House's political rights index as a measure of country-level political freedom and employs measures of linguistic, ethnic, and religious fractionalization. Finally, he includes data on climate and geography, since it is well known that certain geographic characteristics -- such as being land-locked or in an area that is difficult to access -- may offer safe haven to terrorist groups and facilitate training.

After controlling for the level of political rights, fractionalization, and geography, Abadie concludes that per capita national income is not significantly associated with terrorism. He finds, though, that lower levels of political rights are linked to higher levels of terrorism countries with the highest levels of political rights are also the countries that suffer the lowest levels of terrorism. However, the relationship between the level of political rights and terrorism is not a simple linear one. Countries in an intermediate range of political rights experience a greater risk of terrorism than countries either with a very high degree of political rights or than severely authoritarian countries with very low levels of political rights.

Why this relationship? Abadie offers two possibilities. "On the one hand, the repressive practices commonly adopted by autocratic regimes to eliminate political dissent may help [keep] terrorism at bay," he explains. "On the other hand, intermediate levels of political freedom are often experienced during times of political transitions, when governments are weak, political instability is elevated, so conditions are favorable for the appearance of terrorism." Finally, this study reveals that geographic factors -- such as measures of average elevation, tropical weather, and country area -- are also powerful predictors of terrorism

-- Carlos Lozada


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