International Terrorism

The World Economy (2008) doi: 10.1111/j.1467-9701.2007.01089.x

G. BIRD, International Original S. XXX © 2008 Articles 0378-5920 Terrorism World UK Author BLOMBERG AND © D. HESS TWECEconomy Oxford, The BROCKJournal compilation G. Blackwell Publishers Ltd. 2008 Blackwell Publishing Ltd

International Terrorism: Causes, Consequences and Cures
Graham Bird 1, S. Brock Blomberg2 and Gregory D. Hess 2
1

University of Surrey, UK, and 2 Claremont McKenna College, USA

1. INTRODUCTION

T

HERE can be little doubt that a complete understanding of international terrorism requires a multidisciplinary approach. Individual disciplines such as psychology, sociology, political science, international relations and religious studies can all make important contributions. Having said this, international terrorism has also been receiving closer attention from economists, and it is from this perspective that we examine it in this paper. What are the trends in terrorism? What causes it? What are the consequences? And what may be done to abate it? It may be helpful to organise our discussion of these questions around the views of the typical ‘person in the street’ (the PITS). Although not based on a scientific study, we characterise this view in the following way. The PITS view is that terrorism is on the increase; that it is undertaken by extremists who are often religiously motivated; that it has important adverse economic consequences; and that, to paraphrase Tony Blair’s statement about crime when he was the UK’s shadow Home Secretary, policy needs to be ‘tough on terrorism’ and ‘tough on the causes of terrorism’. The remainder of this paper assesses the accuracy of the PITS view. The paper is structured as follows. Section 2 examines trends in terrorism and the general perception that it is increasing. Section 3 investigates the geographical distribution of terrorist incidents. Section 4 constructs a simple theory of terrorism building on the existing literature, and

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