Terrorism is the use of force or violence against persons or property for the purpose of intimidation, coercion, or ransom. Terrorists often use violence and threats to create fear among the public, to try to convince people that their government is powerless to prevent acts of terrorism, and to get immediate publicity for their causes. Acts of terrorism can range from threats to actual assassinations, kidnappings, airline hijackings, bomb scares, car bombs, building explosions, mailings of dangerous materials, agro-terrorism, computer-based attacks, and the use of chemical, biological, and nuclear weapons-weapons of mass destruction (WMD). In addition to the natural and technological hazards, people face threats of terrorism posed by extremist groups, individuals, and hostile governments. Terrorists can be domestic or foreign, and their threats to people, communities, and the nation range from isolated acts of terrorism to acts of war.
Causes and effects of Terrorism
The widespread view that poverty creates terrorism has dominated much of this debate (see, for example, Kahn and Weiner, 2002). This is hardly surprising. After all, the notion that poverty generates terrorism is consistent with the results of most of the existing literature on the economics of conflicts. In particular, the results in Alesina et al (1996) suggest that poor economic conditions increase the probability of political coups. Collier and Hoeffer (2004) show that economic variables are powerful predictors of civil war, while political variables have low explanatory power. Miguel, Satyanath, and Sergenti (2004) show that, for a sample of African countries, negative exogenous shocks in economic growth increase the likelihood of civil conflict. Because terrorism is a manifestation of political conflict, these results seem to indicate that poverty and adverse economic conditions may play an important role explaining terrorism. However, recent empirical studies have challenged the view that poverty creates terror-ism. Using U.S. State Department data on transnational terrorist attacks, Krueger and Laitin (2003) and Piazza (2004) find no evidence suggesting that poverty may generate terrorism. In particular, the results in Krueger and Laitin (2003) suggest that among countries with similar levels of civil liberties, poor countries do not generate more terrorism than rich countries. Conversely, among countries with similar levels of civil liberties, richer countries seem to be preferred targets for transnational terrorist attacks. Finally, because terrorism may in turn affect economic prosperity (see, e.g., Abadie and Gardeazabal, 2003; Frey, Luechinger and Stutzer, 2004) the observed correlation between terrorism and national income can be interpreted as a measure of the magnitude of the effect of economic variables on terrorism.
As in the Krueger and Laitin (2003) and Piazza (2003) articles, most studies on the causes and effects of terrorism have relied on measures of terrorist casualties or terrorist incidents as proxies for the level of terrorist risk. Frey (2004) and others have recently questioned the quality and adequacy of the available data on terrorist casualties and incidents. The measure of terrorism intensity comes from country-level ratings on terrorist risk from an international risk rating agency. Risk ratings are used by international investors to evaluate specific types of country risks. Terrorist risk ratings have obvious limitations. They provide only a summary measure of an intrinsically complex phenomenon. However, they have the advantage of reflecting directly the total amount of terrorist risk for every country in the world. The analysis of risk rating data presented in this article validates the findings in Krueger and Laitin (2003) and Piazza (2004) and produces a number of new results. The empirical results show that terrorist risk is not significantly higher for poorer countries, once the effects of other country-specific characteristics such as the level of political freedom are taken into account. In contrast with the results for civil wars in Collier and Hoeffler (2004), lack of political freedom is shown to explain terrorism. Over most of the range of the political rights factors, lower levels of political rights are associated with higher levels of terrorism. However, highly authoritarian countries experience lower terrorist risk than countries in some intermediate range of political rights. The non-monotonic nature of the relationship between political rights and terrorism can be interpreted in different ways. On the one hand, the repressive practices commonly adopted by autocratic regimes to eliminate political dissent may help keeping terrorism at bay. 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. As such, countries with intermediate levels of political freedom are shown to be more prone to terrorism than countries with high levels of political freedom or countries with highly authoritarian regimes. This result suggests that, as experienced recently in Iraq and previously in Spain and Russia, transitions from an authoritarian regime to a democracy may be accompanied by temporary increases in terrorism. In Spain, for example, the number of deaths caused by terrorism increased sharply in the late 1970's, with the beginning of the democratic transition, and decreased gradually afterwards( see Abadie and Gardeazabal, 2003).
Geographic factors may be important in sustaining terrorism. Geographic variables include measures of country land area, average elevation, fraction of the country area in tropical climate, and landlock. It is well-known that certain geographic characteristics may favor terrorist activities. First of all, areas of difficult access offer safe haven to terrorist groups, facilitate training, and provide funding through other illegal activities, like the production and trafficking of cocaine and opiates. Failure to eradicate terrorism in some areas of the world has often been attributed to geographic barriers, like mountainous terrain (e.g., Afghanistan) or tropical jungle (e.g., Colombia). In addition, large countries tend to generate centrifugal pressures, include disaffected minorities, and accumulate grievances. However, the identity of the determinants of international terrorism is not necessarily informative about the identity of the determinants of domestic terrorism.
Much of modern-day transnational terrorism seems to generate from grievances against rich countries. 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. Stable and well developed democracies may not face a serious threat from internally generated terrorism, but external intervention or political, economic and cultural presence may provoke terrorism from outside as was the case with 9/11 in the United States. Thus a state's susceptibility to terrorism is determined not just by how it treats its citizens at home but by its actions abroad. When their actions lack international legitimacy and local populations perceive them as unjust, radical groups come to see terrorism as an appropriate response. The terrorist acts aimed against the unfair invasion of Iraq by some Western powers provide an instructive example.
Terrorism is often designed to disrupt and discredit the processes of government by weakening it administratively and impairing normal operations. Terrorism is a direct attack on the regime aims at the insecurity and demoralization of government officials. This form of terrorism often accompanies rural guerilla warfare, as the insurgents try to weaken the government's control over its territory. Terrorism also affects public attitudes in both a positive and a negative sense, aiming at creating either sympathy in a potential consistency or fear and hostility in an audience identified as the enemy. At the same time terrorism may be used to enforce obedience in an audience from whom the terrorists demand allegiance. The FLN in Algeria, for example, claimed more Algerian than French victims (Crenshaw), 1981). When terrorism is part of a struggle between incumbents and challenges, polarization of public opinion undermines the government legitimacy. Terrorism may also be intended to provoke a counteraction from the government, to increase publicity for terrorists cause and to demonstrate to the people that their charges against the regime are well founded. The terrorists mean to force the state to show its true repressive face, thereby driving the people into the arms of the challengers. Provocative terrorism is designed to bring about revolutionary conditions rather than to exploit them. The Palestinians against Israel, and the RAF against the Federal Republic all appear to have used terrorism as provocation. In addition, terrorism may serve internal organizational functions of control, discipline and morale building within the terrorist group and even become an instrument of rivalry among factions in a resistance movement (Crenshaw, 1981).. Rival groups have competed in a vicious game where victims are civilians or anonymous airline passengers, but where the immediate goal is influence within the resistance movement rather the intimidation of the public or international recognition of the group's cause.
There is a significant association between terrorism and economic variables such as income once the effect of other country characteristics is taken into account. However economic factors may cause terrorism, but also terrorism may affect economic prosperity. Results also suggest, that political freedom has a non-monotonic effect on terrorism. This result is consistent with the observed increase in terrorism for countries in transition from authoritarian regimes to democracies. In addition, the results show that certain geographic characteristics may favor the presence of terrorism. In conclusion, we see that terrorism is an attractive strategy to groups of different ideological persuasions who challenge the state's authority. Groups who want to dramatize a cause, to demoralize the government, to gain popular support, to provoke regime violence, to inspire followers or to dominate a wider resistance movement, who are impatient to act, often find terrorism a reasonable choice. This is especially so when conditions are favourable, providing opportunities and making terrorism a simple and rapid option with immediate payoff.