Few events in history shape the way societies react to future anomalies, one such being, the attack on the Twin Towers in 2001.With this event followed a flurry of discussions on “Terrorism” in media, academia circles, and several other forums. The spill over effect was felt all across the globe in form of pre-emptive coercive military and diplomatic intervention by the super powers in states like Afghanistan, Iraq, and Pakistan. But with rising number of losses, both human and pecuniary, suffered by the society on the whole; is this strategy of intimidation coupled with aid addressing the root cause of the problem?
Terrorism is one of the gravest challenges faced by the world today. Vast monetary resources in form of military as well as developmental aid have been diverted to counter this menace. In spite of the ostentatious expenditures sustained by the world community, have we been successful so far in quelling this threat? Leaders and academicians from wide spectrum of disciplines have been advocating for addressing the root causes of this phenomenon. Nevertheless, the question looming over this entire debate is “what are the root causes of Terrorism?”
One of the key linkages of terrorism identified by the political ranks, especially after the 9-11 attacks was, terrorism and other forms of political violence are a product of economic and socio-political factors. US-President Bush (2002) argued that there is a vicious circle of political disenfranchisement, state failure and terror, saying that because “[…] persistent poverty and oppression can lead to hopelessness and despair […] these failed states can become havens for terror.” Similarly, then-UK Prime Minister Blair (2004) argued: “[…] poverty and instability leads to weak states, which can become havens for terrorists […].” (Krieger and Meierrieks 2010). The remarks discussed above open a new-fangled and a broader approach to addressing the problem.
Terrorism is admittedly a very complex social phenomenon. It is the outcome of a set of quantitative as well as qualitative factors, which function at various levels of causation and where some of the factors are directly observable while others are latent (Drakos and Gofas April 2006). Although terrorism is a presumably multifaceted and multi-casual phenomenon lying between the nexus of war and peace, scholarly research on the causes of terrorism has all but escaped rigorous empirical analysis (O’Brien June 1996) .Nevertheless, in this contribution I attempt to identify the plausible reasons for the emergence of terrorism. The study exposits the economic, social, and political factors which are considered to be the main causes of manifestation of terrorism based on the existing literature and widely held perceptions. I explore the empirical validity of the causes of terrorism using econometric methods and seek to establish results which could be used in formulating effective counter terrorism strategies.
The Dissertation is divided into 4 sections. I first discuss the theoretical foundations of my work and then in the subsequent section move on to discussing the existing literature on this issue. The main focus of Section 3 is to show if there exists a relationship (even though casual) linking terrorism with economic, social and political conditions in various regions across the globe. In order to capture this relationship I estimate a panel regression for 109 countries from 1971 to 2005. Section 4 involves a detailed discussion of the problems associated with the estimated procedures and how results could have been affected by them. Lastly I conclude by summarizing my main findings and provide recommendations based on the empirical findings using the panel regressions
There are myriad circumstances capable of giving rise to terrorism. Terrorists exist in developed as well as less developed countries; in former colonial states and in independent ones; in democratic and in non democratic states and so on. This implies that one needs to incorporate a number of diverse conditions while trying to develop an understanding of Terrorism. This makes it difficult to arrive at any form of generalisation (Lia and Skjølberg 2000). In spite of this complexity, the causes of terrorism can be broadly explained by the following approaches1 -:
The Psychological approach focuses on the individual or a group of individual’s decision to become a terrorist or join the terrorist group or sympathise with the ideology. Psycho-pathological and Psycho-sociological are two important approaches that fall under the psychological approach. The former treats an individual terrorist in isolation and accepts violent behaviour as a deviant characteristic. Such an advancement has been criticized not only for divesting terrorism completely from socio-economic and political setting, but also on empirical grounds (Lia and Skjølberg 2000).Authors such as Wintrobe (2006), Frey and Luchinger (2004) while criticizing the psycho-pathological approach argue that terrorists are indeed rational beings and operate on the basis of a cost-benefit principle. The Psycho-sociological approach on the other hand relates psychological factors and the societal environment [Wilkinson, Paul 1990]. Several others, such as Crenshaw (1990), Stedman (1997) also argue in favour of combining psychological and environmental factors on various stratums to arrive at any comprehensive theory of the causes of terrorism. Under the above mentioned framework theories such as the relative deprivation theory [Piazza, A James (2004)], Contagion theory [Weimann and Brouiss (1988)] are the most widely used premise to explain the phenomenon of terrorism. The relative deprivation1 theory emphasizes deprivation in form of poverty, health, life expectancy and etc as major causes of terrorism. The contagion theory on the other hand considers terrorism to be duration dependant i.e. terrorism being far from random (Lia and Skjølberg 2000); There exists voluminous empirical evidence suggesting the relevance of the contagion theory1.
Societal approach lays emphasis on the historical and present social, cultural, economical, political, in short overall environmental development of any given region. Under the societal approach, factors such as modernization, globalization, urbanization, economic development, state legitimacy, politics etc are assumed to be primary in explaining terrorism [Crenshaw 1990a, 1995]. Critics of the societal approach often argue that the relationship between terrorism and the factors treated under the societal approach are at best “casual”.
Lastly the geo-political approach essentially relates to “International Terrorism”. This approach considers factors such as state sponsorship of terrorism, hegemony and weak and collapsed state as major causes of terrorism. Works of Volgy et al., Guelke, have pioneered in using the geo political approach to explain the phenomenon of terrorism.
The opportunity cost model is one of the extensively used models in economics to analyse the causes of terrorism. In this work I use the same microeconomic opportunity cost model presented by Freytag Kruger and Schneider (2008), Anderton, Charles H; Carter, John R (2004)]. As I will show in discussions to follow, that such a treatment is indeed capable of encompassing the theories explained by the various approaches discussed above, hence making it ideal for usage in my analysis. Also, while formulating policies for counter terrorism strategies the usage of opportunity cost model assumes even a greater level of importance [Bruno S. Frey and Simon Luechinger (2003)]
The traditional microeconomic framework looks at the decision making calculus and goals of an individual terrorist, as well as a group of terrorists and their sympathisers. One of the basic assumptions of this framework is that terrorist or the terrorist organizations are rational decision makers (essentially adhering to the rational choice model1) who have preferences over terrorism as well as ordinary activities [Anderton, Charles H; Carter, John R (2004)]. Incentives for an individual terrorist differ from that of the leaders who organize the terror. The opportunity costs of a leader of the terrorist organization are not measurable directly; violence for them is just a means to an end (Harrison, 2006).Thus their opportunity costs are reflected in their ability to use violence. Since the ability to use violence depends on the involved economic costs which inturn depends on the environment, hence we can conclude that the societal environment indirectly reflect the opportunity cost facing a leader. On the contrary, for an individual terrorist, incentives could be the solidarity that the group provides or the economic rewards that the he or she may be able to reap from terrorism or otherwise .His or hers opportunity cost in fact would be directly reflected in the societal environment.
How an individual decision making dilemma can have an implication for the various subgroups on the whole is as follows. For any organization to survive, it is the preferences of their recruits or the volunteers that matter the most since they are being directly affected by their own actions as against the leader. Hence by analysing the individual choice problem we are in a way capturing the choices faced by the various sub-groups on the whole.
Given this I focus on an individual faced with 2 choices either to become a terrorist or consume material rewards. I assume that there exists a set of rewards (mental) that an individual can gain from committing an act of terror or sympathising with the cause. On the other hand an individual by not becoming a terrorist can reap the benefits of employing his energies in other productive activities.
I represent this in the figure shown below. The decision to become a terrorist or not depends on the shape of the utility curve. A high preference for terrorism would imply greater their willingness to some material rewards to achieve an increment to mental rewards; they would have steep indifference curves in the utility space. Non-terrorists receive no utility or even disutility from terrorism, so their indifferences curves would be flat or upward sloping. The shape of the utility curve determines the strength of the substitution and the income effect.
For any terrorist the utility maximization problem can be written down in the following manner:
Argmax. (T, O) U (1)
Subject to R = Pt T + Po O (Budget Line) 1(eyerman) (2)
Where ‘R’ denotes the total resources; ‘Pt’ and ‘Po’ denote the respective prices of terrorism1 (terrorism as a public good and its pricing) and composite good respectively; T denotes the quantity of terrorism and O denotes the quantity of composite good.
In fig 1 for any individual the utility is maximized at point A. Now suppose that the GDP, democracy or education etc increase. This increases the material wealth available to the person there by increasing the opportunity cost of terrorist activities. The budget line pivots around the point D and the new budget constraint is DF with the new equilibrium level being at point C. Similarly, when opportunity cost of terrorist activities fall, the budget constraint becomes flatter (shown by DG) and this over all increases the preferences for mental rewards otherwise ‘Terrorism’. The corner solution given by point D shows the maximum level of utility that a person can achieve by committing a terrorist attack. As noted by [Kruger et al (2008)] this is the point at which an individual chooses to commit suicide bombing.
Source: The origins of terrorism
One can also represent this choice problem using an inter-temporal budget constraint. Assuming that the terrorists have a two-period horizon and must choose between terrorist activities today (T0) and tomorrow (T1) based on resources today (R0) and tomorrow (R1), the inter-temporal budget constraint1 [Walter Enders* Todd Sandler 2002] is given by:
T1 = R1 + (1+ r) (R0- T0), Where r is the interest rate. (3)
In the above equation tomorrow’s terrorism equals tomorrow’s resource endowment plus the earnings on savings from the initial period. The inter-temporal budget constraint framework can be used to explain the contagion effects via effects such as the inter-temporal substitution effects.
Hence any shift or a tilt in the budget line DE would either raise or lower the opportunity cost of terrorism. The changes in the budget line are due to changes in the economic, social or political factors, and other factors which fall under the various approaches discussed in the first paragraph of this section. One can also restate the above mechanism in the following way, the utility that an individual derives from being peaceful or being violent depends upon the environment that the individual functions in. This is because the opportunity costs for being violent or peaceful facing an individual depend on macro variables affecting the settings that he or she operates under. These macro variables as we have seen can be either country specific or globally universal. This essentially gives us a new equation for the utility of the form
Where is a vector of macro variables that affect the opportunity cost of an individual; represents the vector of coefficients which suggest the magnitude and the direction of the relationship that each macro variable shares with the utility that an individual attains from being either peaceful or violent; is the error term in the equation depicting the other factors which may effect the utility.
As seen earlier, factors identified by the theories listed above such as poverty, globalization, geopolitical-setting, urbanization etc. can be used to explain the phenomenon of terrorism by using the traditional framework of opportunity cost Thus the challenge lies in identifying the key macro variables which affect the opportunity cost. But before moving on to empirically testing the relevance of the macro variables effecting terrorism, I now review the existing literature in the subsequent section.
“one man’s terrorist is another man’s freedom fighter” problem (Jenkins 1982; Hoffman 1998).
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