The Nonlinear Relationship Between Terrorism and Poverty

It is tempting to argue that poor economic circumstances are a precursor to terrorist activities. After all, economic theory suggests that it would be easier for a terrorist group to recruit lowincome or unemployed individuals since they have a relatively low opportunity cost of time. Moreover, as argued by Crenshaw (1981), people who believe that their economic prospects have been limited by others might have grievances that could attract them to terrorism. The fact that most terrorist attacks are staged in low income countries seems to support the notion that poverty causes terrorism. However, empirical papers such as Krueger and Maleckova (2003), Abadie (2006) and Piazza (2006) argue that it is a lack of political freedoms, and not poverty, that is responsible for terrorism. In the presence of other variables (such as a measure of civil liberties), they find that the level of terrorism is not significantly affected by per capita GDP. These findings were supported by Gassebner and Luechinger’s (2011) meta study: almost every one of the 13.4 million different regressions estimated using various combinations of the 65 variables contained in 43 different studies indicate no significant causal effects between terrorism and per capita GDP. The two robust explanatory variables for terrorism were found to be population and various measures of democratic freedom, but not per capita GDP.