T his article reconsiders the effects of terrorism on trade. The conventional wisdom is that trade with a nation affected by terrorism involves higher risks. The consequent rise in the transaction costs is akin to a rise in transportation costs, which tend to reduce trade. Based on such an argument, Nitsch and Schumacher (2004) and Blomberg and Hess (2006) find evidence that terrorism indeed te...

When revolutionaries or insurgents, broadly defined, indiscriminately attack civilians, they generally attack “complicitous civilians,” i.e., those categories of noncombatants which the revolutionaries see as benefiting from, supporting and/or having a substantial capacity to influence the states that the revolutionaries are attempting to displace or overthrow. Such “categorical” terrorism will...

This article presents a framework for using probabilistic terrorism risk modeling in regulatory analysis. We demonstrate the framework with an example application involving a regulation under consideration, the Western Hemisphere Travel Initiative for the Land Environment, (WHTI-L). First, we estimate annualized loss from terrorist attacks with the Risk Management Solutions (RMS) Probabilistic ...

Web Publication: 06 February 2004 There should be no doubt by now that the challenge of terrorism has left an indelible mark on the world as we know it. From the 11 September 2001 assaults on the New York City World Trade Center and the US Pentagon to the daily carnage in Iraq, as the traditional Turkish expression goes, we are truly "living the history". No group is as intimately connected to ...

In the contemporary political climate, terrorism and insurgency are often exploited to an alarming degree by political figures keen to take advantage of a practice that has become ever increasingly equated with innate evil. If we are to believe this common depiction of terrorism, then terrorism is always wrong, and is committed for no other reason than to do harm for harm's sake. However, it is...

The post-9/11 war against terrorism has increased international attention to illicit drug business as a source of terrorist financing. For politicians and the media, the contentious term narcoterrorism has become fashionable. While the term implies a full merger between terrorism and drug business, the interrelationship between them is more accurately described in terms of linkages. As terroris...

In this work we attempt to develop a game theoretic model that can indicate the nuances of strategic investments in the face of possible cyber terrorist attacks. First, we briefly review the literature on terrorism. Second, we identify the „cyber‟ factors in terrorism, and how this new mode of attack alters the general scenario. Then, beginning with a naïve counter terrorism model, we increment...

This paper finds that political freedom has a significant and non-linear effect on domestic terrorism, but this effect is not significant in the case of transnational terrorism. Some of our other novel findings are that while geography and fractionalization may limit a county’s ability to curb terrorism, the presence of strong legal institutions deters it. JEL classification codes: D74, H56

This paper indicates how economic analysis can be applied for enlightened policy making with respect to transnational terrorism. Both theoretical tools (e.g., game theory and utilitymaximizing models) and empirical techniques (e.g., time series and spectral analysis) are used to put modern-day terrorism into perspective and to suggest policy responses. From hostage negotiations to the installat...