What We Have Learned about Terrorism since 9/11

Abstract

This overview examines critically the post-9/11 empirical literature on terrorism. Major contributions by both economists and political scientists are included. We focus on five main themes: the changing nature of terrorism, the organization of terrorist groups, the effectiveness of counterterrorism policies, modern drivers or causes of terrorism, and the economic consequences of terrorism. In so doing, we investigate a host of questions that include: How do terrorist groups attract and retain members? What determines the survival of terrorist groups? Is poverty a root cause of terrorism? What counterterrorism measures work best? In the latter regard, we find that many counterterrorism policies have unintended negative consequences owing to attack transference and terrorist backlash. This suggests the need for novel policies such as service provision to counter some terrorist groups’ efforts to provide such services. Despite terrorists’ concerted efforts to damage targeted countries’ economies, the empirical literature shows that terrorism has had little or no effect on economic growth or GDP except in small terrorism-plagued countries. At the sectoral level, terrorism can adversely affect tourism and foreign direct investment, but these effects are rather transient and create transference of activities to other sectors, thus cushioning the consequences. (JEL F21, F52, H56, K42, Z31)

Terrorism and affinity of nations

“…Political affinity may motivate a country's terrorist groups to resort to domestic terrorism to protest a home country's adoption of Western liberal values. That was the case for some domestic terrorist attacks in Greece, Spain, Germany, Italy, and elsewhere when leftist terrorists constituted the dominant terrorist influence during 1968-1989(Gaibulloev and Sandler 2019. Those groups objected to Western-style capitalism, their country's membership in NATO, and other US-associated policies.…”

“…Moreover, limiting such political ties may reduce the country's counterterrorism needs, as was true for Spain after the election following the March 11, 2004 Madrid commuter train bombing attack. At the time, the incoming Spanish government withdrew its support for the US-led War on Terror, which had been a demand of the terrorists, to limit its terrorism risks (Gaibulloev and Sandler 2019).…”

“…Terrorist groups may direct their attacks to convenient weaker target countries that display some of the same political philosophies of strong prime-target countries. In some instances, prime-target countries' interests may be hit in the weaker countries (Gaibulloev and Sandler 2019). Affinity-based terrorist attacks are likely to blindside some venue countries, which may have little direct grounds for anticipating an attack.…”

Introducing Extended Data on Terrorist Groups (EDTG), 1970 to 2016

“…A terrorist group is a subnational collective whose members try to obtain a political goal by intimidating an audience (or constituency) through violence or its threat (Gaibulloev and Sandler 2019;Phillips 2015). Group size may vary from a mere handful of members (e.g., Animal Liberation Front) to many thousands (e.g., Aum Shinrikyo).…”

Transnational terrorism and restrictive immigration policies

“…To analyze whether domestic terrorist activity indeed also affects migration policymaking, we first create a domestic terrorism index as in Equations (1) and (2), using data on the number of domestic terrorist incidents and the number of individuals killed and wounded in these attacks from Enders, Sandler & Gaibulloev (2011) and Gaibulloev & Sandler (2019b). We then use this domestic terrorism index to run empirical models as in Equation (3).…”