 Effects of terrorism on tradeSubhayu Bandyopadhyay and Javed Younas Chapter 9 in Elgar Encyclopedia of International Trade, 2026, pp 39-41 from Edward Elgar Publishing Abstract: We discuss the effect of terrorism on international trade. First, using a Heckscher–Ohlin type of framework, we show that terrorism reduces trade if it disproportionately hurts the factor that is intensively used in the nation's exporting sector. If, however, terrorism's primary burden is on the other factor, then terrorism will raise trade. Second, we consider the trade effects of transnational terrorism and of domestic terrorism in the context of monopolistic competition. Transnational terrorism reduces trade through amplification of shipping costs. Domestic terrorism, however, may or may not reduce trade. If domestic terrorism disproportionately amplifies domestic production costs relative to transportation costs, then the relative price of domestic varieties will rise, spurring import demand and hence trade. Finally, we discuss selected empirical studies on the effects of terrorism on trade. Consistent with the theories discussed, the empirical findings generally find negative effects of terrorism on trade but also present some ambiguities. Keywords: International trade; Transnational terrorism; Domestic terrorism; Factor intensities; Monopolistic competition; Gravity Model (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:elg:eechap:23076_10 Ordering information: This item can be ordered from Access Statistics for this chapter More chapters in Chapters from Edward Elgar Publishing |
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