Terrorism Networks and Trade: Does the Neighor Hurt?

José De Sousa (jose.de-sousa@u-paris2.fr), Daniel Mirza and Thierry Verdier

Working Papers from CEPII research center

Abstract: We study the impact of transnational terrorism diffusion on security and trade. We set a simple theoretical model predicting that the closer a country to a source of terrorism, the higher the negative spillovers on its trade. The idea is that security measures, which impede trade, are directed both against the source country of terror and its neighbor countries where terrorism may diffuse. In contrast, we demonstrate that countries located far from terror could benefit from an increase in security by trading more. Taken to the test, we empirically document these predictions. We find (1) a direct negative impact of transnational terrorism on trade; (2) an indirect negative impact emanating from terrorism of neighbor countries; and (3) that trade is increasing with remoteness to terror. These results are robust to various definitions of the neighboring relationships among countries.

Keywords: Terrorism; Trade; Security (search for similar items in EconPapers)
JEL-codes: F12 F13 (search for similar items in EconPapers)
Date: 2010-03
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Terrorism Networks and Trade: Does the Neighbor Hurt? (2010)
Working Paper: Terrorism Networks and Trade: Does the Neighbor Hurt? (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:cii:cepidt:2010-04

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