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The purpose of this contribution is to review the theoretical and empirical literature on the economic determinants of terrorism.

Review of the relevant academic literature.

This contribution shows that there is a theoretical foundation to the popular hypothesis that poor economic conditions are conducive to terrorism. A review of the empirical evidence on the economic determinants of terrorism, however, yields an inconclusive result. Some studies find that economic conditions (directly and indirectly) matter to terrorism, whereas a plurality of studies suggest that noneconomic factors are more important.

The findings of the survey indicate that it is unlikely that economic conditions are universal determinants of terrorism. By pointing at several avenues of future research (e.g., a focus on the role of ideology in terrorism), this contribution, however, argues that the opposite also does not need to be true. The influence of economic factors on terrorism should neither be overemphasized nor completely ruled out.

The contribution offers a comprehensive overview of the economy–terrorism nexus and hints at promising areas of future research.

The purpose of this study is to assess the ability of a theoretically motivated statistical model to accurately forecast annual, national counts of terror attacks out-of-sample.

Bayesian multi-level models, classification analysis, marginal calibration plots

We find that the model forecasts reasonably well, but conclude that its overall performance suggests that it is not ready for use in policy planning. This is likely due to the coarse temporal and spatial aggregation of the data.

The implications of this study are that social scientists should devote more effort into evaluating the predictive power of their statistical models, and that annual, national data on violent conflict are probably too coarse to provide useful information for policy planning.

The primary value of our modeling effort is to provide a baseline against which to evaluate the performance of more region- and country-specific models to be developed in the future.

In addition to their effects on economic growth, prolonged terrorist activities can reduce government revenue. Apart from the destruction of physical infrastructure and human capital, terrorism also has lagged-effect on investment, which ultimately dampens the fiscal position and further affects the economic growth. This chapter is devoted to the discussion on the interaction between terrorism, growth, and fiscal variables in Nigeria using real per capita income, government revenue, government expenditure and defense expenditure. The findings show that terrorism is associated with low economic growth which has the potency to reduce government expenditure. It was also observed that government expenditure can be improved by fostering government revenue. In view of this, apart from domestic efforts, interventions of international communities are further needed to reduce the drastic effects of terrorism, especially in meeting and improving expenditure on growth-enhancing sectors.