This paper investigates the relationship between economic development and domestic terrorism. We argue states at intermediate levels of development go through socioeconomic changes that result when traditional economies are replaced by modern economic relations, which may lead to grievances and social mobilizations conducive to terrorism. The effects of economic development should have a curvilinear effect on domestic terrorism. We test our theory using the GTD dataset and find support for our theory. We show that states at intermediate levels of economic development are more prone to domestic terror attacks than the poorest and richest states. Terror events would appear more likely where states fail to provide, or reduce, an economic safety net to mitigate the transformative effects of economic development. Moreover, the results show that states that are highly democratic, and long-enduring, are less prone to domestic terrorism than less democratic states.
Clientalist economies are based on social hierarchies that include gift-giving reciprocity often linked to accumulating surpluses of influence by obtaining obligations from others, often related to patronage systems. The economies of such systems are in-ward looking and the enforcement of norms and rules occur through in-groups. In contrast, market economies rely on contract law and equality among economic atomistic actors, which challenges traditional norms and the in-groups of social hierarchies.
The data matrix is based partly on Li (2005), which truncated the time frame, and also included the ITERATE data to study both domestic (GTD) and ITERATE data. This project began with the idea of nesting our work in Li (2005) to examine the different effects of development on democracy and transnational terrorism. Our domestic attacks count variable comes from Daube (2011), which was created around the same time that the Enders, Sandler, and Gaibulloev (2011) data became available.
Please contact the author for variable data sources and coding. In an earlier version of this paper, we also verified that economic development affects income inequality, and that income inequality positively affects domestic terrorist incidents. This aspect of the project is being developed in a separate paper.
We would like to thank Victor Asal, Taeko Hiroi, Brian Greenhill, Neil Ferguson, Yoram Haftel, Tobias Böhmelt and two anonymous reviewers for comments during the course of this project, and we also thank Quan Li for help with data. All errors herein are the fault of the authors.
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