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Are lives a substitute for livelihoods ? Terrorism, security, and U.S. bilateral imports

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  • Mirza, Daniel
  • Verdier, Thierry

Abstract

What is the impact of terrorism on trade through higher security at the borders? The authors set up a theory which shows that the impact goes not only from terrorism to trade. Higher trade with a partner might, in turn, increase the probability of terrorism acts and make security measures more costly for total welfare. To identify the true impact of terrorism, their theory allows for a strategy to condition out the latter mechanism. The authors show in particular how past incidents perpetrated in third countries (anywhere in the world except the origin or targeted country) constitute good exogenous factors for current security measures at the borders. Their tests suggest that terrorist incidents have a small effect on U.S. imports on average, but a much higher effect for those origin countries at the top of the distribution of incidents. In addition, the level of the impact is up to three times higher when the acts result ina relatively high number of victims, the products are sensitive to shipping time, and the size of the partner is small. The authors further show how terrorism affects the number of business visas given by the United States, thereby affecting significantly U.S. imports in differentiated products. These results suggest that security to prevent terrorism does matter for trade.

Suggested Citation

  • Mirza, Daniel & Verdier, Thierry, 2006. "Are lives a substitute for livelihoods ? Terrorism, security, and U.S. bilateral imports," Policy Research Working Paper Series 4094, The World Bank.
  • Handle: RePEc:wbk:wbrwps:4094
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    References listed on IDEAS

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    Cited by:

    1. De Sousa, José & Mirza, Daniel & Verdier, Thierry, 2018. "Terror networks and trade: Does the neighbor hurt?," European Economic Review, Elsevier, vol. 107(C), pages 27-56.
    2. Mirza, Daniel & Verdier, Thierry, 2008. "International trade, security and transnational terrorism: Theory and a survey of empirics," Journal of Comparative Economics, Elsevier, vol. 36(2), pages 179-194, June.
    3. Volker Nitsch, 2009. "Terrorismus und internationaler Handel: Probleme und Ergebnisse empirischer Untersuchungen," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 78(4), pages 41-50.
    4. Subhayu Bandyopadhyay & Todd Sandler & Javed Younas, 2018. "Trade and terrorism," Journal of Peace Research, Peace Research Institute Oslo, vol. 55(5), pages 656-670, September.
    5. Anderson, James E., 2015. "Terrorism, trade and public policy," Research in Economics, Elsevier, vol. 69(2), pages 180-190.
    6. Hippolyte d'Albis & Ekrame Boubtane & Dramane Coulibaly, 2022. "Global Uncertainty and International Migration To Western Europe," Annals of Economics and Statistics, GENES, issue 148, pages 1-28.
    7. Foubert, Killian & Ruyssen, Ilse, 2024. "Global migration and the role of terrorist attacks," Journal of Economic Behavior & Organization, Elsevier, vol. 220(C), pages 507-530.
    8. Bassil Charbel, 2013. "Macroeconomic Consequences of War and Terrorism in Lebanon," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 19(3), pages 415-429, December.
    9. José de Sousa & Daniel Mirza & Thierry Verdier, 2010. "Terrorism Networks and Trade: Does the Neighor Hurt?," Working Papers 2010-04, CEPII research center.
    10. Korn, Tobias & Stemmler, Henry, 2022. "Your Pain, My Gain? Estimating the Trade Relocation Effects from Civil Conflict," Hannover Economic Papers (HEP) dp-698, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    11. Zouheir El†Sahli, 2018. "The role of inbound tourist flows in promoting exports," The World Economy, Wiley Blackwell, vol. 41(5), pages 1457-1475, May.
    12. Jerónimo Carballo & Georg Schaur & Christian Volpe Martincus, 2016. "Trust No One?: Security and International Trade," IDB Publications (Working Papers) 94636, Inter-American Development Bank.
    13. José de Sousa & Daniel Mirza & Thierry Verdier, 2009. "Trade and the Spillovers of Transnational Terrorism," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 145(IV), pages 453-461, December.
    14. Subhayu Bandyopadhyay & Todd Sandler, 2022. "Effects of Defensive and Proactive Measures on Competition Between Terrorist Groups," Journal of Conflict Resolution, Peace Science Society (International), vol. 66(10), pages 1797-1825, November.
    15. Khusrav Gaibulloev & Gerel Oyun & Javed Younas, 2019. "Terrorism and subjective financial well-being: micro-level evidence from Pakistan," Public Choice, Springer, vol. 178(3), pages 493-512, March.
    16. Korn, Tobias & Stemmler, Henry, 2022. "Your Pain, My Gain? On the Trade Relocation Effects from Civil Conflict," VfS Annual Conference 2022 (Basel): Big Data in Economics 264095, Verein für Socialpolitik / German Economic Association.
    17. Graham Bird & S. Brock Blomberg & Gregory D. Hess, 2008. "International Terrorism: Causes, Consequences and Cures," The World Economy, Wiley Blackwell, vol. 31(2), pages 255-274, February.
    18. Carballo, Jerónimo & Schaur, Georg & Volpe Martincus, Christian, 2016. "Trust No One?: Security and International Trade," IDB Publications (Working Papers) 7684, Inter-American Development Bank.
    19. Wenlong Yang & Wentian Shi & Dongcheng Chen, 2024. "Unveiling the nexus: exploring the influence of terrorism on energy trade in China and the Belt and Road countries," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-16, December.
    20. Matthieu Crozet & Pamina Koenig & Vincent Rebeyrol, 2008. "Exporting to Insecure Markets: a Firm-Level Analysis," Working Papers 2008-13, CEPII research center.
    21. Subhayu Bandyopadhyay & Todd Sandler & Javed Younas, 2020. "Terms-of-trade and counterterrorism externalities," Oxford Economic Papers, Oxford University Press, vol. 72(2), pages 293-318.
    22. Christophe Gouel & Nina Kousnetzoff & Hassan Salman, 2008. "Commerce international et transports : tendances du passe et prospective 2020," Working Papers 2008-28, CEPII research center.
    23. Subhayu Bandyopadhyay & Todd Sandler & Javed Younas, 2016. "Trade and Terrorism: A Disaggregated Approach," Working Papers 2016-1, Federal Reserve Bank of St. Louis.
    24. Bardwell Harrison & Iqbal Mohib, 2021. "The Economic Impact of Terrorism from 2000 to 2018," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 27(2), pages 227-261, May.
    25. Paul H. Jung & Jean-Claude Thill & Luis Armando Galvis-Aponte, 2021. "State Failure, Violence, and Trade: Dangerous Trade Routes in Colombia," Documentos de trabajo sobre Economía Regional y Urbana 303, Banco de la Republica de Colombia.

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    More about this item

    Keywords

    International Terrorism&Counterterrorism; Transport Security; Economic Theory&Research; Country Strategy&Performance; Free Trade;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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