As (measuredby, e.g., poverty or income inequality) and short-run

As shown above, popular wisdom has it that economic conditions matter to the emergence of terrorism. Intuitively, the poor the likely would-be terrorists ought to resort toviolence to change socio-economic conditions in their favor. Rational-choice theory thetheoretical workhorse of most economic analyses of the determinants of terrorism (e.g.,Sandler and Enders, 2004; Caplan, 2006) can be used to provide a theoretical reasoning that mirrors this popular wisdom. In short, in a rational-choice approach terroristsare considered rational actors who want to maximize their (political) utility from usingterrorism as a means to facilitate socio-political change, where they are subject to certainconstraints such as nancial resources or manpower (e.g., Sandler and Enders, 2004). Then,terrorists are expected to choose the optimal (i.e., utility-maximizing) level of violence byconsidering the benets from terrorism (e.g., from gaining government concessions) as wellas its costs (e.g., from government punishment) and opportunity costs (e.g., from foregoneearnings). Arguably, a countrys long-run level of socio-economic development (measuredby, e.g., poverty or income inequality) and short-run state of the economy (indicated by,e.g., economic growth) can be expected to inuence the terroristscalculus. For example,Blomberg et al. (2004a, b) introduce a model in which the poor state of the economy(i.e., slow economic growth) fosters terrorist activity. They argue that the benets fromterrorism during economic downturns increase because terrorist success (i.e., a redistribution of wealth) means more access to an otherwise scarce resource base. Also, slow growthmeans that the opportunity costs of terrorism are particularly low because, e.g., non-violentopportunities of economic participation are limited.However, the empirical literature on the determinants of terrorism is far from producing consistent results regarding the role of economic factors in terrorism. For one, thereis robust empirical evidence that economic success immunizes against the occurrence ofcivil wars (e.g., Sambanis, 2002; Fearon and Laitin, 2003). Some studies also nd that6socio-economic progress is detrimental to terrorism as a form of lower-scale conict. Forinstance, Blomberg et al. (2004b) and Blomberg and Hess (2008a, b) nd that economicprogress is associated with a decrease in terrorism. What is more, further studies pointat indirect linkages between terrorism and the economy, where any improvement of socioeconomic conditions as intervening variables that is a consequence of some underlyingpolicy change (the development of a welfare state, economic liberalization etc.) ultimatelyreduces terrorist activity. For example, Li and Schaub (2004) nd that economic integration tends to have a benecial e?ect on economic growth and development, which in turnmakes terrorism less likely by driving up the price of terrorism. Similarly, Burgoon (2006)argues that social welfare policies reduce terrorist activity through their benecial e?ecton the socio-economic causes of terrorism (e.g., economic insecurity, inequality). Finally,Piazza (2011) nds that economic discrimination leads to domestic terrorism, whereas policies that counter this kind of discrimination may discourage terrorism that otherwise wouldhave emerged due to economic grievances.For another, most empirical studies on the causes of terrorism stress the primacy ofnon-economic over economic variables in terrorism (e.g., Gassebner and Luechinger, 2011; Kis-Katos et al., 2011; Krieger and Meierrieks, 2011).4 For instance, Basuchoudhary andShughart (2010) nd that terrorism is more strongly related to ethnic tension than toeconomic development. Abadie (2006) nds that terrorism is more likely in countries thatare politically semi-open (meaning that they are neither democracies nor autocracies) witha geography that is favorable to a sustained terrorist campaign (e.g., jungle, mountains)by providing terrorists with safe havens. Kurrild-Klitgaard et al. (2006) also point at anon-linear relationship between political conditions and terrorism, while Piazza (2008) and