Terrorism and uneven economic development

Abstract

While the question of whether a relationship exists between socio-economic inequality and incidence of terrorism has been previously explored, the answer remains inconclusive. With the motivation of shining further light on this issue, we re-visit the link between terrorism and socio-economic inequality. We distinguish our work from prior research mainly via the inclusion of multi-dimensional rather than unidimensional measures of socio-economic inequality. We develop a theoretical model, which predicts that uneven development increases the likelihood of terrorism. Using a panel dataset covering 151 countries over the period 2005 to 2019, we find conclusive evidence that uneven development is indeed a significant determinant of terrorism. Our result holds for developed and developing countries indicating robustness. Additionally, we also test the relationship between unidimensional inequality and terrorism, finding less conclusive results. As further robustness check, we also test different measures of unemployment as a potential determinant of terrorism, in the process uncovering intriguing results deserving further empirical enquiry.