Growth and Fiscal Consequences of Terrorism in Nigeria

Abstract

In spite of government counter-terrorism expenditure and efforts, the incidence of terrorism in Nigeria appears to be rising. This paper examines the growth and fiscal consequences of terrorism in Nigeria by estimating the terrorism–macroeconomy relation using different measures of terror incidence. The results show that terrorism has an economically and statistically significant negative impact on growth; although this impact is considerably small and short-lived, manifesting only after a lag of about three years. Specifically, the cost of terrorism to Nigeria, in terms of lost GDP per annum, is estimated at 0.82%. Moreover, there is evidence that terrorism leads to the reallocation of economic activity away from private investment spending to government spending; that is, terrorism crowds out investment at a higher rate than its potential to crowd in government spending. Lastly, terrorism alters the composition of government expenditure – with the defence component of government expenditure rising vis-a-vis other expenditure items. The results are robust to allowing for dynamic interactions between terrorism and macroeconomic aggregates.     

Civil wars and economic growth: A regional comparison

The paper examines the impact of civil wars on income per-capita growth at home and in neighbors for four regional groupings of countries: Africa, Asia, Latin America, and a pooled Asian and Latin American sample. Both macroeconomic and civil-war influences on growth differ by region. With the use of a distance measure, we demonstrate that the spatial reach from the negative consequences of a civil war are region and time period specific. Generally, there was less dispersion in Africa than in Asia and Latin America. Moreover, Africa demonstrates a greater ability to recover from the adverse effects of civil wars than the other regions tested.     

How to Fight Terrorism: Alternatives to Deterrence

Deterrence has been a crucial element in fighting terrorism, both in actual politics and rational choice analyses of terrorism. But there are superior strategies to deterrence. One is to make terrorist attacks less attractive. Another to raise the opportunity cost - rather than the material cost - to terrorists. These alternative strategies effectively dissuade potential terrorists. The strategies suggested here build on the "benevolence" system and tend to produce a positive sum game among the interacting parties. In contrast, the deterrence system is based on "threats" and tends to produce a negative sum game interaction.     

SECURITY BRIEF

September 11 2001 precipitated the introduction of anti-terrorism legislation in most states and enhanced cooperation between states around the world. Africa may not have witnessed many incidents of international terrorism on its soil, yet the continent has, in the post 9/11 era, often been referred to as the ‘breeding ground of terrorism’ or the conduit for international terrorists. The assumption that countries with weak governments and failing economies (as in most of the continent) seems to be one of the factors that earned Africa this negative image. While the validity of the assumption is debatable, it is clear that prosecuting cases of terrorism is fraught with legal intricacies. This article deals with the difficulties involved.     

Defence industries adjusting to change 1

This paper analyses the impact of terrorist activity on international tourist flows. To this end, we have estimated a cross‐sectional gravity equation for tourism from the G‐7 countries to a sample of 134 destinations over the period 2001–2003. Within this framework, we evaluate the deviation from ‘normal’ tourist flows due to terrorist activity, which is considered as negative advertising for the affected country. The analysis suggests that both domestic victims and international attacks are relevant factors when foreign tourists make their choice. This result is robust under alternative specifications. Moreover, the impact of terrorism is more severe in developing countries.     

An intervention analysis of terrorism: The spanish eta case

In this paper we evaluate what terrorism policies have worked best in handling the Spanish ETA terrorism using time series data from 1968 to 2000. We consider the political, deterrence and economic effects, and conclude that their influence on terrorism incidents is mixed. A parsimonious model shows that the behaviour of different terrorism incidents is distinct and the lagged effect is a primary concern. A policy to manage this case is devised.     

Causal Linkages Between Domestic Terrorism and Economic Growth

We use the Hsiao–Granger method to test for terrorism–growth causality for seven Western European countries. In bivariate settings, the impact of economic performance on domestic terrorism is very strong. In trivariate settings, the impact of performance on terrorism diminishes. In general, we find that economic performance leads terrorist violence in robust ways only for three out of seven countries. Terrorism is almost never found to causally influence growth in bivariate and trivariate specifications. Our findings indicate that the role of economic performance in determining terrorist violence appears to have been important for some countries, whereas all attacked economies have been successful in adjusting to the threat of terrorism.     

The impact of political instability on the economic growth of ECOWAS member countries

This study contributes to the literature on political instability and economic growth by specifically investigating the impact of political instability on the economic growth of member countries of the Economic Community of West African States (ECOWAS). West Africa is regarded as the riskiest sub-region within the African continent. To achieve this objective, this study employed panel data techniques (fixed effects and generalised method of moments) on a sample of 15 ECOWAS member countries for the period 2005–2012. The findings from the analyses showed that terrorism, poor governance, social unrest, youth unemployment, death rate and natural resource rent have negative relationships with economic growth. The findings and policy implications deduced from this study could not have been any timelier considering the recent escalation of instability in West African countries and their fragile growth prospects.     

Spatial Distribution of Minority Communities and Terrorism: Domestic Concentration versus Transnational Dispersion

Qualitative studies of terrorist movements frequently highlight the importance of diaspora communities as important factors in producing and sustaining terrorist activity in countries. The underlying theoretical argument is that bifurcation of tight-knit minority communities between countries nurtures separatist or irredentist sentiments among affected community members, thus prompting terrorist activity, while minority community members in other countries might mobilize financial and political resources to support terrorist activity among their compatriots. In this study, we empirically test whether transnational dispersion, versus domestic concentration, of minority communities in countries produces higher incidents of terrorism. Conducting a series of negative binomial estimations on a reshaped database of around 170 countries from 1981 to 2006, derived from the Minorities at Risk database and the Global Terrorism Database, we determine that both transnational dispersion of kin minority communities and domestic concentration of minorities within countries increase terrorism and that transnational dispersion is a particularly robust predictor of terrorist attacks.     

The Political Economy of Legislation on Terrorism

^{1 1}This research was funded in part by a grant from the Lowe Institute of Political Economy. The corresponding author is S. Brock Blomerg. We thank Chris Blomberg and Brianna Loyosa for their excellent research assistance on the project. This paper presents an empirical analysis of what drives congressional legislation on terrorism during the period 1995 to 2010. We utilize and augment current methodology to compile and analyze data on sponsorship and cosponsorship of terrorism related data. Our results on the sources of legislation on terrorism are largely in line with past examinations of the importance of committee membership and leadership, party majority-ship, and other political factors. Further, we find that the most significant and robust drive for legislation on terrorism is the September 11^th attacks. And while the impact of 9/11 affected legislative productivity everywhere, we find that it most significantly affected states surrounding New York and Washington D.C. Our results indicate that the economy may be one factor motivating politicians to legislate on terrorism; however, these results are not robust.     

Counter-terrorism in the Horn of Africa: New security frontiers,old Strategies

The US-led ‘war on terror’ dramatically changed America's security strategy towards Africa. But more fundamentally, it threw the Horn of Africa on the centre stage of global counter-terrorism. A double-edged blade, counter-terrorism has at once catalysed peace processes and intensified insecurity, with Islamic radicalism at the core of the regional storm. Governments utilised the threat of terrorism for political ends, defending old security paradigms that prioritised regime stability over human security. Africa integrated counter-terrorism into its emerging security agenda, but insufficient funds, operational constraints and poor coordination with international initiatives have hampered meaningful progress. Washington, laudably, launched a robust counter-terrorist campaign, but its high-handed military-heavy style put fragile democracies at risk while lapses in its overall policy risk triggering proxy wars. This essay examines the impact of counter-terrorism on security in the Horn of Africa. It argues for stronger coordination between national, regional and international initiatives to curb international terrorism.     

Economic Performance And Terrorist Activity In Latin America

We investigate the link between economic performance and terrorism for 18 Latin American countries from 1970 to 2007, taking into account the potentially complex nature of this link. Panel causality analysis findings indicate that during this period, terrorism had no causal effect on economic growth. By contrast, we find that growth reduced terrorism in the less developed but not in the higher developed Latin American economies. We argue that group-specific differences (linked to patterns of economic development) govern this causal heterogeneity. From a series of negative binomial regressions we gain additional support for our findings, while also identifying further determinants of terrorism.     

South Africa's threat environment: a guide for the National Planning Commission

Abstract

The mandate of South Africa's recently appointed National Planning Commission includes addressing ‘defence and security matters’. This article seeks to outline the central elements of the threat environment facing South Africa in the foreseeable future. It is argued that South Africa faces no meaningful existential threat from conventional military forces but that its security forces will need to be prepared to address possible raids and attacks by conventional military forces both on home soil and on vital interests beyond the nation's borders. Other threats highlighted include the threats posed by potential insurgencies, by terrorism, and by crime, social unrest and banditry. Also addressed is the danger of so-called hybrid threats, in which two or more of the single threat types outlined here are combined. Finally, the article challenges the National Planning Commission to rethink South Africa's policy on peace operations in the light of the need to ensure the safety and security of the nation's citizenry.     

The impact of military expenditures on economic growth in the less developed countries∗

This paper presents the results of empirical research on the economic impact of military expenditure — milex — on the less developed countries. The hypothesis is that the impact on growth is a combination of three effects: (1) increased security — positive impact; (2) diversion of resources from productive investment — negative impact; and (3) pressure for more efficient government policies in response to the external threat — positive impact. The combination of these effects would produce a non‐linear relationship with the growth rate at first increasing as milex increased and then decreasing. For the full sample of 71 countries, we found the predicted relationship, however, it is not robust to changes in the sample. The robust conclusion is that there was no evidence of a negative impact of military spending on economic growth.     

Clash of counterterrorism-assistance-seeking states and their super power sponsors: Implications on the war against Boko Haram

ABSTRACT

Decade-long security cooperation and counterterrorism engagements in Nigeria have failed to bring down Boko Haram or at least weaken its terrorist structures and transnational spread. I argue that disconnects between counterterrorism-assistance seeking states and their superpower sponsors are implicated in the intractability of Boko Haram's insurgency in Nigeria. Why is the U.S. counterterrorism intervention to individual MNJTF countries (i.e. troop contribution, military funding and intelligence support) ‘lopsided’, ‘fragmented’ and ‘unevenly distributed;’ and how are these implicated in the fight against Boko Haram terrorism? This has impacted negatively on MNJTF countries – lack of cooperation, divisiveness and individualism in coordinating and forging offensives against Boko Haram. These concerns interface several blind spots in the picture of external influences on military’s approach to Boko Haram. I elicit primary data from top military officers. I conclude by predicting the implications and consequences of these counterterrorism complexities, and their potency to defeat or encourage Boko Haram terror.     

Thirty Years of Conflict and Economic Growth in Turkey: A Synthetic Control Approach

Abstract

This study seeks to estimate the causal effects of PKK separatist terrorism on economic development in Turkey using the synthetic control method. By creating a synthetic control group that reproduces the Turkish Gross Domestic Product (GDP) before PKK terrorism emerged in the late 1980s, we compare the GDP of the synthetic Turkey and the actual for the period 1955–2008. Our study finds that the Turkish per capita GDP would have been higher by about $2600 had it not been exposed to terrorism. This translates into an average of 21.4% higher per capita GDP over a period of 21 years.     

Defense Burden and the Effect of Democracy: Evidence from a Spatial Panel Analysis

ABSTRACT

Do democracies spend less on national defense? This paper provides new evidence of the effect of democracy on defense burden based on a Spatial Durbin Model with panel data for 98 countries for the years 1992–2008. While democracy measured by means of an index variable covering the entire range from perfect democracy to perfect autocracy turns out to be insignificant, dummy variables indicating transition to higher levels of democracy reveal a statistically highly significant negative effect of democracy on a country’s defense burden. Allowing for country-specific effects reveals heterogeneity in the effect of democracy across countries. Apart from the effect of democracy, the estimation results indicate strong spatial dependence of military burdens across countries. Moreover, they provide statistical evidence for a peace dividend, for substitution effects in defense spending and for a negative effect on the military burden for countries when they exhibit a trade surplus instead of a trade deficit.     

Do Military Expenditures Crowd-out Health Expenditures? Evidence from around the World, 2000–2013

Abstract

The paper examines the relationship between health and military expenditures using pooled cross-sectional (197 countries) and time series (2000–2013) data. Simultaneous equation models were employed to estimate the relationship between an array of public sector expenditures in order to address potential endogeneity. Our empirical findings strongly support the crowding-out hypothesis whereby increased military expenditures reduce the capacity of government to direct expenditures to health expenditures. These findings were robust to alternative specifications explored in the sensitivity analyses. Compared with upper-middle-income countries, the crowding-out effect became more pronounced among lower-middle-income countries. Consequently, this study shows that increased military expenditures negatively impacts health expenditures, and therefore poses as an important risk factor for population health and individual well-being. Moreover, it is the poorest of nations that are most sensitive to the negative effects of increased military expenditures.     

On the Determinants of Terrorism Risk Concern in Europe

We investigate whether differences in terrorism risk are mirrored on terrorism risk perception across European countries for the period 2003–2007. We find that the average propensity for terrorism risk concern is affected by actual risk levels. Country and individual heterogeneity contribute substantially to the variation of observed risk perception. Singles and individuals with white collar jobs are less likely to mention terrorism as one of the most pressing issues their country faces, while political positioning towards the right makes it more likely to be concerned about terrorism. As far as competing risks are concerned, we find that the likelihood terrorism is mentioned, decreases with spending on pensions as a percentage of GDP being higher. Finally, based on the Bayesian framework, we also examined the formation of terrorism risk perceptions, and decompose the observed country-level time series of terrorism activity into a long- and a short-run component. We concluded that the observed risk perception variation is only explained by the long-term trend of terrorism activity countries face.     

Determining a role for a military ombudsman in the South African National Defence Force

In recent years, South Africa has come to be used by international terrorists as a safe house, for paramilitary training purposes, as a base from which to plan attacks on other countries and as a conduit for financial transactions. South Africa's own counter-terrorism initiatives have been labelled ‘reactive’ by analysts. Indeed, the existing counter-terrorism regime suffers from a lack of political will to issues of corruption and ineptitude bedevilling the security apparatus of the state. However, using lessons learned from other countries, Pretoria can yet turn the tide against international terrorism by adopting more pro-active measures and by undertaking steps aimed at the depoliticisation and decriminalisation of the security forces.