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Sigma: Journal of Political and International Studies

Keywords

macroeconomic status, economic status, public goods distribution, terror damage, Hezbollah

Abstract

The connection between macroeconomic status and terrorism is disputed; some find links between macroeconomic status and terrorism while others find no link between overall economic status and terrorist occurrence. We theorize that a country’s economic status, defined as overall GDP, is linked to the damage that terror groups do. However, we theorize that this link is contingent on public goods distribution by terror groups. More specifically, we theorize that terror groups provide public goods to compensate for a lack of public goods spending by governments. Using OLS and instrumental modeling, we find a negative link between GDP and terror damage, defined as casualties and property damage; as a country’s GDP increases, terror damage tends to decrease. This link becomes amplified with the instrumentation of public goods provision by terror groups. We then illustrate these findings in the real-world application of Hezbollah in Lebanon.

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