DP6174 | International Trade, Security and Transnational Terrorism: Theory and Empirics

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In this paper, we offer a general analytical framework to illustrate the complex two-way interactions between trade and transnational terrorism. We then survey the recent economic literature in light of this framework by pointing to the importance in empirical studies a) to control appropriately for these interactions, b) to distinguish between 'source' countries and 'target' countries of terrorism and c) to take into account the intertemporal persistence of terrorism between specific pairs of countries.