Terrorism & Political Violence

Dr. Wm. Eric Davis

© Copyright, Wm. Eric Davis, Ph.D (All Rights Reserved)

Economics & Terrorism[Aggregate Level Policy]

Gross Domestic Product [GDP]

The total value of all goods and services produced within a nation (including foreign owned companies).

Dividing this amount by the population gives you the per capita GDP.

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US GDP (1940-2000)

Per Capita GDP

“Comparative Advantage”Comparative advantage means each nation (or state)

exploits the sector of an economy in which it has an advantage.

Some nations (or states) are rich in natural resources (like the US), some are rich in labor supply (China & India), while others are rich in technology, etc.

Comparative Advantage means you do not attempt to compete in each and every sector of the economy, but just in the one (or two) and leave other sectors to other nations so that they can develop (and presumably become peaceful).

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“Export Oriented Growth”

A nation that is poor in raw natural resources imports raw materials from other nations and turns them into finished products.

It then exports them to other nations, often the nation that provided the raw resources in the first place. It allows poor nations to develop economically, but it requires that they be interdependent with other nations (not dependent, hopefully)

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“Dependency Theory”

A theory popular in Latin America (and other regions) in the 1970s which asserted that a wealthy nation’s prosperity is based on the exploitation of third world nations.

It is basically Marxist theory on an international scale.

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How Dependency Theory Explains World Economics

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The Mechanics of Dependency TheoryFocuses on relationships among nations rather than changes within a nation.

Relies on Marxist Framework of explanation (i.e., “class” differences).

Asserts that the modernization of the West came (and still does) at the expense of other nations.

Theory originated out of 16th century patterns of relations in which certain nations were able to exploit others (i.e., colonialization).

Empirical tests of the theory fail to establish its validity. Responsible for the most spectacular international bankruptcies of the 20th century (USSR, Eastern Europe, Latin America, Africa, and parts of Asia). Zimbabwe and Venezuela today have again fallen under its spell).

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World Prosperity

“Import Substitution” This idea became popular in Latin America and Africa

in the 1970s. It means a nation creates domestic substitutes for all imported products. [It does not use the comparative advantage or export-oriented growth strategies].

Basically, a nation will try to make its own cars, refrigerators, and so forth, while cutting itself off from the world economy (however, other countries are welcome to buy their products, but not vice versa).

It was a disastrous policy for nations that implemented it, especially in Latin America. 11

Protectionism in AmericaIn the 1980s, many Americans became concerned about

Japanese competition in the American marketplace.

One political party (the Democrats) responded by proposing protectionist legislation (which is essentially import substitution) to try and protect American jobs.

Today, the Democrats are still opposing free trade agreements between the U.S. and other countries (such as the recent one with Colombia). They want to “renegotiate” the North American Free Trade Agreement (NAFTA). They would get rid of it if they could, eliminating the basis for world prosperity.12

Globalization (Interdependence Theory)

1. Nations establish stable trading patterns in which each country conforms to the rules of “comparative advantage.”

2. Allows poor countries to develop, although not necessarily at the same rate as more developed countries.

3. Promises peace among nations (why attack a nation if your own economy is intertwined with it?)

4. The political left fears it will entrench the developed nations at the top of a world economic hierarchy and that it will lead to cultural imperialism of Western values.

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Fears from Globalization

Fears of Multinational Corporations

The Loss of Good Paying Jobs ?

How Far Can it Go?

Should You be Concerned?

Okay, Maybe Getting Carried Away

Fear or Irrational Panic?

Americans’ fear of jobs going overseas is again on the rise

In the 1980s, Americans were alarmed by the changing nature of world economics and were concerned that the US had entered irreversible economic decline, which would negatively affect our influence in deterring violence and advancing human rights.

Japan was a specific target of our fears. Should the US have been so concerned? In the 1990s, Asia went into a decade long recession.

But Can other Countries Make a Better One of These?

A Little Something for the Ladies Too(So I don’t get accused of discrimination)

Should we Send Manufacturing jobs to the Middle East?

Will greater economic development there eliminate a source of grievances (poverty) and accordingly reduce terrorism?

Arab states oppose globalization because it will increase US influence in the region (especially in terms of values).

Is Economics Relevant to Terrorism?

Is attempting to improve economics among poor states going to be effective in reducing terrorism?

Is economics really what is motivating terrorism by America’s enemies?

If not, then what will it take? Will it take a cultural approach (that is, to change middle eastern culture).

What Distinguishes the WestA Strong Sense of Individualism and the Importance of Life.

Among other things, and culturally speaking, the West elevates life over concerns of dignity or honor. [Gangs and the Mafia are an exception].

Most of Europe has eliminated the death penalty.

The US has a death penalty, but only for the most heinous of murderers, the justice system is biased in favor of the defendant, and there are lots of appeals opportunities. Even so, se rarely sentence people to death and even more rarely carry it out.

Opposing Values

In many parts of the world, including the middle east, dignity and honor (and virtue) are considered more important than life (certainly more important than other people’s lives).

“Honor Killings” Blood Feuds Gangs and Mafia (where respect is demanded) Japan used to be this way (Hari Kari).“Religious Police”. (Sharia, rights of women, etc).

This cultural distinction may explain the quick resort to violence in many parts of the world.

It is a cultural explanation.

Cultural Economics

Maybe we need to combine economics and culture into a single (multi-dimensional) approach to addressing terrorism and political violence.

They both play a role, although it can be argued how strong a role each plays.