Trade, tariffs and terrorism

Abstract

Insurgencies and terrorist activities are often dependent on foreign sources of funding. When this is the case, trade barriers such as import tariffs can prove to be an effective means of combating violence and enhancing social welfare. In this article, we identify the optimal tariff for a country facing an externally financed insurgency.

Keywords:

• trade
• tariff
• terrorism
• counter-insurgency

JEL Classification:

• F52
• H56

Acknowledgements

The authors thank Ellis Tallman, Ken Kuttner, Francois Melese, Jordan Ostwald, Jonathan Robinson and Claude Berrebi for their comments and insights.

All remaining errors are the sole responsibility of the authors.

Notes

¹ See Gera (1998) for an account of Roman assistance provided to the Jewish ‘Maccabean’ rebellion.

² See Burns and Semple (2006).

³ See Berck and Lipow (2010), pp. 182–4.

⁴ See Foote et al. (2004) for what remains the most definitive discussion of economic conditions in post-invasion Iraq.

⁵ See Lerner (1936).

⁶ See Brown and Hogendorn (2000), p. 121.

⁷ See Berman and Shapiro (2011) for an excellent analysis of the role of economic conditions and incentives in determining the viability of an insurgent movement.

⁸ See Berck and Lipow (2010), p. 183.