Mainstream approaches to terrorism usually encompass political and ideological factors. Nevertheless, in order to go deeper into terrorism’s causes and origins, social-economic conditions must be taken into account in its understanding. Even though these are not determining conditions (i.e. both sufficient and necessary) in the genesis of terrorism, in this work we argued that they do influence the incidence of terrorist activities, and thus should be taken in consideration for long-term counter-terrorism policies.

Most studies developed on terrorism to present base their analysis on political and demographic variables, such as political oppression, state failure, ethnic conflicts and interstate relations. (Freytag, Krüger, Meierrieks & Schneider, 2011) We believe, as do Freytag et al. (2010), this approach oversimplifies the issues involved, since it does not take into account the social-economic circumstances of the specific country or region.

The vast literature on terrorism has already explained that individuals who engage in terrorism – supporting it or taking part in violent demonstrations – do so rationally, meaning they balance costs and benefits of choosing violence for obtaining a political objective. Benefits from terror relate to non-material rewards such as social status, collective support, identity and power; while its costs are related more to the fear of punishment and to material means. For those actors choosing terrorism is the outcome of a rationally weighted trade-off between material and non-material gains given its values and preferences. In this sense, poor social-economic conditions do contribute to the emergence of terrorist activities since it lowers the cost of opportunity for choosing violence in the pursuit of political goals.

Freytag et al. (2010) sustain the hypothesis that countries where poor social-economic conditions abound are more likely to generate terror. As a consequence, development can increase the opportunity costs of terrorism by increasing the material losses of appealing for violence. Additionally, enhancing people’s freedom and autonomy by promoting development – and especially human development – raises terrorism’s opportunity costs. Even though this strategy by itself cannot eradicate terror, it can be effective in its reduction. (Pereira, Macedo, Vilarinhos et al, 2012)

The social-economic situation frequently either supports for the emergence of or the perpetuation of terrorism. Blomberg et al. (2003) argue that governments and dissident groups compete for stocks of resources in the economy; dissidents, by their turn, find in terrorism or rebellions a way to change the status quo. However, dissidents will only choose rebellions instead of terrorism when they have sufficient material power to overthrow the government, overtaking all resources. Otherwise, they will go for terrorism, since “the payoffs of such attacks are large and the costs are small” (Blomberg et al., 2003, p. 466). The authors found a statistically relevant link between economic hardship and the incidence of terrorist events, providing more evidence that the former increases the likelihood of the latter. (Blomberg et al., 2003)

Caruso and Schneider (2011) present in their work two complementary theories which establish a relation between economic disparities and political violence in face of a shift in the social equilibrium. Moreover, together they also prove that terrorism opportunity costs change along with these economic changes.Firstly, by the economic deprivation argument, based on Ted Robert Gurr’s theory, collective anger and frustration caused by economic disparities between expectations and reality of individual’s payoffs can turn out into political violence. Therefore, relative depravation would be a precondition to any violent civil conflict. (Gurr, 1968 apud Caruso & Schneider, 2011) Secondly, Olson’s immiserizing modernization argument suggests that economic growth can foster social and political violence, since it implies in several changes in production methods that can cause social and political instability. (Olson, 1963 apud Caruso & Schneider, 2011) Together, both theories also mean to prove that opportunity costs for engaging in terrorism shift along with these economic changes.

When it comes to religious extremism motivated terrorism, however, the influence of socio-economic conditions is not so evident, even though it still exists. Given that this kind of violence is not necessarily reasoned by material means, some argue that poverty should not be considered as individual encouragement for engaging in religious terrorism. As Bernholtz (2004) argues, these “true believers’ supreme values associated with their ideology leave no role for opportunity costs in explaining terror.” (apud Freytag et al., 2011, p. S7) Nevertheless, Freytag et al. (2011) sustain that better economic efficiency and integration increases the cost of opportunity of supporting religious-motivated terror, thus also affecting its occurrence. Therefore, they believe that, despite the fact that economic development by itself is not sufficient to eradicate terror, it can be an effective counter-terrorism strategy if associated with political and military policies,

For Dreher and Fuchs (2010), foreign aid, when properly addressed, can also be a positive alternative in the fight against terror. Previous studies have found that aid is actually effective in reducing terrorism because, in order to receive aid of any kind, governments are frequently asked to implement domestic counter-terrorism measures in exchange Additionally, , contributing to its diminishment. Using aid to combating terrorism can actually be effective in two consequential ways: initially, governments have to show their efforts on specific counter-terrorist measures to attract foreign direct investment (FDI), even if it implies seeking for military assistance; then, aid designed to improve social-economic conditions (e.g. education and heath) will raise the opportunity costs of terrorism. (Bandyopadhyay, Sandler & Younas, 2011 apud Pereira et al., 2012)

Nevertheless, in order to evaluate aid effectiveness in combating terrorism, what should be judged is whether this goal is being achieved rather than analyzing economic growth. (Dreher & Fuchs, 2010) Caruso and Schneider’s (2011) work has shown that these two ends are not excluding. In accordance with the immiserizing argument, their studies have shown a positive relation between “changing economic environment and the incidence of terrorism”. (Schneider & Caruso, 2011, p. S48)

In conclusion, we have emphasized that the fight against terror must encompass socio-economic measures. It must also be considered that damage from terror can include “losses in [FDI], damaged infrastructure, output losses, security costs, reduced economic growth, reduced tourism, trade losses, higher insurance premiums” (Keefer & Loayza, 2008 apud Bandyopadhyay et al., 2011), thus aggravating the scenario for violence. Hence, such measures – such as providing economic and humanitarian aid – can be affective in fighting terrorism because they foster domestic counter-terrorist measures, raise the cost of opportunity for individuals and, by promoting social-economic development, even help provide structural solutions for the use of violence.


  • Bandyopadhyay, S., Sandler T. & Younas, J. (2011). Foreign Direct Investment, Aid, and Terrorism: An Analysis of Developing Countries. Federal Reserve Bank Of St. Louis Research Division Working Paper Series. Retrieved May 06, 2012 from
  • Blomberg, S. B., Gregory, D. H. & Weerapana, A. (2004). Economic Conditions And Terrorism. European Journal of Political Economy, 20, 463–478.
  • Caruso, R. & Schneider, F. (2011). The Socio-Economic Determinants Of Terrorism And Political Violence In Western Europe (1994–2007). European Journal of Political Economy, 27, S37–S49.
  • Dreher, A. & Fuchs, A. (2011). Does terror increase aid? Public Choice, 149, 337–363.
  • Freytag, A., Krüger, J. J., Meierrieks, D. & Schneider, F. (2011). The Origins Of Terrorism: Cross-Country Estimates Of Socio-Economic Determinants Of Terrorism. European Journal of Political Economy, 27, S5–S16.
  • Pereira, A. P. M., Vilarinhos, B. T., Macedo, N. & Qu, C. (2012). The Multiple Faces Of Contemporary Terrorism Complexity, Discourses And The Case-Example Of Northwestern Pakistan. In Sigora, J. A. S., Avellar, C. L. N. & Ribeiro, C. A. C. Individual empowerment in the international system: Towards development (2012). Brasilia.

Antônio Philipe de M. Pereira é mestrando em Relações Internacionais pela Universidade da California em  San Diego, Estados Unidos.
Bárbara Teixeira Vilarinhos, graduanda em Relações Internacionais pela Universidade de Brasília (

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