Are Lives a Substitute for Livelihoods? Terrorism, Security, and U.S. Bilateral Imports

Are Lives a Substitute for Livelihoods? Terrorism, Security, and U.S. Bilateral Imports

What is the impact of terrorism on trade through higher security at the borders? The authors set up a theory which shows that the impact goes not only from terrorism to trade. Higher trade with a partner might, in turn, increase the probability of terrorism acts and make security measures more costl...

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Bibliographic Details
Main Authors: Mirza, Daniel, Verdier, Thierry
Format: Policy Research Working Paper
Language:English
en_US
Published: World Bank, Washington, DC 2012
Subjects:
ABSOLUTE VALUE
ADJUSTMENT
AGRICULTURE
ATTACK
AUTHORITY
BILATERAL IMPORTS
BILATERAL TRADE
BORDER PROTECTION
CAR
CIVIL LIBERTIES
CONSUMER PRICE INDEX
CONTAINER SECURITY
COUNTER TERRORIST
COUNTER-TERRORISM
COUNTRY OF ORIGIN
ECONOMIC RENTS
ECONOMIC WELFARE
ELASTICITY
ELASTICITY OF SUBSTITUTION
EQUILIBRIUM
EXPECTED RETURN
EXPORTS
FOREIGN DIRECT INVESTMENT
GDP
GDP PER CAPITA
GRAVITY MODEL
HUMAN RIGHTS
IMMIGRATION
IMPERFECT COMPETITION
IMPORT VALUE
INCREASING RETURNS
INTERNATIONAL TRADE
LATIN AMERICAN
LDCS
LEVEL OF SECURITY
LOCALIZATION
LOGISTICAL SUPPORT
MARGINAL COSTS
MARITIME TRANSPORT
MONOPOLISTIC COMPETITION
NASH EQUILIBRIUM
NATURAL RESOURCES
PERFECT COMPETITION
PORTS
PROFIT MAXIMIZATION
RESTRICTIONS
SANCTIONS
SECURITY CHECKS
SECURITY CONTROLS
SECURITY COSTS
SECURITY MEASURES
SPECIALIZATION
TERRORISM
TERRORIST
TERRORIST ACTIVITIES
TERRORIST ACTS
TERRORIST ATTACK
TERRORIST ATTACKS
TERRORIST GROUP
TERRORIST GROUPS
TERRORIST INCIDENT
TERRORIST INCIDENTS
TERRORIST ORGANIZATION
TERRORIST ORGANIZATIONS
TERRORIST SECURITY
TERRORISTS
THREAT
TRADE COSTS
TRADE DATA
TRADE EFFECTS
TRADE FACILITATION
TRADE FLOWS
TRADE RESTRICTIONS
TRADE VOLUMES
TRANSACTIONS COSTS
TRANSPORT COSTS
UNIT OF LABOR
WAGE RATE
WELFARE LOSSES
WORLD TRADE
Online Access:http://documents.worldbank.org/curated/en/2006/12/7261845/lives-substitute-livelihoods-terrorism-security-bilateral-imports-lives-substitute-livelihoods-terrorism-security-bilateral-imports
http://hdl.handle.net/10986/9283
Description
Summary:What is the impact of terrorism on trade through higher security at the borders? The authors set up a theory which shows that the impact goes not only from terrorism to trade. Higher trade with a partner might, in turn, increase the probability of terrorism acts and make security measures more costly for total welfare. To identify the true impact of terrorism, their theory allows for a strategy to condition out the latter mechanism. The authors show in particular how past incidents perpetrated in third countries (anywhere in the world except the origin or targeted country) constitute good exogenous factors for current security measures at the borders. Their tests suggest that terrorist incidents have a small effect on U.S. imports on average, but a much higher effect for those origin countries at the top of the distribution of incidents. In addition, the level of the impact is up to three times higher when the acts result in a relatively high number of victims, the products are sensitive to shipping time, and the size of the partner is small. The authors further show how terrorism affects the number of business visas given by the United States, thereby affecting significantly U.S. imports in differentiated products. These results suggest that security to prevent terrorism does matter for trade.

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