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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.

Attack --- Attacks --- Car Bomb --- Conflict and Development --- Counter-Terrorism --- Counter-Terrorism Measures --- Country Strategy and Performance --- Debt Markets --- E-Business --- E-Finance and E-Security --- Economic Theory and Research --- Emerging Markets --- Finance and Financial Sector Development --- Hazard Risk Management --- Homeland Security --- Industry --- Information --- International Terrorism and Counterterrorism --- International Trade --- Logistical Support --- Macroeconomics and Economic Growth --- Private Sector Development --- Security --- Technology Industry --- Terrorism --- Terrorism Acts --- Terrorism Thre Terrorist --- Terrorist Activities --- Terrorist Attack --- Terrorist Incidents --- Terrorist Organizations --- Transport --- Transport Security --- Travel --- Urban Development --- World Trade

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• Reference Manager
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The authors offer a general analytical framework illustrating the complex two-way interactions between trade and transnational terrorism. Then they survey the recent economic literature in light of this framework by pointing to the importance in empirical studies of (1) controlling appropriately for theses interactions, (2) distinguishing between "source" countries and "target" countries of terrorism, and (3) taking into account the intertemporal persistence of terrorism between specific pairs of countries.

Attacks --- Conflict and Development --- Counter-Terrorism --- Counter-Terrorism Policies --- Counterterrorist Policies --- Debt Markets --- E-Business --- E-Finance and E-Security --- Economic Theory and Research --- Emerging Markets --- Finance and Financial Sector Development --- Financial Transactions --- Free Trade --- Hazard Risk Management --- International Economics & Trade --- International Terrorism and Counterterrorism --- International Trade --- Logistical Support --- Macroeconomics and Economic Growth --- Monitoring --- Private Sector Development --- Public Sector Corruption and Anticorruption Measures --- Security --- Terrorism --- Terrorist --- Terrorist Activities --- Terrorist Acts --- Terrorist Groups --- Terrorist Incidents --- Terrorist Organizations --- Terrorist Thre Terrorists --- Transport --- Transport Security --- Travel --- Urban Development --- Weapon