Research

Under what circumstances does terrorism repel foreign investment? The negative effect of terrorism on foreign investment identified in current scholarship masks heterogeneity across host markets and industries. Foreign investment ought to react less to terror when host markets perfectly match firms’ needs; when firms lack viable alternative host markets; and when key assets are market-specific. We model the endogenous co-determination of terror and investment to derive these comparative statics, highlighting several empirical challenges in identifying the effects of terror on FDI. To overcome these obstacles, we develop an instrumental variable estimator which exploits differences in the networks along which terror and investment spread. Using industry-level data on the activities of US multinationals, we test our model and conclude that foreign investors that find it hard to leave particular host markets are doubly penalized: their lack of outside options makes them tempting targets for terror.

How do conciliatory and coercive counterinsurgency tactics affect militant group violence against civilians? Scholars of civil war increasingly seek to understand intentional civilian targeting, often referred to as terrorism. Extant research emphasizes group weakness, or general state attributes such as regime type. We focus on terrorism as violent communication and as a response to government actions. State tactics toward groups, carrots and sticks, should be important for explaining insurgent terror. We test the argument using new data on terrorism by insurgent groups, with many time-varying variables, covering 1998 through 2012. Results suggest government coercion against a group is associated with subsequent terrorism by that group. However, this is only the case for larger insurgent groups, which raises questions about the notion of terrorism as a weapon of the weak. Carrots are often negatively related to group terrorism. Other factors associated with insurgent terrorism include holding territory, ethnic motivation, and social service provision.