World Economics - Insight , Analysis and Data

World Economics - Insight , Analysis and Data
The Diseconomies of Terrorism
Peter J. Phillips
World Economics, December 2011

The Global Terrorism Database (GTD) contains many active and inactive terrorist groups. The defining characteristic of the terrorist groups contained in the GTD is smallness. Unlike the modern business enterprise, for example, there appears to be no trend towards ‘bigness’. This paper presents an analysis of the size distribution of terrorist groups and the implications of this size distribution for the technological conditions under which the output of terrorism may be increased. With net internal and external diseconomies to larger-scale production of terrorism, we should observe relatively small terrorist groups and little or no tendency for the number and size of terrorist groups in the ‘terrorism industry’ to increase. These facts do characterise the empirically observed size distribution of terrorist groups, and imply that the technological conditions under which the output of terrorism may be increased are characterised by internal and external diseconomies to larger-scale production of terrorism.


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