Volume 17, Issue 1

This work uses several empirical approaches to examine the effects of poverty and inequality on violence in the seven metropolitan areas in Colombia. To this end, this study describes the main determinants of violence in these cities; these determinants are all fundamental features of social instability. For this description, this paper uses several econometric approximations to compare and determine an adequate estimator for the analysis of Colombian urban violence. This hypothesis was supported by evidence showing that factors related to poverty, inequality, and education directly influenced violence in the cities. Because of their effects over time and their incidence rates across society, these factors also had negative effects on the economic and social development of every city analysed.

This study theoretically and empirically tests the relationship between military spending and social spending in Egypt using data from 1987–2005. The theoretical results show that the crowding-out of social spending is ambiguous, unless the government is fully allocating its tax receipts to the military. The crowding-out of social spending by military spending lacks theoretical and empirical justification.

In this paper we analyze the impact of terrorist attacks conducted in Israel during the Second Intifada (2000-2006) on the Israeli stock market. The impact is assessed by differentiating between attacks in the center of Israel (what is termed here the core region) and attacks in the periphery (the southern and northern areas of the country). We use the event study technique to evaluate the effects of the attacks on abnormal returns on the Israeli stock market. Our major finding is that a terrorist attack in the center of Israel has a significant negative effect on the stock market on the day it happens and a significant cumulative negative effect for several days afterward. However, when the attack takes place in the periphery, it has a less significant effect and no lasting impact after the first day.

This paper (1) translates theoretical notions of optimal security allocations into concrete policy recommendations and (2) compares these recommendations with actual transport security policy and transport security allocations in Norway. I argue that when protecting against mass-casualty attacks, priority should be given to potential targets that would suffer high casualties and that have a high number of foreign travelers, low employee density, many hiding places, many entry/exit points, high passenger anonymity, and high system fragility. Interviews with Norwegian transport authorities suggest that budget constraints and international commitments, rather than concerns for efficiency at the aggregate (national) level, determine the authorities’ allocation of security resources.

The purpose of this paper is to investigate the insights that might be generated into the nature of 'lone wolf terrorism’ through the application of economic analysis. Orthodox approaches, particularly (standard) expected utility analysis and game theoretical analysis, are discussed. These tools prove useful in developing preliminary or 'first order’ insights. The lone wolf terrorist exhibits a number of idiosyncrasies that present challenges to both economic analysis and government security policy. An alternative analytical framework is constructed wherein a terroristic agent makes choices on the basis of a preference ordering constructed over two moments of the distribution (measured in terms of fatalities generated by terrorist attacks). Seven predictions are yielded from the mean-variance theoretical framework and numerical estimates are computed as preliminary steps towards the full exploration of the implications of the framework. Most importantly, depending on their level of risk aversion (or risk seeking behaviour), lone wolves are expected to predominantly choose assassination, armed attack, bombing, hostage taking or unconventional attacks. Furthermore, within a range of between one and two standard deviations from the mean, it is possible that the quadratic utility function will reach a maximum. Following attacks of a certain magnitude (in terms of fatalities), it might be expected that the lone wolf will withdraw from activity for a period of time. This analytical approach may assist governments and security agencies facing the threat of lone wolf terrorism.

Rural-urban divides have characterized recent violent insurgencies around the world, but there are important differences in dynamics: sometimes rural insurgents target cities and sometimes not; sometimes the combat frontier is blurry, other times neat. This paper attempts to construct a simple model of the rural-urban relationship in conflict to understand when predators will attempt to prey on cities, versus when they remain in the hinterlands. It takes Krugman’s (1991) core-periphery model as a starting point, in which there are just two regions, A and B (perhaps rural and urban), and two sectors. However, the model is modified such that the sectors are not “manufacturing” and “agriculture,” but rather production and predation, after Hirshleifer (1991), which can both occur in either or both regions. It finds that at middling levels of predation and/or high transportation costs, rural predatory actors will target cities. At high levels of predation and/or low transportation costs, however, multiple stable equilibria may arise, creating disincentives for rural predatory actors to target cities.

Free media may reduce incidents of socio-political instability. Different types of socio-political instability have been shown to have a negative effect on investment and economic growth. This study examines the effect of free media on various indicators of socio-political instability. Using a panel of 98 countries over 1994-2005, this study shows that media free from government control and interference may decrease different forms of socio-political instability because it puts internal and external pressure on self-interested governments to act in the best interests of citizens—rather than their own. The empirical results suggest that a freer media is associated with lower levels of socio-political instability as measured by ethnic tensions, external and internal conflicts, crime and disorder, military participation in government and religious tensions. The estimates are robust to several sensitivity tests.

This paper analyzes the political economy of the creeping militarization of U.S. foreign policy. The core argument is that in integrating the “3D” approach—defense, development, and diplomacy—policymakers have assigned responsibilities to military personnel which go beyond their comparative advantage, requiring them to become social engineers tasked with constructing entire societies. Evidence from The U.S. Army Stability Operations Field Manual is presented to illustrate the wide scope of responsibilities assigned to the U.S. military. The tools of political economy are used to analyze some of the implications.

Despite the fact that the Mozambican Civil War was one of the most violent civil war, no data is available at the intra-country level pertaining to this conflict. This paper introduces a new micro-level database and proposes a geo-temporal analysis of the evolution of this conflict. This database provides information on the province-level location, the district-level location, and the dates of 1,723 events related to this conflict. It also provides the latitude and longitude for 551 of these events. This database also classifies these collected events and provides the location of 22 rebel bases. Furthermore, this database provides the start and end dates of the conflict for each province, highlighting the differences in the duration of the conflict across the Mozambican provinces.

Ron P. Smith is the winner of the 2010 Lewis Fry Richardson Lifetime Achievement Award, which honours exemplary scholarly contributions to the scientific study of militarized conflict by researchers based in Europe for most of their career. This essay summarizes Smith’s scholarly achievements. Smith’s research shows how economic analysis can be helpful to analyse peace and security issues, very much in the spirit of Richardson’s efforts to use scientific methods to study war and peace.

The key idea of this paper is that the level of commitment among combatants should be analyzed to get a better understanding of civil war duration and the survival of armed groups. The empirical application focuses on a sample collected during field research in the Democratic Republic of the Congo. Bayesian analyses show that the ways in which fighters are recruited and the amount of training and promotion they receive have a significant, reliable effect on the level of affective organizational commitment showed by the fighters.

A list of of Referees/Reviewers for 2010 for Peace Economics, Peace Science and Public Policy.