Terrorism and regional integration in sub-saharan Africa: The case of the CFA franc zone

Abstract

To the extent that regional currency integration changes the cost of imported inputs used in the production of terror, it can change the supply of terror produced by rational terrorists. In this paper, we appeal to a theory of rational terrorism where a country's membership in a regional currency union conditions the cost of imported inputs that produce terror, and estimate the parameters of static and dynamic terrorism supply functions with Generalized Estimating Equation count data estimators for Sub-Saharan Africa between 1974 and 2006. Our parameter estimates reveal that regional currency integration has counter-terrorism benefits as countries with membership in the newly constituted CFA Franc Zone had fewer terrorism incidents relative to other Sub-Saharan African countries. Our parameter estimates also suggest that the CFA Franc Zone caused a decrease in terrorism. As terrorism constrains important drivers of economic growth, our results suggest that another potential channel by which regional currency integration improves living standards in Sub-Saharan Africa is through reducing terrorism.