The short- and long-run relationship between the illicit drug business and terrorism

We study the effect of the illicit drug business on terrorism for a sample of 58 countries for the 1984–2007 period. Consistent with the notion of a crime-terror nexus, we find that in the long run, higher drug prices are associated with more terrorism. In the short run, however, increases in drug prices lead to less terrorism, potentially because terrorist groups respond to higher drug business attractiveness by prioritizing criminal over terrorist activity.