The tragic events which took place in Paris are a stark reminder that terrorism is a pervasive phenomenon. The use of violence and intimidation in order to bring about change is gaining momentum. Like any behaviour, terrorism is influenced by economic realities and constraints. It can be analysed in terms of demand for terrorism activities, which depends on the extent to which people share the view that in order to bring about change any means is licit. On the other hand, the supply of terrorists is composed of those people who are willing to perform villain acts, the compensation of which may be either monetary or non-monetary. Viewed along these lines, the observed spike in terrorism activity is the result of a concurrent increase in demand and supply. In order to contain terrorism, both demand and supply factors must be addressed.

Scholars suggest that terrorism is rooted in relative economic deprivation: poverty, inequality and lack of economic opportunities. Violent reactions are by no means a new phenomenon. The French Revolution and World War II, just to name two important historical episodes, are two clear examples of how economic hardship gave rise to demand-driven violence. Indeed, violence may be triggered when there is a discrepancy between what individuals think they deserve and what they actually receive. Such situations create demand for terrorist activities as some people may consider that such extreme actions are the only way to bring about change.

Violence may be triggered when there is a discrepancy between what individuals think they deserve and what they actually receive

At the same time, economic inequality creates fertile territory for the build-up of a pool of people who may be willing to embrace terrorist causes. People who are marginalised may build up a sense of anger that translates itself into radical violence. This sentiment may be present even among those who are living in rich countries but who still feel economically marginalised. In an environment of ­economic deprivation, terrorist organisations find it easier to recruit followers. The distinction between what is morally justified or unjustified may become blurred when someone is destitute. Just as the notorious Mafia in Italy is seen by some of its affiliates as the only source of prosperity, terrorist organisations create a sense of dependency on their followers, as in some cases, these may be seen (erroneously) as the only means of improved well-being.

Most societies have managed to achieve a peaceful equilibrium through economic development, supported by a system of progressive taxation (where the rich pay a higher tax rate than the poor) and through generous welfare systems. In the long term the economic well-being of the rich can only be sustained if the poorer segment of society is compensated, through redistributive income and expenditure policies. The same approach needs to be adopted at an international level. The gap between the rich and the underdeveloped needs to be narrowed. This is a precondition for peace.

Unfortunately, the economic challenges faced by the developed world in the aftermath of the global financial crisis as well as the costs associated with population ageing, among other factors, has meant that rich countries have become increasingly inward oriented, placing at the forefront the economic problems hitting their own countries at the expense of global development goals. Moreover, increased economic integration among some countries, as is the case of the European Union, has tended to divert attention to home policies rather than international affairs.

Such neglect, however, is starting to backfire. There is need for a rethink of international diplomacy and a reassessment of aid efforts. A more proactive strategy based on higher aid, and closer worldwide economic integration, through the further dismantling of trade barriers, will in the long run prove more cost effective than mere reactive antiterrorism policies based on higher spending on defence.

Improved standards of living worldwide and higher levels of education will also tend to reduce religious fanaticisms. Wealth allows people to feel more secure in the sense that they are confident of having their basic needs met and expect to lead a long healthy life. In such environments, there is less of a market for religion extremes, as affluence generally tends to make societies more secular.

Following along the lines of the 1992 economics Nobel Prize winner, Gary Becker, who studied the determinants of crime, even terrorism – which may be considered as the ultimate crime – needs to be understood, and henceforth combated, through an economic approach.