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6. The Deadly Nexus of Globalization, Oil, and Terrorism
- Cornell University Press
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159 6 THE DEADLY NEXUS OF GLOBALIZATION, OIL, AND TERRORISM The impact of Middle Eastern oil on transnational terrorism is only half of the story that this book seeks to tell. We also have to consider the global context, which produces its own important contributions. The other half of the story about terrorism concerns the role of globalization. Middle Eastern oil and globalization contributed individually to the threat of transnational terrorism, but they have also combined to enable its rise as a serious international security problem. Globalization took off as the oil era was also gaining significant traction, after World War II. Our ancestors would probably be surprised by the rise of globalization in all its dimensions and by the emergence of oil as the dominant form of energy. When oil was discovered in 1859 in Pennsylvania, the big rush involved not oil but gold and silver. Nor could our ancestors have predicted that the Middle Eastern oil and globalization eras would roughly overlap, producing what I believe to be important combined effects. Globalization and Oil Demand I make three related arguments in this section. First, globalization has increased the demand for global oil; second,the increased demand for oil has made and will increasingly make the Persian Gulf important to the global economy; and third, this dynamic has linked and will continue to link Middle Eastern oil to some of the oil-terror connections that this book has explicated. 160 PART II: GLOBALIZATION AND TRANSNATIONAL TERRORISM The rise of globalization, as discussed in the introduction, is important for the arguments of this book: there is a connection between globalization and economic growth and, in turn, oil demand. Not surprisingly, scholars have not reached consensus on this issue, largely because some disagree about how to measure globalization and about how to draw causal inferences about its effects.1 However, we have strong theoretical and empirical reasons to believe that globalization matters, and most scholars support that view. One of the fundamental features of international trade theory is that open economies achieve higher economic growth rates than closed economies do. The notion of comparative advantage, first put forth by David Ricardo, is key here: openness (to both trade and international capital) allows countries to specialize in (and then to export products derived from) their comparative advantage while importing products in which they are disadvantaged. Other arguments, such as the importance of openness to realizing economies of scale, have been added to the equation over time. But these only reinforce the mantra that openness is good. A large literature confirms the trade-growth proposition in particular, although dissenting opinions certainly exist.2 Many scholars reveal a strong relationship between economic performance and openness to trade, and between economic performance and trade flows.3 Other analysts have shown that trade increases income significantly, as well as overall global growth, albeit not enough to offset serious global poverty.4 Using panel data for 123 countries over the 1970–2000 period, one scholar found that globalization promotes growth—but not to an extent necessary to reduce poverty on a large scale—and that actual economic flows promoted growth most,information flows did so less robustly,and political integration had no effect.5 While the type of globalization mattered, so did the strength of economies. Global trade may well benefit industrialized nations more than less-developed states.6 Marked by international trade, foreign direct investment, and porous borders for penetration, globalization creates prospects for economic interaction that require oil. Consider China’s significant rise in world politics from the 1980s 1. On the literature, see Brune and Garrett, Globalization Rorschach Test. 2. On this literature, see Dani Rodrik and Francisco Rodriquez “Trade Policy and Economic Growth” (2000) available at www.hks.harvard.edu/fs/drodrik/Research%20papers/skepti1299.pdf, 1–3. 3. On this literature, see Dreher et al., Measuring Globalisation, 120–26. 4. See Jeffrey Frankel and David Romer, “Does Trade Cause Growth,” available at www.econ. berkeley.edu/~dromer/papers/AER_June99.pdf. See Axel Dreher “Does Globalization Affect Growth? “(2003) available at http://129.3.20.41/eps/dev/papers/0210/0210004.pdf. 5. Dreher,“Does Globalization Affect Growth?” See also Dreher et al., Measuring Globalisation. 6. On this literature, see Brune and Garrett, Globalization Rorschach Test. [44.215.110.142] Project MUSE (2024-03-28 23:10 GMT) THE DEADLY NEXUS OF GLOBALIZATION, OIL, AND TERRORISM 161 into the twenty-first century. It is a dramatic example of how oil is critical to...