Examining factors that may lead to violent extremism

Economic conditions are some of the least understood factors that influence people to become violent extremists.  In countries which today are experiencing relatively high incidences of violent extremism, such as the Middle East and North Africa, there is a great disparity in rights and protections that are afforded to workers taking part in the formal and informal economies, potentially fermenting violent extremism.

This project seeks to better understand some of these economic factors that may lead people to radicalize by examining either both, or one of the following two economic issues:  (1) the lack of widespread financial inclusion in formal economies; and (2) expectation gaps that exist between workers and available jobs.

With respect to financial inclusion:

It would be helpful to use the Global Partnership for Financial Inclusion dataset (http://www.gpfi.org/data), along with its 5 indicators (1. Formally banked adults, 2. Adults with credit by regulated institutions, 3. Formally banked enterprises, 4. Enterprises with outstanding loan or line of credit by regulated institutions, and 5. Points of service), to look for any link/correlation with VE, political instability, etc.  This could start as a general survey of countries in a couple regions (Middle East and North Africa, sub-Saharan Africa, etc.).  

The study could then move to focus on particular countries, with more detailed case study analysis, depending on the regional outcomes.  It would be useful to use the data/indicators developed within the context of the G20;  if some sort of relationship is found, it could serve to inform existing efforts on financial inclusion.  

Another way to get at the informal/formal economy divide is by looking at proxy data, such as the World Bank’s Ease of Doing Business rankings.  It’s likely that countries with very low scores on the WB Doing Business Rankings also have large informal sectors and likely high levels of economic marginalization.  It might be worth looking at the rankings to tease out any links to VE among lower ranked countries.

Another way to evaluate the efficacy of this thesis is to examine Regional Disparities.  Students could look to compare countries with pronounced economic disparities among regions with countries (of the same income levels) that do not have pronounced economic disparities among regions.  

With respect to the question of Expectation Gaps:

The study should assess different ways of measuring expectations gaps (minority economic discrimination, gaps between education and income levels, and a country’s macroeconomic trends and the individual’s satisfaction/dissatisfaction). Then the paper can explore the causal relationships between these measures and VE using either a broader statistical or case study approach.


Lead Researcher: Olga Shemyakina, Economics