Preparing Against Future Terror Attacks? A Case of Large UK Firms

This paper attempts to examine the potential viability of the so-called public-private partnership in fighting international terrorism. In the spirit of ‘rentseeking’ approach, a simple model of public-private cooperation is developed, enabling us to identify the weaknesses and strengths of such operation. In testing the potentials of the scheme and in measuring the extent of rent-seeking, the research has conducted a qualitative survey (questionnaire and interviews), and a quantitative analysis of 250 large UK based businesses of selected SIC. The research finds that whilst nearly 40% of firms being in favour of some form of PPP, a significant majority of such firms believe that the government information vis-à-vis terror attack is either misleading, inaccurate or exaggerated. In realising a workable approach and on avoiding any possible selection bias, the research uses a two-step Heckman model. This arises from the fact identified by the research that, on the whole, once firms have decided to trust government’s information on terror threat, then they appear to become sensitive to the economic viability (value for money) of their proceeding with a contingency plan against possible terror attack. The research identifies a strong case of rent-seeking by both the officials, and by those firms who provide counter-terror goods/services for government. In particular, the partial elasticity relating trust to firm’s preparedness has turned out to be large and highly statistically significant. In short, the research concludes, based on the survey’s findings, that any PPP being a one-way relationship in favour of government, and hence one must promote the idea of private businesses conducting risk assessment of terrorist threat, rather than relying on the potentially politically-adjusted information publicized by the rent-seeking officials.