Most efforts to link terrorism and poverty are politically motivated, just like most efforts to link crime and poverty. Liberals do not like either force or poverty, and so faced with crime or terrorism they prefer a solution that involves alleviating poverty rather than one that involves applying force. They sometimes dress up this politically motivated preference by distinguishing between the "root causes" of terrorism or crime, on the hand, and the "symptoms"--i.e., overt acts of terrorism or criminality--on the other hand, and arguing that a problem can be solved only by removing the root causes. But this is incorrect. It's the effects--the acts of terrorism, the criminal offenses--that we care about, and often the effects can be eliminated at lower cost than the causes.
In any event, there is little basis either theoretical or empirical for thinking that poverty causes terrorism. In addressing the issue we need to distinguish between the individual level and the population level. As Becker points out, the terrorists who commit the most significant acts of terrorism are unlikely to be at the bottom of the income/education distribution; indeed the leaders are likely to be even further from the bottom. The ablest terrorists are the leaders, and the ablest members of a terrorist group are also the scarcest and so they rationally take the fewest risks. Terrorism requires not only leadership (apart from "lone wolf" terrorism, which I discuss below) but also motivation, invariably political in at least a broad sense; and the motivation is often supplied, or at least articulated and enhanced, by intellectuals. Think of the role of the Russian "intelligentsia" (intellectuals preoccupied with politics) in Russian terrorism culminating in the Bolshevik revolution.
At the population level, it is difficult to see why wealthy countries should have less terrorism than poor ones; and among the wealthy countries that have been afflicted by terrorism, one has only to think of the United Kingdom (plagued by the Irish Republican Army for so many years), Germany (the Baader-Meinhof gang), Italy (the Red Brigades), Japan (the Red Army and Aun Shinrikyo), Spain (the Basque separatists), Saudi Arabia (al Qaeda)--and the United States. Think of "Bloody Kansas" in the 1850s, the Ku Klux Klan, the anarchists of the late nineteenth and early twentieth centuries such as Sacco and Vanzetti and the assassin of President McKinley, the Puerto Rican separatists who tried to kill President Truman and turned later to bombing buildings, the Weathermen, the Black Panthers, the Unabomber, Timothy McVeigh, and the unknown anthrax assailant of October 2001.
These examples make me skeptical that democracy and liberty are antidotes, even partial ones, to terrorism. For one thing, democracy and liberty encourage independent thinking, which may nourish Utopian fantasies that can breed violence. The kind of lone-wolf terrorism illustrated by the career of the Unabomber is particularly likely to flourish in a society that encourages people to think for themselves, because the diversity of individual thought is very great and one tail of the distribution consists of dangerous maniacs.
For another thing, democracy and liberty create expectations of privacy and free speech that make it difficult to repress subversive movements in their incipience. As Becker points out, the direction of causation may be from absence of terrorism to democracy and liberty rather than vice versa, since, as civil libertarians warn us, fear of terrorism tilts the balance between security and liberty away from liberty.
What does seem to be true (or so at least I found in a study reported in Chapter 3 of my book Frontiers of Legal Theory [Harvard University Press, 2001]) is that a nation’s per capita income is positively related to political stability. Wealthy nations can create the institutional framework required for political stability. But political stability is entirely consistent with terrorist activity. All the wealthy nations that have a terrorist problem are, with the possible exception of Saudi Arabia, politically stable.