Research on terrorism disagrees on whether terrorist activity is at its highest in collapsed states, which are more hospitable to such activities, or whether terrorism increases in more capable states. We revisit this discussion by theorizing an interactive relationship: terrorists prefer to operate in politically-hospitable states, but their attack frequency within these states increases with greater technological capacity, which allows them to expand their military, recruitment, and financing operations. We analyze 27,018 terrorist incidents using regression and causal inference models, conduct a case study, and find robust support for this interactive logic. Our conclusions outline implications for policy and academic work.