Does transnational terrorism stimulate foreign assistance?

Wukki Kim and Todd Sandler
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Wukki Kim: Department of Economics and Law, 65767Korea Military Academy, Republic of Korea

Conflict Management and Peace Science, 2023, vol. 40, issue 2, 187-206

Abstract: This paper quantifies how past transnational terrorist attacks against a potential donor's assets result in enhanced foreign aid flows to a country hosting the responsible terrorist group. Given the reversed causality between foreign aid and terrorism, our empirical analysis puts forward an instrumental variable. Both conflict and governance assistance are shown to stem from transnational terrorist incidents involving recipient–donor dyads during 1974–2013 for a global sample. For recipient-related terrorism, lagged transnational terrorist events against a donor's assets display a robust positive impact on conflict and governance aid. Placebo or falsification tests support the exogeneity of the instrument.

Keywords: transnational terrorism; conflict and governance foreign aid; instrument; war on terror; falsification test (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:sae:compsc:v:40:y:2023:i:2:p:187-206

DOI: 10.1177/07388942221081103

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