Aid, Intervention, and Terror: The Impact of Foreign Aid and Foreign Military Intervention on Terror Events and Severity

Objective Relatively few empirical studies have analyzed the foreign policy options that leaders employ to counter terrorism, and the results have been mixed to date. This study takes a fresh look at two such policies: foreign aid and foreign military intervention. Method Using system generalized method of moments to control for endogeneity and a technique that identifies short‐ and long‐term effects, we examine the impact of both policy options within a sample of 122 countries from 1970 to 2005. Results The results suggest that foreign aid may be associated with an increase in the number of terrorist incidents, fatalities, and casualties. They also indicate that foreign military intervention increases terrorist incidents in the short term and may eventually reduce them in the long term. Conclusion These findings should give pause to those who consider foreign aid to be a possible antidote for both transnational and domestic terrorism. Unfortunately, policymakers searching for ways to reduce terrorist activity will find little solace if they turn to foreign military intervention since a surge in terror incidents in the short term after a military intervention establishes a significantly higher baseline of terror activity and violence. It may take decades for terror activity to return to its preintervention level. Policymakers searching for options to combat international terror should consequently approach both foreign aid and foreign military intervention with caution.