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Exploring the nexus: Foreign aid, war on terror, and conflict in Pakistan

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  • Nasir, Muhammad
  • Rehman, Faiz Ur
  • Orakzai, Mejzgaan

Abstract

This study explores the nexus between foreign aid, war on terror, and terrorism in Pakistan for the period 1972–2010. By making use of Johansen method of cointegration, the paper concludes that, contrary to the popular assumption, there is no association between foreign assistance and conflict in Pakistan. However, the impact of foreign aid on terrorism is positive in the long run during the war on terror period. Furthermore, the positive impact of GDP on terrorism mirrors the fact that militants consider terrorist attacks a feasible option compare to open war in face of enhanced state capacity. The study also unearths the non-linear U-shape relationship between political repression and violence in the long run.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 29 (2012)
Issue (Month): 4 ()
Pages: 1137-1145

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Handle: RePEc:eee:ecmode:v:29:y:2012:i:4:p:1137-1145

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Web page: http://www.elsevier.com/locate/inca/30411

Related research

Keywords: Foreign aid; War on terror; Terrorism; Pakistan;

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References

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  1. Scott Atran, 2006. "the Moral Logic and Growth of Suicide Terrorism," Post-Print ijn_00000676, HAL.
  2. Muhammad, Javid & Qayyum, Abdul, 2011. "Foreign Aid-Growth Nexus in Pakistan: Role of Macroeconomic Policies," MPRA Paper 29498, University Library of Munich, Germany.
  3. Mete Feridun & Muhammad Shahbaz, 2010. "Fighting Terrorism: Are Military Measures Effective? Empirical Evidence From Turkey," Defence and Peace Economics, Taylor & Francis Journals, vol. 21(2), pages 193-205.
  4. Jean-Paul Azam & Alexandra Delacroix, 2006. "Aid and the Delegated Fight Against Terrorism," Review of Development Economics, Wiley Blackwell, vol. 10(2), pages 330-344, 05.
  5. Ahmed, Vaqar & Wahab Siddiqui, Abdul, 2010. "Nexus between aid and security: the case of Pakistan," MPRA Paper 29310, University Library of Munich, Germany.
  6. Enders, Walter & Sandler, Todd, 2000. "Is Transnational Terrorism Becoming More Threatening? A Time-Series Investigation," Staff General Research Papers 1823, Iowa State University, Department of Economics.
  7. Oh, Wankeun & Lee, Kihoon, 2004. "Causal relationship between energy consumption and GDP revisited: the case of Korea 1970-1999," Energy Economics, Elsevier, vol. 26(1), pages 51-59, January.
  8. Muhammad Javid & Abdul Qayyum, 2011. "Foreign Aid and Growth Nexus in Pakistan: The Role of Macroeconomic Policies," PIDE-Working Papers 2011:72, Pakistan Institute of Development Economics.
  9. Axel Dreher & Andreas Fuchs, 2011. "Does terror increase aid?," Public Choice, Springer, vol. 149(3), pages 337-363, December.
  10. Robert K. Fleck & Christopher Kilby, 2009. "Changing Aid Regimes? U.S. Foreign Aid from the Cold War to the War on Terror," Villanova School of Business Department of Economics and Statistics Working Paper Series 1, Villanova School of Business Department of Economics and Statistics.
  11. Todd Moss & David Roodman & Scott Standley, 2005. "The Global War on Terror and U.S. Development Assistance: USAID allocation by country, 1998-2005," Working Papers 62, Center for Global Development.
  12. Azam, Jean-Paul & Thelen, Véronique, 2007. "The Roles of Foreign Aid and Education in the War on Terror," IDEI Working Papers 449, Institut d'Économie Industrielle (IDEI), Toulouse.
  13. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
  14. Stephen Knack, 2001. "Aid Dependence and the Quality of Governance: Cross-Country Empirical Tests," Southern Economic Journal, Southern Economic Association, vol. 68(2), pages 310-329, October.
  15. Muhammad Nasir & Amanat Ali & Faiz Ur Rehman, 2011. "Determinants Of Terrorism: A Panel Data Analysis Of Selected South Asian Countries," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 56(02), pages 175-187.
  16. Alan B. Krueger & Jitka Maleckova, 2003. "Education, Poverty and Terrorism: Is There a Causal Connection?," Journal of Economic Perspectives, American Economic Association, vol. 17(4), pages 119-144, Fall.
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Cited by:
  1. Qayyum, Unbreen & Din, Musleh-ud & Haider, Adnan, 2014. "Foreign aid, external debt and governance," Economic Modelling, Elsevier, vol. 37(C), pages 41-52.

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