Foreign aid and terrorist groups: incidents, ideology, and survival

During recent decades, terrorist groups have sought refuge in weak or failed states from which to launch their attacks. Foreign aid to states harboring those groups may or may not be an effective counterterrorism strategy. The current paper investigates that strategy from resident terrorist groups’ perspectives while accounting for their ideologies. In particular, we investigate how conflict aid and other forms of assistance affect the number of domestic and transnational terrorist incidents perpetrated by resident groups of religious, leftist, or nationalist orientations. Our analysis indicates that aid influences not only resident groups’ terror campaigns but also their survival prospects. Groups’ ideologies play important roles in counterterrorism aid’s effectiveness. To address possible aid-terrorism endogeneity, our regressions rely on novel instruments.