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Foreign aid as counterterrorism policy

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  • Subhayu Bandyopadhyay
  • Todd Sandler
  • Javed Younas

Abstract

This paper presents a model where foreign aid bolsters a developing country's proactive counterterrorism efforts against a resident transnational terrorist group. In stage 1 of the game, the donor country allocates resources to terrorism-fighting tied aid, general assistance, and defensive actions at home. The recipient country then decides its proactive campaign against the common terrorist threat in stage 2, while the terrorists direct their attacks against the donor and recipient countries in stage 3. Terrorists' choices in the final stage provide a solid microfoundation for the terrorists' likelihood of success function. In stage 2, greater tied aid raises the recipient country's proactive measures and regime instability, while increased general aid reduces these proactive efforts and regime instability. In stage 1, a donor's homeland security decisions are interdependent with its aid package to a recipient country, hosting resident transnational terrorists. This interdependency and its implications have gone unrecognized to date. Copyright 2011 Oxford University Press 2010 All rights reserved, Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 63 (2011)
Issue (Month): 3 (July)
Pages: 423-447

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Handle: RePEc:oup:oxecpp:v:63:y:2011:i:3:p:423-447

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References

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  1. Azam, Jean-Paul & Thelen, Véronique, 2007. "The Roles of Foreign Aid and Education in the War on Terror," IDEI Working Papers, Institut d'Économie Industrielle (IDEI), Toulouse 449, Institut d'Économie Industrielle (IDEI), Toulouse.
  2. Subhayu Bandyopadhyay & Todd Sandler, 2009. "The interplay between preemptive and defensive counterterrorism measures: a two-stage game," Working Papers, Federal Reserve Bank of St. Louis 2008-034, Federal Reserve Bank of St. Louis.
  3. Khusrav Gaibulloev & Todd Sandler, 2008. "Growth Consequences of Terrorism in Western Europe," Kyklos, Wiley Blackwell, Wiley Blackwell, vol. 61(3), pages 411-424, 08.
  4. Konstantinos Drakos & Andreas Gofas, 2006. "In Search Of The Average Transnational Terrorist Attack Venue," Defence and Peace Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 17(2), pages 73-93.
  5. Jean-Paul Azam & Alexandra Delacroix, 2006. "Aid and the Delegated Fight Against Terrorism," Review of Development Economics, Wiley Blackwell, Wiley Blackwell, vol. 10(2), pages 330-344, 05.
  6. B. Curtis Eaton, 2004. "The elementary economics of social dilemmas," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 37(4), pages 805-829, November.
  7. Sandler, Todd & Lapan, Harvey E., 1988. "The Calculus of Dissent: An Analysis of Terrorists' Choice of Targets," Staff General Research Papers, Iowa State University, Department of Economics 10818, Iowa State University, Department of Economics.
  8. Todd Sandler & Kevin Siqueira, 2006. "Global terrorism: deterrence versus pre-emption," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 39(4), pages 1370-1387, November.
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Citations

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Cited by:
  1. Axel Dreher & Andreas Fuchs, 2011. "Does terror increase aid?," Public Choice, Springer, Springer, vol. 149(3), pages 337-363, December.
  2. S. Blomberg & Khusrav Gaibulloev & Todd Sandler, 2011. "Terrorist group survival: ideology, tactics, and base of operations," Public Choice, Springer, Springer, vol. 149(3), pages 441-463, December.
  3. Joseph Young & Michael Findley, 2011. "Can peace be purchased? A sectoral-level analysis of aid’s influence on transnational terrorism," Public Choice, Springer, Springer, vol. 149(3), pages 365-381, December.
  4. Subhayu Bandyopadhyay & Todd Sandler, 2011. "Immigration policy and counterterrorism," Working Papers, Federal Reserve Bank of St. Louis 2011-012, Federal Reserve Bank of St. Louis.
  5. Azam, Jean-Paul & Thelen, Véronique, 2012. "Where to Spend Foreign Aid to Counter Terrorism," IDEI Working Papers, Institut d'Économie Industrielle (IDEI), Toulouse 725, Institut d'Économie Industrielle (IDEI), Toulouse.
  6. Claude Berrebi & Jordan Ostwald, 2011. "Earthquakes, hurricanes, and terrorism: do natural disasters incite terror?," Public Choice, Springer, Springer, vol. 149(3), pages 383-403, December.
  7. Prabal Roy Chowdhury & Jaideep Roy, 2011. "Aid in times of terror," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers, Indian Statistical Institute, New Delhi, India 11-08, Indian Statistical Institute, New Delhi, India.
  8. Axel Dreher & Andreas Fuchs, 2011. "Does terror increase aid?," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers, Courant Research Centre PEG 86, Courant Research Centre PEG.
  9. Subhayu Bandyopadhyay & E. Katarina Vermann, 2013. "Donor motives for foreign aid," Review, Federal Reserve Bank of St. Louis, Federal Reserve Bank of St. Louis, issue July, pages 327-336.
  10. Navin Bapat, 2011. "Terrorism, democratization, and US foreign policy," Public Choice, Springer, Springer, vol. 149(3), pages 315-335, December.
  11. Khusrav Gaibulloev & Todd Sandler & Donggyu Sul, . "Reevaluating Terrorism and Economic Growth: Dynamic Panel Analysis and Cross-Sectional Dependence," Economics Working Papers, School of Business Administration, American University of Sharjah 02-03/2013, School of Business Administration, American University of Sharjah.
  12. Todd Sandler, 2011. "The many faces of counterterrorism: an introduction," Public Choice, Springer, Springer, vol. 149(3), pages 225-234, December.

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