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When is Foreign Aid Effective in Fighting Terrorism? Threshold Evidence

Author

Listed:
  • Asongu Simplice

    () (Yaoundé/Cameroun)

  • John Ssozi

    () (Baylor University, USA)

Abstract

Building on previous literature, we assess when foreign aid is effective in fighting terrorism using quantile regressions on a panel of 78 developing countries for the period 1984-2008. Bilteral, multilateral and total aid indicators are used whereas terrorism includes: domestic, transnational, unclear and total terrorism dynamics. We consistently establish that foreign aid (bilateral, multilateral and total) is effective at fighting terrorism exclusively in countries where existing levels of transnational terrorism are highest. This finding is consistent with our theoretical underpinnings because donors have been documented to allocate more aid towards fighting transnational terrorist activities in recipient countries because they are more likely to target their interests. Moreover, the propensity of donor interest at stake is likely to increase with initial levels of transnational terrorism, such that the effect of foreign aid is most significant in recipient countries with the highest levels of transnational terrorism. Policy implications and future research directions are discussed.

Suggested Citation

  • Asongu Simplice & John Ssozi, 2015. "When is Foreign Aid Effective in Fighting Terrorism? Threshold Evidence," Working Papers of the African Governance and Development Institute. 15/031, African Governance and Development Institute..
  • Handle: RePEc:agd:wpaper:15/031
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    References listed on IDEAS

    as
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    Cited by:

    1. Simplice Asongu & Ivo Leke, 2018. "Can foreign aid dampen the threat of terrorism to international trade? Evidence from 78 developing countries," Working Papers of the African Governance and Development Institute. 18/032, African Governance and Development Institute..

    More about this item

    Keywords

    Foreign aid; Terrorism; Quantile regression;

    JEL classification:

    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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