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Does terror increase aid?

Author Info

  • Axel Dreher

    (Heidelberg University)

  • Andreas Fuchs

    (Georg-August-University Göttingen)

Abstract

This article empirically investigates whether, and in which ways, donors in the Development Assistance Committee respond to transnational terrorist incidents and the onset of the War on Terror through changes in aid effort and aid allocation. First, an analysis of 22 donor countries shows that aid effort increased during the War on Terror period, but did not respond to the actual number of terror events. Second, using aid allocation equations, we find that countries where terror originates are not more likely to receive aid as a consequence, but if they are selected, they receive larger amounts of aid.

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File URL: http://www2.vwl.wiso.uni-goettingen.de/courant-papers/CRC-PEG_DP_86.pdf
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Paper provided by Courant Research Centre PEG in its series Courant Research Centre: Poverty, Equity and Growth - Discussion Papers with number 86.

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Date of creation: 12 Aug 2011
Date of revision:
Handle: RePEc:got:gotcrc:086
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Keywords: Foreign aid; Transnational terrorism; War on Terror and aid; DAC donors; Heckman selection model;

Find related papers by JEL classification:

  • F35 - International Economics - - International Finance - - - Foreign Aid

This paper has been announced in the following NEP Reports:

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  1. Neumayer, Eric, 2002. "Is Good Governance Rewarded? A Cross-national Analysis of Debt Forgiveness," World Development, Elsevier, vol. 30(6), pages 913-930, June.
  2. Christopher Kilby & Axel Dreher, 2009. "The Impact of Aid on Growth Revisited: Do Donor Motives Matter?," KOF Working papers 09-225, KOF Swiss Economic Institute, ETH Zurich.
  3. Axel Dreher & Andreas Fuchs, 2011. "Rogue Aid? The Determinants of China's Aid Allocation," CESifo Working Paper Series 3581, CESifo Group Munich.
  4. José Cheibub & Jennifer Gandhi & James Vreeland, 2010. "Democracy and dictatorship revisited," Public Choice, Springer, vol. 143(1), pages 67-101, April.
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  9. Azam, Jean-Paul & Thelen, Véronique, 2009. "Foreign Aid vs. Military Intervention in the War on Terror," TSE Working Papers 09-061, Toulouse School of Economics (TSE).
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  12. Subhayu Bandyopadhyay & Todd Sandler & Javed Younas, 2009. "Foreign aid as counterterrorism policy," Working Papers 2009-021, Federal Reserve Bank of St. Louis.
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  16. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
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  20. Christopher Kilby, 2010. "Informal influence in the Asian Development Bank," Villanova School of Business Department of Economics and Statistics Working Paper Series 13, Villanova School of Business Department of Economics and Statistics.
  21. Gassebner, Martin & Jong-A-Pin, Richard & Mierau, Jochen O., 2008. "Terrorism and electoral accountability: One strike, you're out!," Economics Letters, Elsevier, vol. 100(1), pages 126-129, July.
  22. Jean-Paul Azam & Véronique Thelen, 2008. "The roles of foreign aid and education in the war on terror," Public Choice, Springer, vol. 135(3), pages 375-397, June.
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Cited by:

  1. Andreas Fuchs & Axel Dreher & Peter Nunnenkamp, 2012. "Determinants of Donor Generosity: A Survey of the Aid Budget Literature," Kiel Working Papers 1789, Kiel Institute for the World Economy.
  2. Nasir, Muhammad & Rehman, Faiz Ur & Orakzai, Mejzgaan, 2012. "Exploring the nexus: Foreign aid, war on terror, and conflict in Pakistan," Economic Modelling, Elsevier, vol. 29(4), pages 1137-1145.
  3. Baulch, Bob & Tam, Le Vi An, 2013. "The progressivity and regressivity of aid to the social sectors," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  4. Azam, Jean-Paul & Thelen, Véronique, 2012. "Where to Spend Foreign Aid to Counter Terrorism," IDEI Working Papers 725, Institut d'Économie Industrielle (IDEI), Toulouse.
  5. Todd Sandler, 2011. "The many faces of counterterrorism: an introduction," Public Choice, Springer, vol. 149(3), pages 225-234, December.
  6. Öhler, Hannes, 2013. "Do Aid Donors Coordinate Within Recipient Countries?," Working Papers 539, University of Heidelberg, Department of Economics.
  7. Subhayu Bandyopadhyay & E. Katarina Vermann, 2013. "Donor motives for foreign aid," Review, Federal Reserve Bank of St. Louis, issue July, pages 327-336.

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