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Aid in times of terror


  • Prabal Roy Chowdhury

    () (Indian Statistical Institute, New Delhi)

  • Jaideep Roy

    () (University of Birmingham)


In a scenario where terrorist organizations, based in an LDC, target a rich nation, we examine a joint, multi-pronged and dynamic counter-terror strategy and the role that developmental aid plays in its success. We show that aid-tying leads to a fruitful virtuous cycle whereby joint counter-terror operations help in the observability of aid delivery, and aid in its turn makes greater counter-terror possible. Further, the counter-terror operations must be the largest possible at the very beginning. We argue that it is not necessarily the case that a more hawkish donor is less pro-development, or that a more altruistic donor is softer on terror. Moreover, we identify channels through which international diplomacy aimed at reducing regional hostility can help in the war against terror.

Suggested Citation

  • Prabal Roy Chowdhury & Jaideep Roy, 2011. "Aid in times of terror," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 11-08, Indian Statistical Institute, New Delhi, India.
  • Handle: RePEc:ind:isipdp:11-08

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    References listed on IDEAS

    1. Pande, Rohini, 2008. "Understanding Political Corruption in Low Income Countries," Handbook of Development Economics, Elsevier.
    2. van de Walle, Dominique & Mu, Ren, 2007. "Fungibility and the flypaper effect of project aid: Micro-evidence for Vietnam," Journal of Development Economics, Elsevier, vol. 84(2), pages 667-685, November.
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    4. Jody Overland & Kenneth Simons & Michael Spagat, 2005. "Political instability and growth in dictatorships," Public Choice, Springer, vol. 125(3), pages 445-470, December.
    5. Satya P. Das & Prabal Roy Chowdhury, 2014. "Deterrence, Preemption, And Panic: A Common-Enemy Problem Of Terrorism," Economic Inquiry, Western Economic Association International, vol. 52(1), pages 219-238, January.
    6. Sandler, Todd & Enders, Walter, 2004. "An economic perspective on transnational terrorism," European Journal of Political Economy, Elsevier, vol. 20(2), pages 301-316, June.
    7. Subhayu Bandyopadhyay & Todd Sandler & Javed Younas, 2011. "Foreign aid as counterterrorism policy," Oxford Economic Papers, Oxford University Press, vol. 63(3), pages 423-447, July.
    8. David Locke Newhouse & Prachi Mishra, 2007. "Health Aid and Infant Mortality," IMF Working Papers 07/100, International Monetary Fund.
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    10. World Bank, 2004. "Strategic Framework for Assistance to Africa : IDA and the Emerging Partnership Model," World Bank Publications, The World Bank, number 15179, June.
    11. C. S. Adam & S. A. O'Connell, 1999. "Aid, Taxation and Development in Sub-Saharan Africa," Economics and Politics, Wiley Blackwell, vol. 11(3), pages 225-253, November.
    12. Sajal Lahiri & Pascalis Raimondos-Møller, 2004. "Donor Strategy under the Fungibility of Foreign Aid," Economics and Politics, Wiley Blackwell, vol. 16(2), pages 213-231, July.
    13. 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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    More about this item


    Developmental Aid; Terror; Aid-tying; Joint Counter-terror Operations; Diplomacy;

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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