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Where to Spend Foreign Aid to Counter Terrorism

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  • Azam, Jean-Paul
  • Thelen, Véronique

Abstract

A simple game-theoretic model is first presented to bring out the conditions for terrorist organizations to choose to perpetrate their attacks in a host country other than at home. This emphasizes the diluted impact of counter-terrorism measures implemented in the host-country on the number of attacks taking place there. These measures might attract more imported attacks and mainly impact the number of attacks exported by the domestic terrorists without affecting much the overall level of terrorist activity in the host country. The empirical results presented provide some support to this prediction, by contrasting the econometric equations that explain the number of attacks per country of origin vs. per host country. A dyadic analysis is also presented. These analyses confirm the role of foreign aid as a counterterrorism measure in the source country, but it raises the issue of its role in the host country. Although foreign aid is confirmed as an effective tool for reducing the total number of attacks produced, it affects the venue of these terrorist attacks. Military interventions are mostly counterproductive, as they seem to be a strong attraction factor for terrorists.

Suggested Citation

  • Azam, Jean-Paul & Thelen, Véronique, 2012. "Where to Spend Foreign Aid to Counter Terrorism," IDEI Working Papers 725, Institut d'Économie Industrielle (IDEI), Toulouse.
    • Handle: RePEc:ide:wpaper:25950
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    References listed on IDEAS

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    1. 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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    1. Jean-Paul Azam & Véronique Thelen, 2014. "The Geo-Politics of Foreign Aid and Transnational Terrorism," Revue d’économie du développement, De Boeck Université, vol. 22(HS01), pages 263-288.
    2. Axel Dreher & Andreas Fuchs, 2011. "Does terror increase aid?," Public Choice, Springer, vol. 149(3), pages 337-363, December.
    3. Subhayu Bandyopadhyay & E. Katarina Vermann, 2013. "Donor motives for foreign aid," Review, Federal Reserve Bank of St. Louis, vol. 95(July), pages 327-336.

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