Where to Spend Foreign Aid to Counter Terrorism

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.

Reference

Jean-Paul Azam, and Véronique Thelen, “Where to Spend Foreign Aid to Counter Terrorism”, TSE Working Paper, n. 12-316, June 2012.