Armed conflict, terrorism, and the allocation of foreign aid

Piotr Lis

Abstract


Armed conflict and terrorism damage economic development through disruption of economic activity, trade, and the destruction of human and physical resources. They also can affect foreign aid allocation, but the likely net effect of this is not obvious. On the one hand, donors may be discouraged and reduce aid. On the other hand, donors may provide more aid, for instance as a reimbursement for counter-terrorism efforts that benefit the donor country. This article aims to identify the net effect using data for a panel of countries. It finds that armed conflict does have a large and negative effect on bilateral and multilateral aid, but that bilateral donors seem to turn a blind eye to violence occurring in oil-exporting countries. Further, the article finds that while transnational terrorism tends to increase bilateral aid, bilateral donors seem indifferent to domestic terrorism. In contrast, multilateral aid is found not to react to transnational terrorism, but does react to domestic terrorism.

Keywords


Terrorism; armed conflict; development aid

Full Text:

PDF

References


Alesina, A. and D. Dollar. 2000. “Who Gives Foreign Aid to Whom and Why?” Journal of Economic Growth. Vol. 5, No. 1, pp. 33-63.

Alesina, A. and B. Weder. 2002. “Do Corrupt Governments Receive Less Foreign Aid?” American Economic Review. Vol. 92, No. 4, pp. 1126-1137.

Azam, J.P. and A. Delacroix. 2006. “Aid and the Delegated Fight Against Terrorism.” Review of Development Economics. Vol. 10, No. 2, pp. 330-344.

Azam, J.P. and V. Thelen. 2008. “The Roles of Foreign Aid and Education in the War on Terror.” Public Choice. (2008)135, pp. 375-397.

Azam, J.P. and V. Thelen. 2010. “Foreign Aid versus Military Intervention in the War on Terror.” Journal of Conflict Resolution. Vol. 54, No. 2, pp. 237-261.

Bandyopadhyay, S., T. Sandler, J. Younas. 2011. “Foreign Aid as Counterterrorism Policy.” Oxford Economic Papers. Vol. 63, No. 3, pp. 423-447.

Blomberg, S.B., G.D. Hess, and A. Orphanides. 2004. “The Macroeconomic Consequences of Terrorism.” Journal of Monetary Economics. Vol. 51, No. 5, pp. 1007-1032.

Boyce, J.K. and M. Pastor, Jr. 1998. “Aid for Peace: Can International Financial Institutions Help Prevent Conflict?” World Policy Journal. Vol. 15, No. 2, pp. 42-49.

Bueno de Mesquita, E. 2005. “The Quality of Terror.” American Journal of Political Science. Vol. 49, No. 3, pp. 515-530.

Burnside, C. and D. Dollar. 2000. “Aid, Policies, and Growth.” American Economic Review. Vol. 90, No. 4, pp. 847-868.

Chauvet, L. 2003. “Socio-Political Instability and the Allocation of International Aid by Donors.” European Journal of Political Economy. Vol. 19, No. 1, pp. 33-59.

Collier, P. 2006. “War and Military Expenditure in Developing Countries and their Consequences for Development.” The Economics of Peace and Security Journal. Vol. 1, No. 1, pp. 10-13.

Collier, P. and A. Hoeffler. 2000. “Aid, Policy and Peace.” Development Research Group. Washington, D.C., World Bank.

Enders, W. and T. Sandler. 2006. “Distribution of Transnational Terrorism Among Countries by Income Class and Geography After 9/11.” International Studies Quarterly. Vol. 50, No. 2, pp. 367-393.

Freedom House. 2010. “Freedom in the World Country Ratings 1972-2009.” http://www.freedomhouse.org/report/freedom-world/freedom-world-2010 [accessed 15 September 2012].

Frees, E.W. 2004. Longitudinal and Panel Data: Analysis and Applications in the Social Sciences. New York: Cambridge University Press.

Gaibulloev, K. and T. Sandler. 2009. “The Impact of Terrorism and Conflicts on Growth in Asia.” Economics & Politics. Vol. 21, No. 3, pp. 359-383.

Gleditsch, N.P., P. Wallensteen, M. Erisksson, M. Sollenberg, and H. Strand. 2002. “Armed Conflict 1946-2001: A New Dataset.” Journal of Peace Research. Vol. 39, No. 5, pp. 615-637.

Heston, A., R. Summers, and B. Aten. 2009. Penn World Table Version 6.3, Center for International Comparisons of Production, Income and Prices at the University of Pennsylvania. August 2009.

Kis-Katos, K., H. Liebert, and G.G. Schulze.(2011. “On the Origin of Domestic and International Terrorism.” European Journal of Political Economy. Vol. 27, Supplement 1, pp. S17-S36.

Lis, P. 2011. “Impact of Selected Historical Events on the Income-Based Distribution of Terrorism from the Rise of Fundamentalist Terrorism to the Iraq War.” International Studies Quarterly. Vol. 55, No. 3, pp. 771-785.

Mallaby, S. 2002. “The Reluctant Imperialist: Terrorism, Failed States, and the Case for American Empire.” Foreign Affairs. Vol. 81, No. 2, pp. 2-7.

Mandler, M. and M. Spagat. 2003. “Foreign Aid Designed to Diminish Terrorist Atrocities Can Increase Them.” London: CEPR Discussion Paper No. 4004.

Mickolus, E.F., T. Sandler, et al. 2008. International Terrorism: Attributes of Terrorist Events, 1968-2007. Dunn Loring, VA, Vinyard Software.

Nielson, D.L., R.M. Powers, and M.J. Tierney. 2010. “Broad Trends in Foreign Aid: Insights from PLAID 1.9.1.” Conference paper presented at Aid Transparency and Development Finance: Lessons and Insights from AidData, Oxford, U.K. 22-25 March 2010.

START National Consortium for the Study of Terrorism and Responses to Terrorism. 2011. Global Terrorism Database. Retrived from http://www.start.umd.edu/gtd.

Trumbull, W.N. and H.J. Wall. 1994. “Estimating Aid-Allocation Criteria with Panel Data.” The Economic Journal. Vol. 104, No. 425, pp. 876-882.

Yergin, D. 2006. “Ensuring Energy Security.” Foreign Affairs. Vol. 85, No. 2, pp. 69-82.




DOI: http://dx.doi.org/10.15355/epsj.8.1.12

Refbacks

  • There are currently no refbacks.


Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.