When is Foreign Aid Effective in Fighting Terrorism? Threshold Evidence
Buildingontheprevious literature,weassesswhenforeignaidis effectiveinfightingterrorismusingquantileregressionsonapanel of78developingcountriesfortheperiod1984–2008.Bilateral,mul tilateralandtotalaidindicatorsareusedwhereasterrorismincludes: domestic, transnational,unclearandtotal terrorismdynamics.We consistentlyestablish that foreignaid (bilateral,multilateral and total)iseffectiveatfightingterrorismexclusivelyincountrieswhere existinglevelsoftransnationalterrorismarehighest.Thisfindingis consistentwithourtheoreticalunderpinningsbecausedonorshave beendocumentedtoallocatemoreaidtowards fightingtransna tionalterroristactivitiesinrecipientcountriesbecausetheyaremore likelytotarget their interests.Moreover, thepropensityofdonor interestatstakeislikelytoincreasewithinitiallevelsoftransnational terrorism, suchthat theeffectof foreignaidismostsignificant in recipientcountrieswiththehighestlevelsoftransnationalterrorism. Policyimplicationsandfutureresearchdirectionsarediscussed.
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