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| Author: | Bandyopadhyay, S. Sandler, T. Younas, J. |
| Title: | Foreign aid as counterterrorism policy |
| Journal: | Oxford Economic Papers
2011 : JUL, VOL. 63:3, p. 423-447 |
| Index terms: | public goods economic development policy decision making conflict terrorism models |
| Language: | eng |
| Abstract: | This paper introduces a model where foreign aid bolsters a developing country's proactive counterterrorism aspiration against a resident transnational terrorist group. In the first stage of the game, the donor country allocates resources to terrorism-fighting tied help, general assistance and defensive actions at home. The recipient country then settles its proactive campaign against the common terrorist threat in the second stage, while the terrorists turn their attacks against the donor and recipient countries in third stage. Terrorists' choices in the final stage provide a reliable microfoundation for the terrorists' probability of success function. Greater tied aid in stage 2 increases the recipient country's proactive measures and regime instability, while raised general assistance decreases these proactive efforts and regime instability. In stage 1, a donor's homeland security decisions are mutually dependent with its aid package to a recipient country, containing resident transnational terrorists. This interdependency and its consequences have gone unrecognized to date. |
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