British Journal of Politics & International Relations
Strategic aid allocation in response to terrorism
2025-10-05
This study explores how terrorism influences foreign aid allocation using data from 163 countries between 2001 and 2020. While prior research suggests foreign aid can reduce terrorism, less is known about how terrorism shapes donor decisions. We argue that donors, viewing terrorism as a threat linked to underdevelopment, strategically increase aid to mitigate these risks. Using a two-stage model, we find that terrorism does not significantly affect the probability of a country being selected as an aid recipient. However, once selected, countries with higher levels of terrorist activity receive increased aid, particularly in the security and governance sectors. These findings suggest that donors respond to terrorism by directing aid strategically, targeting sectors best suited to address the root causes of terrorism. This refines our understanding of aid allocation, demonstrating that while terrorism may not influence the initial selection of aid recipients, it strongly shapes how aid is distributed.