Paying Them to Hate US: The Effect of U.S. Military Aid on Anti-American Terrorism, 1968-2014

ECONtribute Discussion Paper No. 013, July 2020

42 Pages Posted: 22 Jul 2020 Last revised: 3 Aug 2020

See all articles by Eugen Dimant

Eugen Dimant

University of Pennsylvania; CESifo

Tim Krieger

University of Freiburg - Department of Economics

Daniel Meierrieks

WZB Berlin Social Science Center

Multiple version iconThere are 2 versions of this paper

Date Written: July 30, 2020

Abstract

Does U.S. military aid make the United States safer? To answer this question, we collect data on 173 countries between 1968 and 2014. We exploit plausibly exogenous time variation in global levels of U.S. military aid associated with distinct aid programs and cross-national time-series variation in the relative importance of the various military aid programs for recipient countries to provide causal estimates of the effect of U.S. military aid on anti-American terrorism. We find that higher levels of military aid led to an increased likelihood of the recipient country to produce anti-American terrorism. For our preferred instrumental-variable specification, doubling U.S. military aid increases the risk of anti-American terrorism by 4.4 percentage points. Examining potential transmission channels, we find that more U.S. military aid leads to more corruption and exclusionary policies in recipient countries. Consistent with a theoretical argument developed in this paper, these results indicate that the inflow of military aid induces rent-seeking behavior, which in turn encourages terrorism by groups that suffer from reduced economic and political participation as a consequence of rent-seeking. These groups direct their dissatisfaction against the U.S. as the perceived linchpin of an unfavorable status quo in the recipient country.

Keywords: U.S. Military Aid; Anti-American Terrorism; Transnational Terrorism; Instrumental Variable Estimation

JEL Classification: D74, F35

Suggested Citation

Dimant, Eugen and Krieger, Tim and Meierrieks, Daniel, Paying Them to Hate US: The Effect of U.S. Military Aid on Anti-American Terrorism, 1968-2014 (July 30, 2020). ECONtribute Discussion Paper No. 013, July 2020, Available at SSRN: https://ssrn.com/abstract=3639277 or http://dx.doi.org/10.2139/ssrn.3639277

Eugen Dimant (Contact Author)

University of Pennsylvania ( email )

Philadelphia, PA 19104
United States

HOME PAGE: http://sites.google.com/view/eugendimant/

CESifo ( email )

Poschinger Str. 5
Munich
Germany

Tim Krieger

University of Freiburg - Department of Economics ( email )

University of Freiburg
Wilhelmstr. 1b
Freiburg, D-79085
Germany

HOME PAGE: http://www.wguth.uni-freiburg.de

Daniel Meierrieks

WZB Berlin Social Science Center ( email )

Reichpietschufer
50
Berlin, D-10785
Germany

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