Paying Them to Hate US: The Effect of U.S. Military Aid on Anti-American Terrorism, 1968-2014
47 Pages Posted: 22 Jul 2020 Last revised: 8 Oct 2021
Date Written: October 7, 2021
Does U.S. military aid make the United States safer? Or does it have unintended and adverse consequences for U.S. security? We provide causal estimates of the effect of U.S. military aid on anti-American terrorism for a sample of 174 countries between 1968--2018 by exploiting 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. We find that higher levels of military aid lead 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 2.7 percentage points. Examining potential transmission channels, we find that more U.S. military aid leads to more corruption and exclusionary policies in recipient countries. We argue that U.S. military aid results in anti-American terrorism by undermining institutions in recipient countries and creating anti-American resentment among those parts of the population that do not have direct or indirect access to benefits arising from aid.
Keywords: U.S. Military Aid; Anti-American Terrorism; Transnational Terrorism; Instrumental Variable Estimation
JEL Classification: D74, F35
Suggested Citation: Suggested Citation