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

39 Pages Posted: 9 Jul 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: 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. Exploiting quasi-random variation in the global patterns of U.S. military aid, our paper is the first 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 United States as the perceived linchpin of an unfavorable status quo in the recipient country.

JEL Classification: D740, F350

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 (2020). CESifo Working Paper No. 8411, Available at SSRN: https://ssrn.com/abstract=3646854

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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