The roles of foreign aid and education in the war on terror

This paper presents a theoretical framework and some empirical results showing that the level of foreign aid received reduces the supply of terrorist attacks by recipient countries, as does the recipient country’s level of education. Due account is taken of endogeneity problems in producing these results. They suggest that Western democracies, which are the main targets of terrorist attacks, should invest more funds in foreign aid with a special emphasis on supporting education.