This paper has presented fairly str

This paper has presented fairly strong evidence that governments tend to increase their overall expenditures on education in response to an increase in U.S. foreign aid, but not in response to an increase in foreign aid in general. The same cannot be said for health expenditures, which do not seem to change significantly in response to a change in either U.S. foreign aid or overall foreign aid received.
The second part of this paper dealt with indirectly testing foreign aid’s effect on terrorism through the channel of social spending. Due to obvious endogeneity problems, the effect of public health and education expenditures on terrorism could not be tested directly. Instead, this paper focused on two long-term measures of health and education which are unlikely to cause a problem of reverse causality in the equation. Secondary school enrollment had a significantly negative effect on the supply of terrorism by a country; these results are fairly robust, as they hold up in three out of four alternate specifications. Tertiary school enrollment, on the other hand, was not significantly correlated with the dependent variable—a result which contradicts the findings of Azam and Thelen (2008), the only other known paper which tests the effect of tertiary school enrollment on the supply of terrorism. This shows that the effect of education on terrorism varies depending on the level of education. Average life expectancy at birth was found to have a significant negative effect on the supply of terrorist attacks, implying that overall health levels in a country influences that country’s supply of terrorism outside of its obvious correlation with national wealth.
As shown in the introduction, economists have been debating for years about whether economic incentives play a role in an individual’s decision whether to commit an act of terrorism. This paper shows that, in general, having a high rate of secondary school enrollment tends to reduce a country’s supply of terrorist attacks. This is significant because it is assumed that having more educational capital creates more opportunities for individual prosperity. However, these considerations seem to matter less, or are perhaps offset by a different, unobserved effect, in regard to tertiary education—despite the fact that individuals with a tertiary education will tend to have more economic opportunities than individuals with a secondary education. This should be cause for concern for countries which earmark aid to strategic GWOT countries for education, but further study is needed to show exactly what about tertiary education
How Foreign Aid Affects Terrorism, Cassidy
86
creates different incentives (or disincentives) to commit acts of terrorism. Strategies in earmarking foreign aid for health programs seem to merit less consideration in regard to the war on terror, as the results were less robust.
This paper additionally shows that recipient countries tend to increase public spending on education in response to an increase in foreign aid from the United States, but not in response to an increase in ODA. In this instance, the effect of ODA serves as a control, showing that the positive correlation between the change in net DAC (U.S.) and the change in public education expenditures is not simply due to an overall increase in the recipient government’s budget, which also occurs when that country receives ODA. This shows that the United States to some extent earmarks its foreign aid for education programs, perhaps because it anticipates that this is an effective tactic for reducing a country’s supply of terrorist attacks. Perhaps more than anything, this paper suggests that the United States should perhaps earmark more foreign aid for secondary school programs in the recipient country rather than allowing the country to spend the money indiscriminately on education of all levels