Domestic terrorism and the allocation of US overseas defense spending

Abstract How do domestic terrorist attacks in a recipient country influence the inflow of US overseas defense spending (ODS)? While extant literature on domestic terrorism has paid great attention to its consequences in areas such as economic development, elections, and authoritarian survival, few studies have studied how domestic terrorism influences cooperation between countries. At the same time, the increasing power competition between major powers has renewed scholars’ interest in state overseas defense spending as a strategic tool for power projection. In this article, I propose a theory that connects domestic terrorist attacks with the inflow of US overseas defense spending. With more domestic terrorist attacks, the incumbents are under more pressure from other political elites and the public. Support from major powers such as the US can help leaders’ political survival. For the US, while this presents an opportunity to preserve or even expand its influence on foreign countries and protect its overseas interests, there are risks and uncertainties associated with supporting countries with deteriorating security environments. Compared to other types of support, such as state visits and military aid, overseas defense spending is a more flexible tool the US can adopt to gain policy concession while mitigating risks and uncertainties. However, this effect of domestic terrorist attacks might be conditioned by the regime type of recipient countries. Using new data on US ODS, I find support for this argument.