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This research examines the effectiveness of foreign aid in reducing terrorism. To uncover the circumstances in which aid is more likely to decrease terrorism, I examine total and sector-specific aid along with twenty-seven indicators of socio-economic and political grievances that aid seeks to redress. The overall expectation is that sectoral aid targeted at addressing relevant needs in aid-recipient countries is more likely to impact terrorism negatively. To test this expectation, I conduct a cross-national, longitudinal analysis of 190 countries and territories over a twenty-year period, from 1990 to 2010. The results, reported in eleven negative binomial, dynamic regression models, largely confirm that certain types of sectoral aid become statistically significant negative predictors of terrorism when addressed at specific socio-economic or political grievances. Examples of sectoral aid exercising a negative impact on terrorism include education aid spent on tertiary school enrollment and on public spending on education, social services aid assisting with research and development expenditures, governance aid geared toward strengthening state control of corruption as well as twelve additional instances when sectoral aid targeted at specific needs is found to correlate negatively with terrorism in a statistically significant way. Theoretically and empirically, this dissertation bridges the current divide between studies examining the effects of aggregate, total aid on poverty and conflict and research focusing on disaggregated, sectoral aid and its impact on terrorist incidents. In addition to integrating and testing both types of aid within the same theoretical …