Community Preferences, Insurgency, and the Success of Reconstruction Spending

A model of reconstruction spending by an occupying force is developed, in which the local population may have different preferences over the allocation of spending than the occupier. When the spendingallocation is misaligned with local preferences an insurgency among some members of the community may result. Depending on the effectiveness of the insurgency, local opposition may constrain the abilityof the occupier to implement its most preferred spending allocation. In equilibrium, the occupier may tolerate some level of insurgency to approach its ideal, but naive insistence on a most preferred allocation may lead to fewer projects of any kind being completed. The model suggests that winning the hearts and minds of a local population is less a question of how much money in invested in reconstruction than of how that money is allocated across projects of different kinds. 1