Abstract
SummaryThis paper studies the effects of bilateral foreign aid on conflict escalation and deescalation. First, we develop a new ordinal measure capturing the two‐sided and multifaceted nature of conflict. Second, we propose a dynamic ordered probit estimator that allows for unobserved heterogeneity and corrects for endogeneity. Third, we identify the causal effect of foreign aid on conflict by predicting bilateral aid flows based on electoral outcomes of donor countries which are exogenous to recipients. Receiving bilateral aid raises the chances of escalating from small conflict to armed conflict, but we find little evidence that aid ignites conflict in truly peaceful countries.
Highlights
Civil conflict is one of the main obstacles to development
While all estimates suggest that bilateral aid tends to fuel conflict, we find no evidence suggesting that foreign aid leads to new eruptions of conflict or that it drives the escalation towards civil wars
This paper studies the effects of development aid on conflict
Summary
Civil conflict is one of the main obstacles to development. Research on the causes of civil war has found that economic growth, commodity shocks, weak institutions or states, and various forms of ethnic heterogeneity are all correlated with conflict. Poor and badly governed states that are prone to experience conflict both need and receive substantial amounts of development assistance. In turn, may exacerbate violent tendencies in such environments but not when society is truly at peace Establishing how this causal effect differs across conflict histories is the key objective of this paper. Foreign aid can have a very different effect on the probability of experiencing conflict, depending on whether a society was entirely peaceful, already in turmoil, or mired in major civil conflict. Aid is harmful when given to countries already experiencing violent turmoil just short of the conventional definition of civil conflict In those cases we find i) a strong negative effect on the probability of transitioning back to peace, ii) an elevated risk of continued violence, and iii) a non-trivial probability of escalating into armed conflict.
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
