Heterogeneous Effects of Development Aid on Violent Unrest in Postwar Countries: Village-Level Evidence from Nepal

Abstract

AbstractMany countries experience massive aid surges when civil wars end. However, operational contexts tend to remain particularly sensitive due to a combination of persisting local-level cleavages and low-quality state institutions. Consequently, aid provision risks inciting distributional conflicts and violent unrest—most notably when resources are injected into areas of high social heterogeneity or particularly weak state administration. I investigate this argument in the case of postwar Nepal. I combine geo-coded aid data with village-level information on various forms of violent unrest, as well as on social demographics and institutional quality. The panel analyses indicate positive short-term effects of aid on social unrest. More fine-grained estimations reveal that this effect is driven by a short-term escalation of violence against nonstate actors—in particular in ethnically fractionalized villages under the administration of weakly performing local-level state institutions. Descriptive cross-country analyses indicate that aid may have similar violence-inducing effects in other postwar contexts.