Abstract
Hezbollah, a Shia Islamist political party and militant group based in Lebanon, is believed to receive a significant amount of informal funding from Iran. In this paper we evaluate whether this funding has had any economically meaningful effect on subnational development in Lebanon. Since the amount of funding is not observed, we use Iranian oil rents and the intensity of sanctions against Iran as plausibly exogenous drivers of transfers to Hezbollah. Then, we leverage the well-established sectarian bias in Hezbollah's spending to obtain conservative estimates of the direct effect of funding to Hezbollah. Studying the 1993-2010 period, we find a positive and economically significant relationship between Iranian oil windfalls and nighttime lights. This effect is significantly stronger in areas with greater concentration of Shia population. Also, nighttime lights are relatively lower in Shia areas than elsewhere during periods when sanctions against Iran intensified. These novel results attest to the non-negligible developmental effects of informal aid as well as how economic sanctions against donors might offset such effects.
Sign-in/Register to access full text options 
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.
