Aiding violence or peace? The impact of foreign aid on the risk of civil conflict in sub-Saharan Africa

Abstract

JEL classification: D74 F35 H56 O55 Keywords:Civil conflict Foreign aid Sub-Saharan Africa This paper considers the impact of foreign aid flows on the risk of civil conflict. We improve on earlier studies on this topic by addressing the problem of the endogenous aid allocation using GDP levels of donor countries as instruments. A more structural addition to the literature is that we efficiently control for unobserved country specific effects in typical conflict onset and conflict continuation models by first differencing. The literature often overlooks the dynamic nature of these types of models, thereby forcing unlikely i.i.d. structures on the error terms implicitly. 1 As a consequence, malfunctioning institutions, deep-rooted political grievances, or any other obvious, yet unobserved and time persistent determinants of war are simply assumed away. We find a statistically significant and economically important negative effect of foreign aid flows on the probability of ongoing civil conflicts to continue (the continuation probability), such that increasing aid flows tends to decrease civil conflict duration. We do not find a significant relationship between aid flows and the probability of civil conflicts to start (the onset probability).

Does aid cause conflict in Pakistan?

“…More aid to the governments can help in controlling domestic conflict. Findley et al (2011), Nielsen et al (2011 and Ree and Nillesen (2009) examine the relationship between aid and conflict. Based on these researches, one can conclude that significant increase in aid reduces conflict.…”

“…These authors (Azam and Delacroix 2006;Thelen 2008, 2010;Bapat 2011, Nielsen et al 2011Ree and Nillesen 2009;Young and Findley 2011) find a negative relationship between aid and transnational conflict and prescribe more aid as a means to reducing conflict. Thelen (2008, 2010) developed a model that aid is money given for protecting the economic and strategic interests of the donor, as Western democracies are the main target of the terrorists.…”

Mapping the Impacts of Food Aid: Current Knowledge and Future Directions

“…Other studies suggest that aid may act as a mitigating force in the duration of conflict, either by augmenting government funding for military defence or increasing the opportunity cost of engaging in war (De Ree and Nillesen 2009;Ruggeri and Schudel 2010). The latter results must be qualified in that they do not refer to prevention of the onset, or creation, of conflict but rather to the duration of extant conflict.…”

Foreign Interventions and Abuse of Civilians During the Peruvian Civil War

“…On the other hand, find no statistically significant relationship between civil war duration and economic intervention. Using a dynamic panel data model, de Ree and Nillesen (2009) model civil war onset and civil war duration simultaneously. They find that foreign aid has no significant impact on the probability that a civil war will start, but increases the probability that it will end, once started.…”