Fueling Conflict? (De)Escalation and Bilateral Aid

Richard Bluhm, Martin Gassebner, Sarah Langlotz and Paul Schaudt

No 619, Working Papers from University of Heidelberg, Department of Economics

Abstract: This paper studies the effects of bilateral foreign aid on conflict escalation and de-escalation. We make three major contributions. First, we combine data on civil wars with data on low level conflicts in a new ordinal measure capturing the two-sided and multifaceted nature of conflict. Second, we develop a novel empirical framework. 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 that are exogenous to recipients. We establish that the effect of foreign aid on the various transition probabilities is heterogeneous and can be substantial. Receiving bilateral aid raises the chances of escalating from small conflict to armed conflict, but we find no evidence that aid ignites conflict in truly peaceful countries.

Keywords: conflict; foreign aid; political economy; dynamic ordered panel data (search for similar items in EconPapers)
Date: 2016-10-07
New Economics Papers: this item is included in nep-dev
Note: This paper is part of http://archiv.ub.uni-heidelberg.de/volltextserver/view/schriftenreihen/sr-3.html
References: Add references at CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
http://nbn-resolving.de/urn/resolver.pl?urn=urn:nbn:de:bsz:16-heidok-219416 Frontdoor page on HeiDOK (text/html)
https://archiv.ub.uni-heidelberg.de/volltextserver ... haudt_2016_dp619.pdf (application/pdf)

Related works:
Journal Article: Fueling conflict? (De)escalation and bilateral aid (2021)
Working Paper: Fueling Conflict? (De)Escalation and Bilateral Aid (2018)
Working Paper: Fueling Conflict? (De)Escalation and Bilateral Aid (2016)
Working Paper: Fueling Conflict? (De)Escalation and Bilateral Aid (2016)
Working Paper: Fueling Conflict? (De)Escalation and Bilateral Aid (2016)
Working Paper: Fueling conflict?: (De)escalation and bilateral aid (2016)
Working Paper: Fueling Conflict? (De)Escalation and Bilateral Aid (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:awi:wpaper:0619

Access Statistics for this paper

More papers in Working Papers from University of Heidelberg, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Gabi Rauscher ( this e-mail address is bad, please contact ).