Foreign Aid and Conflict: What We Know and Need to Know

This chapter evaluates the conditional effects of various factors that shape the relationship between aid and conflict. It discusses existing cross-national research that treats countries as the relevant units of analysis. Aid secured by a government might ease its budget constraint and thereby increase military spending, which might make the government more willing to employ military force against political opponents. Drawing upon a novel source of sub national data on the Commanders Emergency Response Program (CERP) in Iraq, Berman et al. find that US assistance targeted to areas with high levels of expected violence was effective in reducing conflict. Peace Building Fund (PBF) substantially improved inter-group social cohesion among returning ex-combatants, IDPs, and their host communities. With aid from China and other non-traditional donors on the rise, collecting and analyzing the data comparable to that for the Economic Cooperation and Development (OECD) donors will be increasingly important.