Governments in developed countries often provide foreign aid to developing countries in an effort to improve economic, social and political development. Regardless of the intended use for the money, recipient governments sometimes employ the funds to keep civil peace and to accommodate the demands of new groups, especially in times of tension. A sudden withdrawal of foreign aid could thus trigger internal struggles.
A 2011 study by Brigham Young University and Harvard published in the American Journal of Political Science, “Foreign Aid Shocks as a Cause of Violent Armed Conflict,” examined the data of bilateral and multilateral foreign aid from 1981 to 2005 to determine if there was a link between levels of aid over time and internal strife.
The study’s findings include:
- Within the time period studied, there were 15 severe shocks when foreign aid was suddenly withdrawn. Of these cases, four countries — Liberia (1999), Ghana (1981), Guinea-Bissau (1997), and Sierra Leone (1990) — experienced armed conflict within one year of the shock.
- A negative aid shock to an average country was associated with more than doubling the risk of violent conflict, from 2.1% to 5.0%, even after controlling for both in-country and between country variation and characteristics.
- There was no statistically significant evidence that sudden infusions of development funding — “positive aid shocks” — were associated with increased probability of conflict.
- After controlling for other factors, there was no association between per-capita GDP, population, or mountainous terrain and increased risk of conflict.
- Human rights violations, factional democracy, oil production and ethnic fractionalization were all found to be statistically significant determinants of higher risk of civil conflict.
The study concludes that, for aid recipient countries, “sudden aid shortfalls make governments relatively less able to make enough side-payments or military investment to preserve the peaceful status quo in the future.”