Foreign Aid and Conflicts: The Effects of 9/11 on Donor Behavior

Rabah Arezki, Youssouf Camara, Patrick Imam () and Kangni Kpodar

No 2025/016, IMF Working Papers from International Monetary Fund

Abstract: We explore the changing relationship between armed conflicts and non-military foreign aid. We find that the sign of the relationship linking (bilateral) aid commitments to the onset of armed conflicts in aid recipient countries is statistically significant and goes from negative to positive after the year 2001. We also find that our results are driven by grants rather than loans and by aid for health and humanitarian purposes. The results are robust to a myriad of checks including substituting armed conflicts with terror attacks, accounting for debt relief initiatives and using different estimators. We interpret our results as stemming from a shift in donors’ preferences induced by 9/11 attacks toward supporting conflict affected countries, confirming the primacy of donors’ interests over recipient needs.

Keywords: Foreign Aid; Conflicts; Terror Attacks; Absorptive Capacity; donor behavior; recipient country; sign of the relationship; donors' interest; d index donor country; Terrorism; Aid flows; Development assistance; Global; East Africa (search for similar items in EconPapers)
Pages: 44
Date: 2025-01-17
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