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Foreign Aid and Conflicts: The Effects of 9/11 on Donor Behavior
Author:
Rabah Arezki
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,
Youssouf Camara
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,
Patrick A. Imam
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Kangni R Kpodar
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Series:
IMF Working Papers
Volume/Issue:
Volume 2025: Issue 016
Language:
English
Publication Date:
17 Jan 2025
DOI:
https://doi.org/10.5089/9798400296161.001
ISBN:
9798400296161
ISSN:
1018-5941
Pages:
44
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
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund