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Giving and Receiving Aid: Does Conflict Count?

Giving and Receiving Aid: Does Conflict Count?. Eliana Balla Gina Yannitell Reinhardt. How do donor interests condition bilateral aid allocation?. Altruistic interests Aid is a development tool; poor countries need money Literacy rates, infant mortality rates, GDP per capita

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Giving and Receiving Aid: Does Conflict Count?

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  1. Giving and Receiving Aid: Does Conflict Count? Eliana Balla Gina Yannitell Reinhardt

  2. How do donor interests condition bilateral aid allocation? • Altruistic interests • Aid is a development tool; poor countries need money • Literacy rates, infant mortality rates, GDP per capita • Strategic interests • Aid is a policy tool; we use it to establish partnerships and encourage cooperation • Proximity to Communist countries, human rights abuses, UNGA votes, military expenditures, democracy indicators, treaty memberships

  3. Different donors exhibit different patterns • Scandinavian donors are altruistic • France gives to former colonies • Japan gives to trading partners • US gives according to geopolitical interests • Problem? • All donors are not put to the same test • Solution? • Examine geographic proximity to conflict • Why? • Aid effectiveness, conflict repercussions

  4. Conflict and allocation

  5. Conflict and allocation

  6. Conflict and allocation

  7. Data, Hypotheses, and Estimation • Unit of Analysis: dyad-year (20 donors, 122 recipients, 37 years) • Conflict • Proximity (0-3); Correlates of War & PRIO • Based on whether a recipient contains, borders, or shares a region with conflict • Intensity (0-3); PRIO Armed Conflict Data • Based on number of battle-related deaths per year

  8. Heckman selection model (MLE) • Gate-keeping (Selection stage: who gets aid?) • GDP per capita, life expectancy • Bilateral trade patterns, past colonial ties, Polity IV, UNGA voting history, FDI flows • Conflict proximity and intensity • Level-setting (Outcome stage: how much aid do they get?) • GDP per capita, life expectancy, population • Recent UNGA correlations • Conflict proximity and intensity

  9. Effects of Conflict Proximity on Aid • Internal and border proximity to conflict increases the possibility of selection • Austria, Belgium, Finland, France, Germany, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Sweden, Switzerland, US • Regional proximity to conflict increases the possibility of selection • Belgium, Canada, France, Germany, Ireland, Italy, Japan, New Zealand, Sweden, USSR

  10. Effect of Conflict Intensity on Aid • Reduce aid to recipients bordering more intense conflicts • Spain, Canada, New Zealand, UK • Increase aid to countries bordering more intense conflicts • Denmark, Finland, Netherlands, Norway, US, Japan, Germany, Ireland

  11. Changes from low to moderate intensity yield: • For internal conflicts: • $6.59 increase per capita in US aid (47%) • $1.79 increase per capita in Soviet aid (11%) • $.76 decrease per capita in French aid (7.5%) • For border conflicts: • $2.46 increase per capita in US aid (17.4%) • $3.12 decrease per capita in UK aid (76%)

  12. Other variables? • UNGA voting history • Positive effects on aid for Austria, Finland, France, Germany, Japan • Negative effects on aid for Netherlands, Spain, Ireland • Recent UNGA votes • $54.50 increase per capita in US aid (400%) • $.42 increase per capita in German aid (13%) • Denmark and Finland “reward” votes with aid

  13. Humanitarian Indicators • Path dependency is evident for all donors • Population • Negative and significant for all donors • GDP • Negative and significant for all donors • Life expectancy • Significant for all donors

  14. Political and Economic Variables • PolityIV • Relevant for 9 donors: Denmark, Ireland, Japan, Netherlands, New Zealand, Norway, Portugal, Sweden, Spain • Not significant for US, UK, France • Bilateral trade • Positive effects for: Canada, Denmark, Finland, France, Ireland, New Zealand, Portugal, Sweden, Spain, USSR • Colonial ties • Positive effects for France, Spain, Portugal

  15. Summary – Gate-Keeping • Funnel aid to nations bordering or containing conflict • Finland, Norway, and Sweden, plus Austria, Belgium, France, Germany, Ireland, Italy, Netherlands, New Zealand, Switzerland, and the US • Funnel aid away from intense conflicts • Belgium, Canada, Denmark, France, Ireland, Japan, Switzerland, and Spain

  16. Summary – Level-setting • Decrease aid to border and internal conflicts • Belgium, Canada, France, New Zealand, Portugal, Switzerland, Spain, and the UK • Increase aid to internal or border conflicts • US, USSR, Denmark, Finland, Germany, Ireland, Japan, the Netherlands, and Norway • Increase aid to border conflicts while decreasing aid to internal conflicts • Denmark, Ireland, Japan • No level-setting based on conflict • Sweden, Austria

  17. Summary - Intensity • Reduce aid to countries bordering intense conflicts • Spain joins Canada, New Zealand, and UK • Increase aid to countries bordering intense conflicts • Denmark, Finland, the Netherlands, Norway US, Japan, Germany, and Ireland

  18. Conclusions • Every donor conditions aid on conflict at some point in their allocation. • Donor motivations are more complex than previously indicated. • Donor types can no longer be assumed as they were previously, and must be broken down more carefully. • Geographic proximity and intensity of conflict are important determinants of allocation.

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