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

How do donor interests condition bilateral aid allocation? Altruistic interests Altruistic interests –Aid is a development tool; poor countries need money –Literacy rates, infant mortality rates, GDP per capita Strategic interests 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

Different donors exhibit different patterns 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? Problem? –All donors are not put to the same test Solution? Solution? –Examine geographic proximity to conflict Why? Why? –Aid effectiveness, conflict repercussions

Conflict and allocation

Data, Hypotheses, and Estimation Unit of Analysis: dyad-year (20 donors, 122 recipients, 37 years) Unit of Analysis: dyad-year (20 donors, 122 recipients, 37 years) Conflict 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

Gate-keeping (Selection stage: who gets aid?) 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?) Level-setting (Outcome stage: how much aid do they get?) –GDP per capita, life expectancy, population –Recent UNGA correlations –Conflict proximity and intensity Heckman selection model (MLE)

Donor Internal Conflict Border Conflict Austria Belgium-0.300***0.155 Canada-0.100***-0.116*** Denmark-0.068***0.068*** Finland *** France-0.812*** Germany *** Ireland-0.005*0.007** Italy0.207***0.185 Japan-0.227**0.313*** Donor Internal Conflict Border Conflict Netherlands ** New Zealand ** Norway0.052*0.098*** Portugal Spain-0.295**-0.222* Sweden Switzerland-0.020** UK ** US7.028***1.846*** USSR1.910***0.431

Effects of Conflict Proximity on Aid Internal and border proximity to conflict increases the possibility of selection 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 Regional proximity to conflict increases the possibility of selection –Belgium, Canada, France, Germany, Ireland, Italy, Japan, New Zealand, Sweden, USSR

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

Changes from low to moderate intensity yield: For internal conflicts: 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: For border conflicts: –$2.46 increase per capita in US aid (17.4%) –$3.12 decrease per capita in UK aid (76%)

Other variables? UNGA voting history UNGA voting history –Positive effects on aid for Austria, Finland, France, Germany, Japan –Negative effects on aid for Netherlands, Spain, Ireland Recent UNGA votes 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

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

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

Summary – Gate-Keeping Funnel aid to nations bordering or containing conflict 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 Funnel aid away from intense conflicts –Belgium, Canada, Denmark, France, Ireland, Japan, Switzerland, and Spain

Summary – Level-setting Decrease aid to border and internal conflicts 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 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 Increase aid to border conflicts while decreasing aid to internal conflicts –Denmark, Ireland, Japan No level-setting based on conflict No level-setting based on conflict –Sweden, Austria

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

Conclusions Every donor conditions aid on conflict at some point in their allocation. Every donor conditions aid on conflict at some point in their allocation. Donor motivations are more complex than previously indicated. 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. 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. Geographic proximity and intensity of conflict are important determinants of allocation.