title: Fueling Conflict? (De)Escalation and Bilateral Aid
creator: Bluhm, Richard
creator: Gassebner, Martin
creator: Langlotz, Sarah
creator: Schaudt, Paul
subject: ddc-330
subject: 330 Economics
description: This paper studies the effects of bilateral foreign aid on conflict escalation and de-escalation. We make three major contributions. First, we combine data on civil wars with data on low level conflicts in a new ordinal measure capturing the two-sided and multifaceted nature of conflict. Second, we develop a novel empirical framework. We propose a dynamic ordered probit estimator that allows  for unobserved heterogeneity and corrects for endogeneity. Third, we identify the causal effect of foreign aid on conflict by predicting bilateral aid flows based on electoral outcomes of donor countries that are exogenous to recipients. We establish that the effect of foreign aid on the various transition probabilities is heterogeneous and can be substantial. Receiving bilateral aid raises the chances of escalating from small conflict to armed conflict, but we find no evidence that aid ignites conflict in truly peaceful countries.
date: 2016-10
type: Working paper
type: info:eu-repo/semantics/workingPaper
type: NonPeerReviewed
format: application/pdf
identifier: https://archiv.ub.uni-heidelberg.de/volltextserverhttps://archiv.ub.uni-heidelberg.de/volltextserver/21941/1/Bluhm_Gassebner_Langlotz_Schaudt_2016_dp619.pdf
identifier: DOI:10.11588/heidok.00021941
identifier: urn:nbn:de:bsz:16-heidok-219416
identifier:   Bluhm, Richard ; Gassebner, Martin ; Langlotz, Sarah ; Schaudt, Paul  (2016) Fueling Conflict? (De)Escalation and Bilateral Aid.  [Working paper]     
relation: https://archiv.ub.uni-heidelberg.de/volltextserver/21941/
rights: info:eu-repo/semantics/openAccess
rights: http://archiv.ub.uni-heidelberg.de/volltextserver/help/license_urhg.html
language: eng