The Effectiveness and The Goals of Foreign Aid: An Empirical Examination of Sectoral Aid’s Influence on Mitigating Conflicts and Violence

Abstract

The objectives of foreign aid are closely associated with the global political and economic issues during the last 60 years. In recent years foreign aid flows have been considerably influenced by international terrorism. In this paper I attempt to investigate whether and how sectoral aid has affected international conflicts and intra-country violence.

The analysis is initiated by case studies. I use graphical analysis to examine the rationale and disbursements of sectoral foreign aid to Iraq and Afghanistan from 2002 to 2010. It is discovered that aid for agriculture and food are extremely low in these conflict areas. Then I use a comprehensive panel data to show the relationships between conflicts/violence and sectoral foreign aid covering 123 developing countries from 2002 to 2010. It shows that agricultural aid can significantly reduce conflict, and aid for food security can significantly mitigate violence. Aid for some sectors will increase conflict/violence. Finally I use directed acyclic graphs (DAG) to present preliminary results on the structure of causality among conflicts/violence and sectoral aid, showing that aid to government is positively associated with both conflict and violence.