Foreign Aid: a Tool to Escape the Conflict Trap?

In developing countries of the Global South, civil conflicts pose a significant hindrance to the process of development. The risk of a civil conflict recurring in these countries within ten years after the end of a conflict is high, creating a conflict trap that perpetuates economic underdevel- opment. This study investigates the relationship between the likelihood of a conflict recurrence and the level of foreign aid. The findings suggest that higher levels of foreign aid after the end of a conflict are positively associated with the likelihood of a conflict recurrence. However, higher foreign aid in a given year is associated with a lower likelihood of a conflict recurrence in the following year. The decomposition of foreign aid data by foreign aid donor shows that this rela- tionship only applies to foreign aid from multilateral organizations such as the World Bank and the IMF. While there are indications that a country’s level of democratization may influence the relationship between foreign aid and conflict recurrence, there is no evidence to suggest that the human rights situation has any influence on this relationship.