IMF Working Papers

Foreign Aid and Conflicts: The Effects of 9/11 on Donor Behavior

By Rabah Arezki, Youssouf Camara, Patrick A. Imam, Kangni R Kpodar

January 17, 2025

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Format: Chicago

Rabah Arezki, Youssouf Camara, Patrick A. Imam, and Kangni R Kpodar. "Foreign Aid and Conflicts: The Effects of 9/11 on Donor Behavior", IMF Working Papers 2025, 016 (2025), accessed February 10, 2025, https://doi.org/10.5089/9798400296161.001

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

We explore the changing relationship between armed conflicts and non-military foreign aid. We find that the sign of the relationship linking (bilateral) aid commitments to the onset of armed conflicts in aid recipient countries is statistically significant and goes from negative to positive after the year 2001. We also find that our results are driven by grants rather than loans and by aid for health and humanitarian purposes. The results are robust to a myriad of checks including substituting armed conflicts with terror attacks, accounting for debt relief initiatives and using different estimators. We interpret our results as stemming from a shift in donors’ preferences induced by 9/11 attacks toward supporting conflict affected countries, confirming the primacy of donors’ interests over recipient needs.

Subject: Bilateral aid, Foreign aid, Population and demographics

Keywords: Absorptive Capacity, Bilateral aid, Conflicts, Foreign Aid, Global, Terror Attacks

Publication Details