Aid Fragmentation and Corruption

41 Pages Posted: 19 Mar 2020 Last revised: 12 Nov 2020

See all articles by Travers Child

Travers Child

China Europe International Business School (CEIBS)

Austin L. Wright

University of Chicago - Harris School of Public Policy

Yun Xiao

University of Amsterdam - Amsterdam School of Economics (ASE); Tinbergen Institute

Date Written: October 31, 2020

Abstract

Effectiveness of development aid is widely perceived to suffer in the presence of multiple donors with overlapping responsibilities. We test existing theory on aid fragmentation by studying aid provision under numerous donors throughout Afghanistan from 2006-2009. Leveraging granular military data on aid, conflict, corruption, and public opinion, we conduct the first micro-level analysis of aid fragmentation. When delivered by a single donor, aid reduces conflict, curtails corruption, and boosts public opinion. But under donor fragmentation, the benefits of aid are significantly reduced. We are able to distinguish among various causal pathways underlying these heterogeneous effects. Our findings are robust to accounting for a battery of novel observable confounding factors as well as a computational bounding exercise used to assess potential bias arising from unobserved factors. Our evidence suggests fragmentation facilitates corruption and erodes the ability of development aid to win ‘hearts and minds’ in the fight against insurgents. This study yields potentially actionable insights about improving government policy and public welfare outcomes in fragile and weakly institutionalized settings.

Keywords: development aid, fragmentation, civil conflict, insurgency, corruption

Suggested Citation

Child, Travers and Wright, Austin L. and Xiao, Yun, Aid Fragmentation and Corruption (October 31, 2020). Available at SSRN: https://ssrn.com/abstract=3543247 or http://dx.doi.org/10.2139/ssrn.3543247

Travers Child

China Europe International Business School (CEIBS) ( email )

Shanghai-Hongfeng Road
Shanghai 201206
Shanghai 201206
China

Austin L. Wright (Contact Author)

University of Chicago - Harris School of Public Policy ( email )

1307 E 60th St
Chicago, IL IL 60637
United States

HOME PAGE: http://www.austinlwright.com

Yun Xiao

University of Amsterdam - Amsterdam School of Economics (ASE) ( email )

Roetersstraat 11
Amsterdam, North Holland 1018 WB
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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