Does Foreign Aid Lead to Armed Civil Conflict? Examining Horizontal Inequalities and Ethnic Exclusion

Abstract

The impact of aid flows and ethnic exclusion on civil conflict in Africa is explored. Ethno-politics and informal institutions dictate discriminatory spending allocations (in the form of political patronage flows) in most African states. The unequal allocation of these resources can foster grievances in excluded populations. When states gain access to non-tax revenues (i.e., foreign aid), it is often allocated in a similar fashion. When inequalities in access to resources lie along ethnic lines, the likelihood and intensity of conflict is higher as ethnicity can offer an important mobilizing source in organizing political action. Using newly-available disaggregated data to explore these relationships at the subnational-level, statistical results are found supporting this theory. Additionally, micro-level analysis of these mechanisms bolsters the statistical findings in a country-case study of the Democratic Republic of the Congo, where the locations of aid projects, ethnic group settlement patterns, and civil conflict sites are mapped using geographic information systems.