News - June 15, 2010

Development aid ends wars faster

Joris Tielens

While development aid has only a small effect on restraining corruption in African countries, it does increase the chances of ending civil wars. This conclusion is drawn by Eleonara Nillesen in her PhD thesis.

It has been said that development aid aggravates military conflicts because rebels view such aid as interesting spoils of war. 'But there doesn't seem to be any relationship between aid and the occurrence of conflicts or wars. More aid would in fact increase the chances that long drawn out wars can come to an end', says economist Eleonora Nillesen, who graduated on 15 July.
Government army
The explanation for this can be that a government which receives support can arrive at better compromises with rebels. However, it is possible, says Nillesen, that additional aid given to a country can lead to more spending by the government army for settling conflicts faster. 'If so, this outcome is of course less positive because it means that a regime uses force to stay in power.'
In its recent report on development aid, the Scientific Council for Government Policy has concluded that such relationships are in fact too complex to be measured and to be commented upon. Can Nillesen do that then? 'I agree with the WRR that the processes are complex. I too won't place too much emphasis on exact figures. But I do want to establish the causal links.'
Nillesen also examined the idea that aid can advance corruption. The Zambian economist Dambisa Moyo and the Dutch politician Arend Jan Boekestijn have contended that much aid money ends up in the pockets of the powerful. Nillesen says: 'My research however shows that aid money can improve the quality of governments. Corruption in particular goes down temporarily due to aid. The impact is indeed small, and after five years, the effects can no longer be felt. On the other hand, I have not found any empirical evidence for the contradictory idea that corruption gets worse because of aid.'
Nillesen carried out model studies based on macroeconomic data of thirty African countries and examined causal links among aid, government and civil wars. The quality of government was measured with a subjective index, the International Country and Risk Guide (ICRG) based on criteria set up by international experts.
High salaries
Nillesen explains the positive relationship between aid and good government mainly by way of the higher salaries earned by government officers. 'As a result, government officers are less prone to being bribed or to obtain money through other channels.' An alternative explanation is that needy governments know that good management is a requirement for getting aid in the future.
Nillesen does stress that the effect of aid on restraining corruption is small. 'You would need to give an average of almost two times as much aid as what is given at present to lower the ICRG index of corruption by just one point on a scale of zero to six.'