Aid Fragmentation and Corruption

43 Pages Posted: 18 Jun 2021

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

Multiple version iconThere are 2 versions of this paper

Date Written: June 18, 2021

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. Our study leverages granular military data on aid and conflict, and household survey data on corruption and public opinion. We conduct the first micro-level analysis of aid fragmentation. When delivered by a single donor, aid appears to curtail corruption, boost public opinion, and reduce conflict. But under donor fragmentation, the benefits of aid are significantly reduced. Our results suggest under high volumes of aid provision, fragmentation facilitates corruption and thereby erodes aid’s ability to win hearts and minds in the fight against insurgents. At moderate levels of aid, however, fragmentation may actually benefit the quality of institutions. Our findings remain stable when accounting for a rich set of observable confounds. Moreover, we obtain robust estimates when correcting for bias likely arising from the omission of unobservable factors.

Keywords: Aid, Corruption, Public opinion, Conflict, Afghanistan

JEL Classification: F35, D73, D74

Suggested Citation

Child, Travers and Wright, Austin L. and Xiao, Yun, Aid Fragmentation and Corruption (June 18, 2021). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2021-69, Available at SSRN: https://ssrn.com/abstract=3869814 or http://dx.doi.org/10.2139/ssrn.3869814

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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