Graduation Year

2025

Date of Submission

12-2024

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

William Lincoln

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Rights Information

© 2024 Audrey H Donahue

Abstract

This paper examines the impact of United States foreign aid on civil violence in recipient countries, specifically investigating the interaction between aid implementation channels—bilateral aid, implemented directly by recipient governments, vs. multilateral aid, implemented through Non-Governmental Organizations (NGOs) or other multilateral partners—and governance quality. Using a panel dataset covering 49 countries from 1996 to 2022, the study measures the effect of aid on violence through conflict-related fatalities normalized by population. A fixed-effects regression model is employed to control for country-specific and time-specific factors, revealing that in countries with poor governance, bilateral aid is associated with a reduction in conflict fatalities, while multilateral aid correlates with increased fatalities. These findings suggest that while the stringent oversight and reporting requirements associated with US bilateral aid enhance its correlated effectiveness in mitigating violence in poorly governed contexts, the lack of comparable oversight in multilateral channels may lead to increased challenges and unintended consequences in similar governance environments. This research underscores the need for policymakers to tailor aid strategies to the recipient country’s governance environment and consider the impact of implementation channels to maximize the stabilizing potential of US foreign aid.

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