Canceling development aid can exacerbate conflicts

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What happens to unstable regions if development aid is scaled back suddenly and significantly? This was the question addressed in a recent study by an international research team that included LMU economist Uwe Sunde. The findings are published in the latest edition of Science magazine.

For the purposes of the study, the researchers examined what consequences the complete shutdown of the United States Agency for International Development (USAID) has had for conflicts and violence in African regions that, in the past, depended very heavily on US funding.

Fierce debate rages among experts over whether development aid curbs or fuels conflicts. Essentially, there are two contradictory ways in which aid can influence conflicts: On the one hand, the money can improve economic conditions and raise incomes, thereby diminishing the incentive for people to engage in violent conflict. On the other hand, the additional resources that flow into weak regions in the form of development aid can be the very factor that triggers conflicts over resource allocation, for example.

Investigating a historically new situation

Uwe Sunde is a professor at LMU’s Department of Economics. By taking the shutdown of USAID – the largest national humanitarian donor in the world – as an example, he and his colleagues were able to conduct empirical analyses of whether or not conflicts increase if aid funding is withdrawn from weak regions at short notice.

“Our study doesn’t say anything about whether development aid is or isn’t useful per se to avoid conflicts,” Sunde points out. “What became clearly apparent, however, is what happens when an unstable region that has hitherto been receiving aid suddenly has that flow of funds cut off. As soon as the resources dry up, the conflicts intensify.”

Conflicts in regions that receive aid

The researchers were able to document empirically that, in regions that relied heavily on aid from the USA, the probability of conflict rose by an average of 6.5 percent in the period stretching from ten months before and ten months after the moratorium on US funding compared to regions that had hitherto received little or no US aid. The likelihood of protests and riots increased, as did the number of battles and the associated number of deaths. “These effects persisted over time,” Sunde explains. The intensity of protests and riots increased immediately, while larger conflicts grew in intensity over a period of months. It was also shown that the effects of aid shutdowns were substantially lower in regions that have stronger and more inclusive political institutions.

The findings of the study are of relevance to the timing of future changes in development aid and the way such changes are organized.

Publication:

Dominic Rohner, Uwe Sunde, Oliver Vanden Eynde, Austin L. Wright, Jing Rong Zeng: „Aiding Peace or Conflict? The impact of USAID cuts on violence.” In: Science 2026