Foreign Aid and Civil Unrest

Does foreign aid promote or reduce civil unrest in recipient countries? While a significant body of research has tested examined the relationship between aid and the likelihood of civil war in recipient countries, there has been little discussion of the effects of foreign aid when considering foreign aidﾒs effect on other less violent forms of civil strife is understudied. We consider, and empirically test, two competing theories regarding the effect of aid on civil unrest. The results of our tobit analyses on 99 countries from 1961 through 2004 of aid on three indicators of unrest indicate that increased inflows of foreign aid actually reduces the instance incidence of civil unrest, in particular, demonstrations, general strikes, and riots. Though these findings suggest that aid may be beneficial by reducing unrest in recipient countries, this implication is contingent upon the causal mechanism linking aid to stability.