Foreign aid and local conflict dynamics : a monthly grid-cell-level analysis in Africa

This study investigates the relationship between foreign aid and conflict incidence at the sub-national level across Africa using an innovative, high-resolution panel dataset of monthly grid-cell observations. By combining geo-referenced World Bank aid data with conflict event data from the Armed Conflict Location and Event Data (ACLED) project, we construct a dataset comprising over 12 million grid-month observations from 1995 to 2020. Using difference-in-differences (DiD) and event study methodologies, we estimate the immediate and dynamic effects of foreign aid allocation on local conflict. Our findings indicate that foreign aid significantly increases the likelihood of conflict onset within treated grid cells, with effects that emerge immediately upon aid allocation and persist for at least five years. These results are robust across multiple conflict types - including protests, riots, battles, and violence against civilians - and actor categories, such as military forces, militias, and protesters. The use of monthly data at a 0.25 × 0.25 decimal degrees spatial resolution enables precise temporal alignment of aid delivery and conflict, allowing us to capture both static and dynamic treatment effects. This paper contributes novel empirical evidence to the aid-conflict literature and raises important considerations for the spatial and temporal targeting of development assistance.