The Localized Geography of Development Assistance: A Disaggregated Grid Cell Analysis

• Applicant: Professor Dr. Erkan Gören
• Subject Area: Statistics and Econometrics
• Term: from 2019 to 2024
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 424612440

The project aims at improving the empirical methodology that is commonly employed in the cross-country aid effectiveness literature. In contrast to the relevant literature, I use equally sized small grid cells with a spatial resolution of 0.5 decimal degree latitude and longitude (approximately 55 km x 55 km at the equator) as the unit of investigation. The use of geographic information system (GIS) techniques in combination with georeferenced data on World Bank foreign aid projects, local economic activity, and conflict sites enables the design of credible identification strategies for drawing causal inferences regarding the impact of foreign aid on a broad range of socioeconomic outcomes (i.e., economic activity and civil conflicts). In the first part of the research project, I investigate the relationship between foreign aid and civil conflicts. The current research project contributes in several directions to the existing literature. First, I examine the relationship between foreign aid and civil conflicts at the local level across the entire set of African countries during the years 1997 to 2018. Second, detailed information on the type of implemented World Bank foreign aid projects and localized conflict sites enable a much better understanding of the underlying mechanisms between both outcomes. In the second part of the research project, I investigate the impact of different kinds of World Bank foreign aid projects (e.g., schooling, health, and infrastructure) on local economic activity measured by night-time light growth. The proposed research framework enables a detailed analysis about the long-term influence of different kinds of World Bank foreign aid projects on local economic activity. In the last part of the research project, I examine the main political and local determinants underlying the decision process of the World Bank regarding the spatial allocation of foreign aid projects within aid-targeted recipient countries. To reduce poverty in the developing world, it seems important that aid funds are targeted to locations with high poverty rates. A multilateral organization as the World Bank should rely on the economic and humanitarian needs of people when allocating funds within recipient countries. Political-strategic and/or historical considerations that seem important for the allocation of bilateral aid funds between donor and recipient countries should be of minor interest for the World Bank. However, this research question is empirically largely unanswered.

• DFG Programme: Research Grants