Foreign Aid, Democratization, and Civil Conflict: How Does Democracy Aid Affect Civil Conflict?

It has been suggested that democratizing states are prone to civil wars. However, not all democratizing states experience domestic political violence. We argue that one of the key factors that “shelters” some democratizing states from domestic political violence is the receipt of democracy aid. Democratizing states that receive high levels of democracy assistance are less likely to experience civil conflict than countries that receive little or no external democracy assistance. During democratic transitions, the central authority weakens and uncertainty about future political commitments and promises among domestic groups increases. Democracy aid decreases the risk of conflict by reducing commitment problems and uncertainty. Using an instrumental variables approach that accounts for potential endogeneity problems in aid allocation, we find empirical support for our argument. We conclude that there is a potential path to democracy that ameliorates the perils of democratization, and democracy assistance programs can play a significant positive role in this process.