Does Nation Building Spur Economic Growth?

Nation building, the simultaneous allocation of economic and military aid in con- ict environments, has cost the world trillions of dollars over the last half century. Yet few attempts have been made to quantify the potential growth eects for the recip- ient country from the provision of this aid. Using a forty-ve year panel dataset, we construct a measure of nation building using a three-way interaction term between military assistance, economic aid, and conict regime. We nd that spending on na- tion building has a positive eect on economic growth. Once conict ceases, however, continued military operations coupled with economic aid harms growth.