The Double-Edged Effects of IDA Aid on Conflict and Governance: Policy Insights for Smarter Development Assistance

This study uncovers the paradoxical political consequences of the World Bank’s concessional aid through the International Development Association (IDA). Using a regression discontinuity design based on IDA’s income eligibility threshold, the study shows that while IDA assistance reduces public protests and mass mobilization in recipient countries, it simultaneously increases elite-driven violence such as purges, coups, and political assassinations. In the short run, aid inflows weaken institutional quality by intensifying competition for rents, but over time these pressures contribute to gradual institutional strengthening as governance adapts. The findings highlight the double-edged nature of development assistance: it can buy social peace yet fuel political aggression, underscoring the need for transparency, oversight, and governance safeguards—particularly in the first years after aid disbursement.