consequences of violent conflict at the local level. Dercon (2006) and Verwimp (2005) analyze the effects of local violence on household wellbeing in Ethiopia and Rwanda. Again, important spatial differences emerge. For instance, Yanagizawa-Drott (2012) finds evidence that in Rwanda radio stations encouraged people to participate in the genocide. But the reach of these stations varied depending on the terrain, resulting in considerable dispersion in violence across geographic areas.

Some of the studies in this strand of the literature refer specifically to Afghanistan. Using household data from 2007, D’Souza and Jolliffe (2013) find robust evidence that conflict and food security are negatively correlated. They attribute this relationship to disruptions of local markets leading to spikes in food prices. Callen et al. (2014) show the persistence and intensity of the conflict affect household expectations, with the poorest sections of the population having a more negative perception of their future wellbeing. Consistent with this perception, Ciarli et al. (2015) find that conflict reduces employment opportunities by making business investment less attractive, while boosting self-employment in activities that have low returns.

There are also empirical studies focusing on how foreign aid affects economic growth and household wellbeing in conflict-affected countries. During a conflict, aid can enhance state legitimacy and service delivery. After a conflict it could help implement peace agreements and support reconstruction and development. However, aid may also fuel violence because it might exacerbate tensions among local communities. Although the literature has yet to come to a consensus, findings so far suggest a positive impact. Girod (2012) finds that aid improves development outcomes after a civil war. Chandy (2011) reaches a similar conclusion for fragile countries, while pointing out that targeting, design and delivery are critically important.

The allocation of aid is also driven by political and security considerations. Douglas (2012) shows that in Afghanistan, foreign aid is positively correlated with conflict at the provincial level. This is so not only in the case of security assistance but also—albeit to a lower extent—in the case of development aid. According to Johnson, Ramachandran, and Walz (2012), in Afghanistan development aid has been fully anchored into the counterinsurgency strategy. Economic development in conflict areas is seen as essential to reduce local support for insurgents, in line with the “hearts and minds” doctrine (Chou, 2012; Douglas, 2012; Sexton, 2015).

Whether development aid has actually defused conflict in Afghanistan is less clear. There have been unambiguous successes in small-scale and community-driven development projects. Beath, Enikolopov, and Fotini (2014) conduct a thorough evaluation of the National Solidarity Program (NSP) relying on randomized control trials. Their findings show that this program had a positive effect on economic wellbeing and attitudes towards international and Afghan troops.

However, Sexton (2015) claims that successes have been confined to areas already controlled by pro-governmental forces. In disputed areas, aid—and in particular, large development projects— is said to fuel violence or be ineffective (Beath, Fotini, and Enikolopov, 2014; Chou, 2012). Findings have been similar in other fragile settings such as Iraq (Berman, Shapiro, and Felter, 2011) and the Philippines (Crost, Felter, and Johnson, 2014a).

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