The past 18 months have seen a historic decline in the development aid budgets of various donor countries, as many direct more funds toward rearmament. It was the brutal and massive reduction in American aid that had the greatest impact.
Less than a week after President Donald Trump’s inauguration in January 2025, his administration ordered the immediate suspension of all programs managed by the United States Agency for International Development (USAID) – historically the world’s largest domestic humanitarian donor. hours to leave their posts, local contracts were terminated and supply chains for medical care and food came to a grinding halt.
Researchers have already warned of serious health consequences. A study published in Lancet Global Health estimates that USAID helped prevent nearly 92 million deaths between 2001 and 2021. It also predicts more than 14 million additional deaths by 2030 if budget cuts continue.
The rapid and massive decline in foreign aid experienced by various recipient countries can have very significant consequences, ranging from health repercussions to armed conflicts. Recent data suggests what types of international support could help countries build back better and foster peace and prosperity for generations to come.
Development assistance also affects various socio-economic outcomes. We could therefore expect that budget cuts in this area would also have far-reaching societal consequences. Building on our previous work in political economy and development economics, we decided to study this question.
Our new study reveals that sudden cuts in USAID programs are associated with an increase in armed conflict in various regions of Africa.
We cross-referenced geolocated data on historical USAID disbursements with violent incidents recorded by the Armed Conflict Location and Event Data (ACLED) project in 870 African regions over a period of nearly two years. This project monitors conflicts.
The data paints a clear picture: in areas that received the most U.S. aid, the likelihood of conflict increased by 3.1 percentage points after January 2025 compared to the control group of locations not receiving USAID funding. To account for the fact that locations receiving U.S. aid and non-US aid locations may differ, we filtered out some locations’ unchanged conflict risk over time and focused only on changes over time.
This corresponds to a relative increase in conflict risk of 6.5%. Fighting increased by almost 7%, protests and riots by more than 5%, and conflict-related deaths by about 9%. These effects appear from the first weeks and intensify over time.
Read more: Health in Africa: the consequences of the United States’ withdrawal from the WHO
International aid has always been the subject of debate. Some economists see it as a lever for stability; others, a breeding ground for corruption and conflict, because it creates resources worth fighting for. Academic work has indeed highlighted evidence that progressive aid flows can both promote peace and fuel conflict. But a massive and sudden withdrawal follows a different logic – and our results confirm it.
When aid suddenly disappears, economic opportunities shrink very quickly. The cost of rebellion declines mechanically, because participants have less to lose, but many of the underlying causes of conflict – economic rents, territorial conflicts, ethnic tensions, political grievances – remain intact.
This mechanism could explain why violence erupts precisely where aid was most present. Our data also show that institutions play a shock-absorbing role: where governance is stronger, the destabilizing effects are significantly weaker.
However, we find no evidence that the presence of Chinese aid projects mitigates the impact of USAID withdrawal.
What to do now?
Sub-Saharan Africa, where USAID primarily funded health, food security and basic services, is also the continent where state fragility is most widespread. Our estimates probably represent a low range: other European donors (including France) have started to reduce their own contributions. If these cuts accumulate, the effects could exceed what we measure so far.
Given that today’s conflicts are the best indicator of tomorrow’s, an outbreak of violence can quickly turn into a vicious circle from which it is very difficult to escape.
The political implications of these results are therefore multiple. As for other major donors, one interpretation of our findings is that they would currently benefit from moving slowly and cautiously. After witnessing a very significant drop in global aid and an increase in armed fighting, a rapid and massive disengagement from other major donor countries could very well accentuate the consequences that we have highlighted.
Read more: The WHO in Africa: three risks linked to Trump’s withdrawal
Rethinking development aid
Following the dismantling of USAID, there is an urgent need to rethink development aid. Now is the perfect time to ask tough questions and reassess what kind of international support can best promote peace and prosperity. Many questions arise: how can we make aid more resilient, less dependent on a single donor and more firmly anchored in local institutions?
A growing academic literature on optimal peace policies can serve as a useful guide. A synthesis of recent research highlights the role of strong institutions, security guarantees and policies promoting productivity. While institution building is often a local initiative, international cooperation is essential for the other two aspects. In particular, a series of recent studies demonstrates the crucial importance of UN peacekeepers in guaranteeing security.
The presence of UN troops prevents the worst atrocities, suggesting that the international community should increase the peacekeepers’ budget rather than reduce it.
In this context, financial aid can play a key role in investments in the economy, with far-reaching repercussions. When individuals have future prospects and opportunities in life, they are much less likely to engage in armed conflict, because leaving legal employment would entail much higher opportunity costs. It is therefore not surprising that policies such as building schools, improving health care and access to the job market have proven to be conducive to peace.
Strong public policies and safety nets are essential. As a recent article shows, public employment programs can provide protection against adverse shocks, helping to reduce levels of conflict.
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Build Back Better
Now that the old system of foreign aid is largely dismantled, the international community should not seek to restore it as it was. Instead, we should aim to “build back better”. This starts by prioritizing the types of investments that cannot be easily diverted – physical capital can be stolen, but human capital cannot. We must ensure that money is invested in ways that boost productivity and economic prospects for all.
Combined with national efforts to strengthen institutions and inclusive governance, such international financial assistance can bear fruit for generations to come.
