Economic sanctions are the central tool of economic coercion, yet their effects on state-to-state lending remain largely unclear. This study argues that sanctions reduce bilateral official lending from sanctioning to sanctioned states. It also contends that third-party states adjust lending based on their economic and political ties: those more exposed to the sanctioning state tend to reduce bilateral lending, while those more exposed to the sanctioned state often increase it. Using sanctions data from the Global Sanctions Database and lending data from the World Bank’s International Debt Statistics, the study analyzes 120 emerging and developing countries since the end of the ColdWar. Gravity and event study models reveal that sanctions lower bilateral official lending by around 25% on average, with reductions of 30–35% over the medium to long term. These findings contribute to broader debates on the growing use of sanctions and the rising geopolitical fragmentation of global capital flows.

This study examines the effect of foreign aid projects on subnational economic recovery after civil wars. The central argument is that foreign aid projects foster regional economic recovery by rebuilding economic infrastructure, improving social infrastructure, and stimulating the productive sectors of the economy. To test this theoretical argument, the study combines geocoded data on aid projects from the World Bank, China, the United States, and 18 European donors with granular data on nightlight intensity. The analysis covers 40,687 subnational regions across 151 countries, with annual data from 1995 to 2020. The regression results show that regions receiving foreign aid after civil wars experience higher nightlight intensity, indicating stronger economic recovery. These effects are particularly pronounced for aid projects targeting social infrastructure and production sectors, and for aid projects provided by the United States and the World Bank. Further analysis reveals that democratic institutions enhance the effectiveness of aid in post-conflict areas, while prolonged civil wars in the past and postwar violence diminish its effectiveness.

Spring 2026, Teaching Assistant for Prof. Stefanie Walter