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When does more aid imply less democracy? An empirical examination

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  • Kalyvitis, Sarantis
  • Vlachaki, Irene

Abstract

Foreign aid flows have increased considerably during the last decades, targeting, apart from development objectives, goals related to democracy. In this paper we investigate whether aid has affected the political regime of recipient countries. To this end, we use annual data on Net Official Development Assistance covering 64 aid-recipients. Because of data limitations, we cover the 1967–2002 period. We find that aid flows decreased the likelihood of observing a democratic regime in a recipient country. This effect is sensitive to economic and social conditions. The negative relation between aid and democracy is moderated when aid flows are preceded by economic liberalization. Aid from the U.S. has a non-significant effect on the political regime of recipients.

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Bibliographic Info

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 28 (2012)
Issue (Month): 1 ()
Pages: 132-146

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Handle: RePEc:eee:poleco:v:28:y:2012:i:1:p:132-146

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Web page: http://www.elsevier.com/locate/inca/505544

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Keywords: Democratization; Foreign aid; Binary model; Endogeneity;

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Citations

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Cited by:
  1. Kersting, Erasmus & Kilby, Christopher, 2014. "Aid and democracy redux," European Economic Review, Elsevier, vol. 67(C), pages 125-143.
  2. Niklas Potrafke, 2013. "Policies against Human Trafficking: The Role of Religion and Political Institutions," CESifo Working Paper Series 4278, CESifo Group Munich.
  3. Toke, A.S. & Albornoz, F. & Gassebner, M., 2012. "The Golden Hello and Political Transitions," Cambridge Working Papers in Economics 1241, Faculty of Economics, University of Cambridge.
  4. Grégoire ROTA-GRAZIOSI & Clémence VERGNE & Blanca MORENO DODSON, 2012. "Breaking the wave of democracy: The effect of foreign aid on the incumbent’s re-election probability," Working Papers 201231, CERDI.
  5. Potrafke, Niklas, 2013. "Democracy and countries with Muslim majorities: A reply and update," Munich Reprints in Economics 19270, University of Munich, Department of Economics.
  6. Zohid Askarov & Hristos Doucouliagos, 2013. "Does aid improve democracy and governance? A meta-regression analysis," Public Choice, Springer, vol. 157(3), pages 601-628, December.
  7. Rode, Martin & Gwartney, James D., 2012. "Does democratization facilitate economic liberalization?," European Journal of Political Economy, Elsevier, vol. 28(4), pages 607-619.
  8. Axel Dreher & Nathan Jensen, 2009. "Country or Leader? Political Change and UN General Assembly Voting," KOF Working papers 09-217, KOF Swiss Economic Institute, ETH Zurich.
  9. John Anyanwu & Andrew E. O. Erhijakpor, 2013. "Working Paper 184 - Does Oil Wealth Affect Democracy in Africa?," Working Paper Series 988, African Development Bank.
  10. Audrey Menard, 2012. "Why foreign aid does (not) improve democracy?," Working Papers of BETA 2012-19, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.

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