Does Aid Effectiveness Differ per Political Ideologies?

Despite the extensive empirical literature on aid effectiveness, existing studies have not addressed directly how political ideology affects the use of foreign aid in the recipient country. This study, therefore, uses a unique dataset of 12 democratic countries in Africa to investigate the impact of political ideologies on aid effectiveness. Our results indicate that each political party uses aid differently in peruse of their political, ideological orientation. Further analyses suggest that rightist capitalist parties are likely to use aid to improve the private sector environment. Leftist socialist on the other hand, use aid effectively on pro-poor projects such as short-term poverty reduction, mass education and health services. Our additional analysis on the lines of colonialisation shows that the difference in the use of aid by political parties is much stronger in French colonies than Britain colonies. The study provides insight on how the recipient government are likely to use foreign aid.