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The Political Economy of US Aid to Pakistan

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Author Info

  • Mumtaz Anwar

    (University of the Punjab, Lahore Pakistan & Hamburg Institute of International Economics HWWA)

  • Katharina Michaelowa

    (Hamburg Institute of International Economics)

Abstract

Variations of bilateral aid flows are difficult to explain on the basis of official development objectives or recipient need. At the example of US aid to Pakistan, this paper suggests alternative political economic explanations, notably the relevance of ethnic lobbying and the relevance of US business interests. Time series regressions for the period from 1980 to 2002 and logistic regressions based on votes for the Pressler and the Brown Amendment confirm the significance of these political economic determinants. While in case of the Pressler Amendment, the direct influence of population groups of Indian and Pakistani origins seems to have played a predominant role, the role of ethnic business lobbies appears to have dominated in the context of the Brown Amendment. Time series analysis also provides some evidence for the impact of US business interests based on FDI and exports, but these effects appear to be comparatively small.

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File URL: http://128.118.178.162/eps/if/papers/0411/0411008.pdf
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Bibliographic Info

Paper provided by EconWPA in its series International Finance with number 0411008.

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Length: 33 pages
Date of creation: 26 Nov 2004
Date of revision:
Handle: RePEc:wpa:wuwpif:0411008

Note: Type of Document - pdf; pages: 33. This paper is not meant to stress the long-term political rivalry between India and Pakistan which, fortunately, appears to be mitigated now through join efforts from both sides. It is meant as an example that aid policies tend to be determined by the utility maximizing behavior of donor country politicians taking into account the particular characteristics of their respective constituencies among which the ethnic origin of the citizens seems to play a major role.
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Keywords: Public Choice; ethnic lobbying; foreign aid;

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Cited by:
  1. Chaudhry, Mumtaz Anwar & Aman, Sughra, 2010. "Aid effectiveness in education sector of Pakistan," HWWI Research Papers 2-20, Hamburg Institute of International Economics (HWWI).
  2. Khan, Mushtaq H., 2013. "Aid and governance in vulnerable states: Bangladesh and Pakistan since 1971," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  3. Epstein, Gil S. & Gang, Ira N., 2008. "Good Governance and Good Aid Allocation," IZA Discussion Papers 3585, Institute for the Study of Labor (IZA).
  4. Hannes Öhler & Peter Nunnenkamp & Axel Dreher, 2011. "Does Conditionality Work? A Test for an Innovative US Aid Scheme," CESifo Working Paper Series 3454, CESifo Group Munich.
  5. Michaelowa, Axel & Michaelowa, Katharina, 2011. "Coding Error or Statistical Embellishment? The Political Economy of Reporting Climate Aid," World Development, Elsevier, vol. 39(11), pages 2010-2020.
  6. Öhler, Hannes & Nunnenkamp, Peter & Dreher, Axel, 2010. "Does conditionality work? A test for an innovative US aid scheme," Center for European, Governance and Economic Development Research Discussion Papers 103, University of Goettingen, Department of Economics.
  7. Coyne Christopher J, 2011. "The Political Economy of the Creeping Militarization of U.S. Foreign Policy," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 17(1), pages 1-27, May.
  8. Ruxanda Berlinschi, 2010. "Reputation concerns in aid conditionality," The Review of International Organizations, Springer, vol. 5(4), pages 433-459, December.
  9. Karim Khan, 2013. "Distributive consideration in institutional change: the case of Zia’s Islamization policy in Pakistan," Constitutional Political Economy, Springer, vol. 24(2), pages 139-165, June.

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