The Political Economy of US Aid to Pakistan
AbstractVariations 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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Bibliographic InfoPaper provided by EconWPA in its series International Finance with number 0411008.
Length: 33 pages
Date of creation: 26 Nov 2004
Date of revision:
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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Public Choice; ethnic lobbying; foreign aid;
Other versions of this item:
- D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
- F35 - International Economics - - International Finance - - - Foreign Aid
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-06-03 (All new papers)
- NEP-CWA-2006-06-03 (Central & Western Asia)
- NEP-DEV-2006-06-03 (Development)
- NEP-POL-2006-06-03 (Positive Political Economics)
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