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Political Aid Cycles

Author

Listed:
  • Michael Faye
  • Paul Niehaus

Abstract

Researchers have scrutinized foreign aid's effects on poverty and growth, but anecdotal evidence suggests that donors often use aid for other ends. We test whether donors use bilateral aid to influence elections in developing countries. We find that recipient country administrations closely aligned with a donor receive more aid during election years, while those less aligned receive less. Consistent with our interpretation, this effect holds only in competitive elections, is absent in US aid flows to non-government entities, and is driven by bilateral alignment rather than incumbent characteristics.

Suggested Citation

  • Michael Faye & Paul Niehaus, 2012. "Political Aid Cycles," American Economic Review, American Economic Association, vol. 102(7), pages 3516-3530, December.
  • Handle: RePEc:aea:aecrev:v:102:y:2012:i:7:p:3516-30
    Note: DOI: 10.1257/aer.102.7.3516
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    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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