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Foreign Aid and Regime Change: A Role for Donor Intent

  • Bermeo, Sarah Blodgett
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    This paper uses data from the AidData project to analyze the association between foreign aid and the likelihood of democratization in aid recipients. Previous studies have argued that aid can entrench dictatorships, making a transition less likely. I find evidence that the relationship between aid and democratization depends on characteristics of the aid donor. During the period from 1992 to 2007, aid from democratic donors is often found to be associated with an increase in the likelihood of a democratic transition. This is consistent with a scenario in which aid promotes democratization and/or a situation in which democratic donors reward countries that take steps in a democratic direction. In either case, it suggests that democratic donors use scarce aid resources to encourage democracy. During the same period, aid from authoritarian donors exhibits a negative relationship with democratization. This suggests that the source of funding matters, with donor preferences regarding democracy helping to determine the link between aid and democratization.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0305750X1100194X
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    Article provided by Elsevier in its journal World Development.

    Volume (Year): 39 (2011)
    Issue (Month): 11 ()
    Pages: 2021-2031

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    Handle: RePEc:eee:wdevel:v:39:y:2011:i:11:p:2021-2031
    Contact details of provider: Web page: http://www.elsevier.com/locate/worlddev

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    1. Alesina, Alberto & Dollar, David, 2000. " Who Gives Foreign Aid to Whom and Why?," Journal of Economic Growth, Springer, vol. 5(1), pages 33-63, March.
    2. de Mesquita, Bruce Bueno & Smith, Alastair, 2009. "A Political Economy of Aid," International Organization, Cambridge University Press, vol. 63(02), pages 309-340, April.
    3. William H. Greene, 2009. "Testing Hypotheses About Interaction Terms in Nonlinear Models," Working Papers 09-08, New York University, Leonard N. Stern School of Business, Department of Economics.
    4. Alberto Alesina & Beatrice Weder, 2002. "Do Corrupt Governments Receive Less Foreign Aid?," American Economic Review, American Economic Association, vol. 92(4), pages 1126-1137, September.
    5. Daron Acemoglu & Simon Johnson & James Robinson & Pierre Yared, 2005. "Income and Democracy," NBER Working Papers 11205, National Bureau of Economic Research, Inc.
    6. Dunning, Thad, 2004. "Conditioning the Effects of Aid: Cold War Politics, Donor Credibility, and Democracy in Africa," International Organization, Cambridge University Press, vol. 58(02), pages 409-423, April.
    7. Simeon Djankov & José Garcia Montalvo & Marta Reynal-Querol, 2005. "The curse of aid," Economics Working Papers 870, Department of Economics and Business, Universitat Pompeu Fabra.
    8. Brautigam, Deborah A & Knack, Stephen, 2004. "Foreign Aid, Institutions, and Governance in Sub-Saharan Africa," Economic Development and Cultural Change, University of Chicago Press, vol. 52(2), pages 255-85, January.
    9. Collier, Paul, 2006. "Is Aid Oil? An Analysis Of Whether Africa Can Absorb More Aid," World Development, Elsevier, vol. 34(9), pages 1482-1497, September.
    10. Morrison, Kevin M., 2009. "Oil, Nontax Revenue, and the Redistributional Foundations of Regime Stability," International Organization, Cambridge University Press, vol. 63(01), pages 107-138, January.
    11. Goldsmith, Arthur A., 2001. "Foreign Aid and Statehood in Africa," International Organization, Cambridge University Press, vol. 55(01), pages 123-148, December.
    12. José Cheibub & Jennifer Gandhi & James Vreeland, 2010. "Democracy and dictatorship revisited," Public Choice, Springer, vol. 143(1), pages 67-101, April.
    13. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
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