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Does Foreign Aid Harm Political Rights? Evidence from U.S. Aid

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  • Ahmed, Faisal Z.

Abstract

The United States is the world's largest bilateral foreign aid donor. For many developing countries, this aid constitutes a nontrivial share of state revenue with the capacity to shape a recipient's governance. Whether such assistance has a causal effect on political liberalization, however, is plagued by concerns with endogeneity bias. To mitigate this concern, I exploit plausibly exogenous variation in the legislative fragmentation of the U.S. House of Representatives to construct a powerful instrumental variable for U.S. bilateral aid disbursements. For a sample of 150 countries from 1972 to 2008, U.S. aid harms political rights, fosters other forms of state repression (measured along multiple dimensions), and strengthens authoritarian governance. U.S. aid does so by weakening government accountability via the taxation channel. These findings counter the publicly stated objectives of the U.S. government to foster political liberalization abroad via bilateral economic assistance.

Suggested Citation

  • Ahmed, Faisal Z., 2016. "Does Foreign Aid Harm Political Rights? Evidence from U.S. Aid," Quarterly Journal of Political Science, now publishers, vol. 11(2), pages 183-217, July.
  • Handle: RePEc:now:jlqjps:100.00015110
    DOI: 10.1561/100.00015110
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    Citations

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    Cited by:

    1. Axel Dreher & Sarah Langlotz, 2020. "Aid and growth: New evidence using an excludable instrument," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(3), pages 1162-1198, August.
    2. Toke S. Aidt & Facundo Albornoz & Esther Hauk, 2019. "Foreign in influence and domestic policy: A survey," Cambridge Working Papers in Economics 1928, Faculty of Economics, University of Cambridge.
    3. Dreher, Axel & Fuchs, Andreas & Langlotz, Sarah, 2019. "The effects of foreign aid on refugee flows," European Economic Review, Elsevier, vol. 112(C), pages 127-147.
    4. Richard Bluhm & Martin Gassebner & Sarah Langlotz & Paul Schaudt, 2021. "Fueling conflict? (De)escalation and bilateral aid," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 36(2), pages 244-261, March.
    5. Langlotz, Sarah & Potrafke, Niklas, 2019. "Does development aid increase military expenditure?," Journal of Comparative Economics, Elsevier, vol. 47(3), pages 735-757.
    6. Eichenauer, Vera Z. & Fuchs, Andreas & Brueckner, Lutz, 2018. "The Effects of Trade, Aid, and Investment on China's Image in Developing Countries," Working Papers 0646, University of Heidelberg, Department of Economics.
    7. Nathan Nunn, 2019. "Rethinking economic development," Canadian Journal of Economics, Canadian Economics Association, vol. 52(4), pages 1349-1373, November.
    8. Eichenauer, Vera Z. & Fuchs, Andreas & Brückner, Lutz, 2021. "The effects of trade, aid, and investment on China's image in Latin America," Journal of Comparative Economics, Elsevier, vol. 49(2), pages 483-498.
    9. Chris Doucouliagos & Jack Hennessy & Debdulal Mallick, 2021. "Health aid, governance and infant mortality," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 184(2), pages 761-783, April.
    10. Alexandra O. Zeitz, 2021. "Emulate or differentiate?," The Review of International Organizations, Springer, vol. 16(2), pages 265-292, April.

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