Breaking the wave of democracy: The effect of foreign aid on the incumbent's re-election probability
We investigate whether foreign aid affects the probability of incumbent's re-election and then the Schumpeterian quality of democracy in developing countries. We present a simple theoretical framework, which captures the competitiveness of elections through the Tullock's approach based on the Contest Success Function. We obtain an ambiguous theoretical effect of foreign aid on the incumbent probability to be reelected: Foreign aid increases the prize of the electoral contest stimulating the challenger to increase his campaign effort; But, the incumbent may divert part of the aid, improving his advantage and reducing political competition. We investigate empirically this effect using panel data from 60 aid-recipient countries between 1980 and 2005. Our analysis shows that foreign aid increases the incumbent's re-election probabilities. However, this effect depends on recipients' democratic level and on the nature of foreign aid, consistently with our theoretical framework. While financial aid increases the probability of incumbent's re-election, political aid, especially through assistances in developing competitive electoral systems, reduces this probability.
|Date of creation:||01 Aug 2012|
|Date of revision:|
|Note:||View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00722375|
|Contact details of provider:|| Web page: http://hal.archives-ouvertes.fr/|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Omar M. G. Keshk, 2003. "CDSIMEQ: A program to implement two-stage probit least squares," Stata Journal, StataCorp LP, vol. 3(2), pages 157-167, June.
- Irene Vlachaki & Sarantis Kalyvitis, 2011.
"When does more aid imply less democracy? An empirical examination,"
DEOS Working Papers
1125, Athens University of Economics and Business.
- Kalyvitis, Sarantis & Vlachaki, Irene, 2012. "When does more aid imply less democracy? An empirical examination," European Journal of Political Economy, Elsevier, vol. 28(1), pages 132-146.
- Brender, Adi, 2003. "The effect of fiscal performance on local government election results in Israel: 1989-1998," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 2187-2205, September.
- Hoffmann, Magnus & Rota Graziosi, Gregoire, 2010.
"Endogenous Timing in General Rent-Seeking and Conflict Models,"
24084, University Library of Munich, Germany.
- Hoffmann, Magnus & Rota-Graziosi, Grégoire, 2012. "Endogenous timing in general rent-seeking and conflict models," Games and Economic Behavior, Elsevier, vol. 75(1), pages 168-184.
- Grégoire ROTA-GRAZIOSI & Magnus HOFFMANN, 2010. "Endogenous Timing in General Rent‐Seeking and Conflict Models," Working Papers 201024, CERDI.
- Grégoire Rota-Graziosi & Magnus Hoffmann, 2011. "Endogenous Timing in General Rent‐Seeking and Conflict Models," Working Papers halshs-00553119, HAL.
- 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.
- Todd Moss & Gunilla Pettersson & Nicolas van de Walle, 2006. "An Aid-Institutions Paradox? A Review Essay on Aid Dependency and State Building in Sub-Saharan Africa," Working Papers 74, Center for Global Development.
- repec:cup:cbooks:9780521707404 is not listed on IDEAS
- Besley, Timothy & Case, Anne, 1995.
"Incumbent Behavior: Vote-Seeking, Tax-Setting, and Yardstick Competition,"
American Economic Review,
American Economic Association, vol. 85(1), pages 25-45, March.
- Timothy Besley & Anne Case, 1992. "Incumbent Behavior: Vote Seeking, Tax Setting and Yardstick Competition," NBER Working Papers 4041, National Bureau of Economic Research, Inc.
- Alberto Alesina & David Dollar, 1998.
"Who Gives Foreign Aid to Whom and Why?,"
NBER Working Papers
6612, National Bureau of Economic Research, Inc.
- Robert J. Shiller, 1997.
"Why Do People Dislike Inflation?,"
in: Reducing Inflation: Motivation and Strategy, pages 13-70
National Bureau of Economic Research, Inc.
- Svensson, Jakob, 1998.
"Foreign aid and rent-seeking,"
Policy Research Working Paper Series
1880, The World Bank.
- Clémence Vergne, 2011.
"Democracy, Elections and Allocation of Public Expenditure in Developing Countries,"
- Vergne, Clémence, 2009. "Democracy, elections and allocation of public expenditures in developing countries," European Journal of Political Economy, Elsevier, vol. 25(1), pages 63-77, March.
- Clémence VERGNE, 2006. "Democracy, Elections and Allocation of Public Expenditure in Developing Countries," Working Papers 200608, CERDI.
- Collier, Paul & Hoeffler, Anke, 2009. "Testing the neocon agenda: Democracy in resource-rich societies," European Economic Review, Elsevier, vol. 53(3), pages 293-308, April.
- Yogesh Uppal, 2009.
"The disadvantaged incumbents: estimating incumbency effects in Indian state legislatures,"
Springer, vol. 138(1), pages 9-27, January.
- Uppal, Yogesh, 2007. "The Disadvantaged Incumbents: Estimating Incumbency Effects in Indian State Legislatures," MPRA Paper 8515, University Library of Munich, Germany.
- 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.
- Lancaster, Carol, 1999. "Aid to Africa," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226468389, June.
- Boone, Peter, 1996. "Politics and the effectiveness of foreign aid," European Economic Review, Elsevier, vol. 40(2), pages 289-329, February.
- Knack, Stephen, 2009. "Sovereign rents and quality of tax policy and administration," Journal of Comparative Economics, Elsevier, vol. 37(3), pages 359-371, September.
- Ashish Chaturvedi, 2005. "Rigging elections with violence," Public Choice, Springer, vol. 125(1), pages 189-202, July.
- repec:cup:cbooks:9780521881029 is not listed on IDEAS
- Ilyana Kuziemko & Eric Werker, 2006. "How Much Is a Seat on the Security Council Worth? Foreign Aid and Bribery at the United Nations," Journal of Political Economy, University of Chicago Press, vol. 114(5), pages 905-930, October.
When requesting a correction, please mention this item's handle: RePEc:hal:wpaper:halshs-00722375. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD)
If references are entirely missing, you can add them using this form.