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More than Words and Good Intentions: The Political Agenda-Setting Power Behind Foreign Aid Mechanisms

Listed author(s):
  • Riaño Rodríguez, Juan Felipe

In this paper, international aid is examined as a tool for political agenda-setting. A theoretical model is constructed for the analysis, incorporating the incentives created by foreign aid, on the political benefits of recipient governments. The model also incorporates the compensating benefits provided by these governments through the legitimization of the donor country's political agenda. The main results of this model indicate that governments which offer international assistance can influence the political agenda of recipient countries through two channels: 1) By reducing the political costs of official intervention in issues that receive aid, and 2) By generating incentives for additional political rent-seeking. The results are studied in the case of aid provided by the USA to Colombia during the period 1998-2012, which shows the power of US presidents to establish part of the Colombian political agenda related to drugs and terrorism. The results are obtained through a novel content analysis of presidential speeches in both countries and from a set of estimates corrected by possible problems of endogeneity in foreign aid allocation.

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File URL: https://mpra.ub.uni-muenchen.de/54826/1/MPRA_paper_54826.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 54826.

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Date of creation: 26 Mar 2014
Handle: RePEc:pra:mprapa:54826
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  1. Busse, Matthias & Gröning, Steffen, 2009. "Does foreign aid improve governance?," Economics Letters, Elsevier, vol. 104(2), pages 76-78, August.
  2. Oeindrila Dube & Suresh Naidu, 2010. "Bases, Bullets, and Ballots: The Effect of U.S. Military Aid on Political Conflict in Colombia," Working Papers 197, Center for Global Development.
  3. Svensson, Jakob, 2000. "Foreign aid and rent-seeking," Journal of International Economics, Elsevier, vol. 51(2), pages 437-461, August.
  4. William Easterly, 2002. "The cartel of good intentions: The problem of bureaucracy in foreign aid," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 5(4), pages 223-250.
  5. Svensson, Jakob, 2000. "When is foreign aid policy credible? Aid dependence and conditionality," Journal of Development Economics, Elsevier, vol. 61(1), pages 61-84, February.
  6. Helen V. Milner & Dustin H. Tingley, 2010. "The Political Economy Of U.S. Foreign Aid: American Legislators And The Domestic Politics Of Aid," Economics and Politics, Wiley Blackwell, vol. 22(2), pages 200-232, 07.
  7. Benjamin E. Goldsmith & Yusaku Horiuchi & Takashi Inoguchi, 2005. "American Foreign Policy and Global Opinion," Journal of Conflict Resolution, Peace Science Society (International), vol. 49(3), pages 408-429, June.
  8. Wenli Cheng & Dingsheng Zhang & Heng-fu Zou, 2008. "The Effects of Foreign Aid on the Creation and Distribution of Wealth," Annals of Economics and Finance, Society for AEF, vol. 9(2), pages 223-237, November.
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