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The Political Economy of US Aid to Pakistan

Author

Listed:
  • Mumtaz Anwar

    (University of the Punjab, Lahore Pakistan & Hamburg Institute of International Economics HWWA)

  • Katharina Michaelowa

    (Hamburg Institute of International Economics)

Abstract

Variations of bilateral aid flows are difficult to explain on the basis of official development objectives or recipient need. At the example of US aid to Pakistan, this paper suggests alternative political economic explanations, notably the relevance of ethnic lobbying and the relevance of US business interests. Time series regressions for the period from 1980 to 2002 and logistic regressions based on votes for the Pressler and the Brown Amendment confirm the significance of these political economic determinants. While in case of the Pressler Amendment, the direct influence of population groups of Indian and Pakistani origins seems to have played a predominant role, the role of ethnic business lobbies appears to have dominated in the context of the Brown Amendment. Time series analysis also provides some evidence for the impact of US business interests based on FDI and exports, but these effects appear to be comparatively small.

Suggested Citation

  • Mumtaz Anwar & Katharina Michaelowa, 2004. "The Political Economy of US Aid to Pakistan," International Finance 0411008, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpif:0411008
    Note: Type of Document - pdf; pages: 33. This paper is not meant to stress the long-term political rivalry between India and Pakistan which, fortunately, appears to be mitigated now through join efforts from both sides. It is meant as an example that aid policies tend to be determined by the utility maximizing behavior of donor country politicians taking into account the particular characteristics of their respective constituencies among which the ethnic origin of the citizens seems to play a major role.
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    Citations

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    Cited by:

    1. Michaelowa, Axel & Michaelowa, Katharina, 2011. "Coding Error or Statistical Embellishment? The Political Economy of Reporting Climate Aid," World Development, Elsevier, vol. 39(11), pages 2010-2020.
    2. Rana, Zunera & Koch, Dirk-Jan, 2020. "Why fungibility of development aid can be good news: Pakistan case study," World Development Perspectives, Elsevier, vol. 20(C).
    3. Chaudhry, Mumtaz Anwar & Aman, Sughra, 2010. "Aid effectiveness in education sector of Pakistan," HWWI Research Papers 2-20, Hamburg Institute of International Economics (HWWI).
    4. Muhammad Luqman & Mirajul Haq & Karim Khan, 2015. "The Role of Political Regimes in the Macroeconomic Effectiveness of Foreign Aid in Pakistan," South Asian Journal of Macroeconomics and Public Finance, , vol. 4(1), pages 118-137, June.
    5. Lubaina Dawood & Khadija Karim & Gul Nagina & Niamatullah, 2020. "Idealist, Realist or Neo-Realist Financial Aid Donors to Pakistan," Technium Social Sciences Journal, Technium Science, vol. 10(1), pages 1-12, August.
    6. Rudolph, Alexandra, 2017. "The concept of SDG-sensitive development cooperation: implications for OECD-DAC members," IDOS Discussion Papers 1/2017, German Institute of Development and Sustainability (IDOS).
    7. Mumtaz Anwar & Katharina Michaelowa, 2006. "The Political Economy of US Aid to Pakistan," Review of Development Economics, Wiley Blackwell, vol. 10(2), pages 195-209, May.
    8. Aurore Gary & Audrey-Rose Menard, 2015. "Aid, Trade and Migration : How are OECD countries policies connected in times of crisis?," Working Papers of BETA 2015-11, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    9. Öhler, Hannes & Nunnenkamp, Peter & Dreher, Axel, 2012. "Does conditionality work? A test for an innovative US aid scheme," European Economic Review, Elsevier, vol. 56(1), pages 138-153.
    10. Mushtaq H. Khan, 2013. "Aid and Governance in Vulnerable States: Bangladesh and Pakistan Since 1971," WIDER Working Paper Series wp-2013-122, World Institute for Development Economic Research (UNU-WIDER).
    11. Pervez Zamurrad Janjua & Malik Muhammad & Muhammad Usman, 2018. "Impact of Project and Programme Aid on Economic Growth: A Cross Country Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 57(2), pages 145-174.
    12. Fuchs, Andreas & Richert, Katharina, 2018. "Development Minister Characteristics and Aid Giving," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 53, pages 186-204.
    13. M. Ali Kemal & Anum Jilani, 2016. "Impact of Foreign Aid in Education on Educational Outcomes," PIDE-Working Papers 2016:139, Pakistan Institute of Development Economics.
    14. Sultan Mehmood & Avner Seror, 2019. "The Political Economy of Foreign Aid and Growth:Theory and Evidence," Working Papers 19-10, Chapman University, Economic Science Institute.
    15. Daina Chiba & Tobias Heinrich, 2019. "Colonial Legacy and Foreign Aid: Decomposing the Colonial Bias," International Interactions, Taylor & Francis Journals, vol. 45(3), pages 474-499, May.
    16. Karim Khan, 2013. "Distributive consideration in institutional change: the case of Zia’s Islamization policy in Pakistan," Constitutional Political Economy, Springer, vol. 24(2), pages 139-165, June.
    17. Coyne Christopher J, 2011. "The Political Economy of the Creeping Militarization of U.S. Foreign Policy," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 17(1), pages 1-27, May.
    18. Ruxanda Berlinschi, 2010. "Reputation concerns in aid conditionality," The Review of International Organizations, Springer, vol. 5(4), pages 433-459, December.
    19. Epstein, Gil S. & Gang, Ira N., 2009. "Good governance and good aid allocation," Journal of Development Economics, Elsevier, vol. 89(1), pages 12-18, May.
    20. Khan, Mushtaq H., 2013. "Aid and Governance in Vulnerable States: Bangladesh and Pakistan Since 1971," WIDER Working Paper Series 122, World Institute for Development Economic Research (UNU-WIDER).
    21. repec:got:cegedp:103 is not listed on IDEAS
    22. Mushtaq H. Khan, 2014. "Aid and Governance in Vulnerable States," The ANNALS of the American Academy of Political and Social Science, , vol. 656(1), pages 59-78, November.
    23. Luqman, Muhammad & Haq, Mairajul & Lal, Irfan, 2013. "Foreign Aid and Macroeconomic Performance in Pakistan: Exploring the Role of Local Financial Sector Development," MPRA Paper 106866, University Library of Munich, Germany.

    More about this item

    Keywords

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    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • F35 - International Economics - - International Finance - - - Foreign Aid

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