Overseas Economic Aid or Domestic Electoral Assistance: The Political Economy of Foreign Aid Voting in the U.S. Congress

Abstract

Each year, Congress authorizes the transfer of approximately $27 billion to foreign countries in the form of foreign development assistance. Despite the "foreign aid" label, much of this money remains in the United States, flowing to individuals and corporations who contract with the U.S. Agency for International Development (USAID) and other government agencies to implement development projects. But despite its long history, little is known about the domestic political economy of U.S. foreign aid. We extend the literature by showing that the domestic political economy of foreign aid spending is more significant and dynamic than the current literature suggests. We find that members of Congress are more likely to support foreign aid bills when foreign aid beneficiaries are present in their district. In addition, we show incumbents are less likely to be reelected if they vote for foreign aid bills while in office. Using new data, however, we find that when a given member's vote for foreign aid is coincident with his or her district receiving contracts from USAID, the negative effects of supporting foreign aid are mitigated.