The Effects of Aid on Rights and Governance: Evidence from a Natural Experiment

56 Pages Posted: 6 Aug 2012 Last revised: 24 Jan 2017

See all articles by Allison Sovey Carnegie

Allison Sovey Carnegie

Yale University

Peter M. Aronow

Yale University - Department of Political Science

Nikolay Marinov

University of Houston - Department of Political Science

Multiple version iconThere are 2 versions of this paper

Date Written: August 6, 2012

Abstract

Does foreign aid promote good governance in recipient countries? We help arbitrate the debate over this question by leveraging a novel source of exogeneity: the rotating presidency of the Council of the European Union. We find that when a country's former colonizer is the president of the Council of the European Union during the budget-making process, the country is allocated considerably more foreign aid than are countries whose former colonizer does not hold the presidency. Using instrumental variables estimation, we demonstrate that this aid has positive effects on multiple measures of human rights and governance, although the effects are short-lived after the shock to aid dissipates. We then disaggregate aid flows, present evidence for the causal mechanism at work, and offer directions for future advances.

Keywords: democracy, European Council, foreign aid, governance, instrumental variables, natural experiment, human rights

Suggested Citation

Sovey Carnegie, Allison and Aronow, Peter Michael and Marinov, Nikolay, The Effects of Aid on Rights and Governance: Evidence from a Natural Experiment (August 6, 2012). Available at SSRN: https://ssrn.com/abstract=2124994 or http://dx.doi.org/10.2139/ssrn.2124994

Allison Sovey Carnegie (Contact Author)

Yale University ( email )

New Haven, CT 06520
United States

Peter Michael Aronow

Yale University - Department of Political Science ( email )

P.O. Box 208301
New Haven, CT 06520-8269
United States

Nikolay Marinov

University of Houston - Department of Political Science ( email )

TX 77204-3011
United States

HOME PAGE: http://www.nikolaymarinov.com

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