Doing Well by Doing Good: The Impact of Foreign Aid on Foreign Public Opinion

Abstract

Does foreign aid extended by one country improve that country’s image among populations of recipient countries? Using a multinational survey, we show that a United States aid program targeted to address HIV and AIDS substantially improves perceptions of the U.S. Our identification strategy for causal inference is to use instrumental variables measuring the magnitude of the HIV/AIDS problem in aid recipient countries. Our finding implies that in addition to its potential humanitarian benefits, foreign aid that is targeted, sustained, effective, and visible can serve an important strategic goal for those countries that give it: fostering positive perceptions among foreign publics. By doing good, a country can do well.

Keywords: foreign aid, U.S. foreign policy, HIV, AIDS, PEPFAR, public opinion, instrumental variables

JEL Classification: A12, F35, I18, O55