First Impressions: How Leader Changes Affect Bilateral Aid

48 Pages Posted: 10 Oct 2016

See all articles by Tobias Rommel

Tobias Rommel

University of Zurich - Institute for Political Science

Paul Schaudt

Leibniz Universität Hannover

Date Written: September 2017

Abstract

This paper investigates a new mechanism to explain politically induced changes in bilateral aid. We argue that shifts in the foreign policy alignment between a donor and a recipient country following leadership changes induce reallocation of aid. This is due to heightened uncertainty of recipients’ behavior in the international arena. Utilizing data from the G7 and 133 developing countries between 1975 and 2012 and employing gravity and control function models, we show that incoming leaders in recipient countries, which politically converge towards their donors, receive more aid commitments, compared to those that diverge. Additionally, accounting for donor leader change, we find that incumbent recipient leaders have an opportunity to get even more aid when political change in donor countries moves them closer to the donor’s foreign policy position. Thus, leadership turnover in recipient and donor countries makes otherwise inconsequential deviations in foreign policy alignment highly consequential for aid provision.

Keywords: dyadic leader change, UNGA voting realignment, development aid

JEL Classification: D720, F350, F530, O190

Suggested Citation

Rommel, Tobias and Schaudt, Paul, First Impressions: How Leader Changes Affect Bilateral Aid (September 2017). CESifo Working Paper Series No. 6047. Available at SSRN: https://ssrn.com/abstract=2850375

Tobias Rommel

University of Zurich - Institute for Political Science ( email )

International Relations and Political Economy
Affolternstrasse 56
CH-8050 Zurich
Switzerland

Paul Schaudt (Contact Author)

Leibniz Universität Hannover ( email )

Welfengarten 1
D-30167 Hannover, 30167
Germany

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