Democracy and Aid Donorship

Kiel Working Paper No. 2113

54 Pages Posted: 28 Oct 2018

See all articles by Andreas Fuchs

Andreas Fuchs

Kiel Institute for the World Economy; University of Goettingen (Göttingen) - Faculty of Economics and Business Administration

Angelika Müller

Heidelberg University

Date Written: September 1, 2018

Abstract

Almost half of the world’s states provide bilateral development assistance. While previous research takes the set of donor countries as exogenous, this article is the first to explore the determinants of aid donorship. We hypothesize that democratic institutions reduce poor countries’ likelihood to initiate aid giving. On the contrary, the leadership of poor authoritarian regimes face fewer constraints that would hinder these governments to reap the benefits of a development aid program despite popular opposition. To test our expectations, we build a new global dataset on aid donorship since 1945 and apply an instrumental-variables strategy that exploits exogenous variation in regional waves of democratization. Our results confirm that the likelihood of a democratic country to start aid giving is more responsive to income than it is the case for authoritarian countries. Overall, democracies are — if anything — less rather than more likely to engage in aid giving.

Keywords: foreign aid, Official Development Assistance, aid donorship, aid institutions, new donors, democracy, selectorate theory

JEL Classification: F35, F55, H77, H87, O19, O57

Suggested Citation

Fuchs, Andreas and Fuchs, Andreas and Müller, Angelika, Democracy and Aid Donorship (September 1, 2018). Kiel Working Paper No. 2113, Available at SSRN: https://ssrn.com/abstract=3260859 or http://dx.doi.org/10.2139/ssrn.3260859

Andreas Fuchs (Contact Author)

Kiel Institute for the World Economy ( email )

Kiellinie 66
Kiel, Schleswig-Hosltein 24105
Germany

University of Goettingen (Göttingen) - Faculty of Economics and Business Administration ( email )

Platz der Goettinger Sieben 3
Goettingen, 37073
Germany

Angelika Müller

Heidelberg University ( email )

Heidelberg
Germany

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