Monday, March 18, 2013

Aid is Not Oil: Donor Preferences, Heterogeneous Aid, and the Aid-Democratization Relationship

New paper: This paper develops a model that incorporates changing donor preferences and the heterogeneity of aid into theories on the relationship between aid and the likelihood of democratic change in recipients. Revisiting existing studies and conducting a new analysis, it is found that the relationship between aid and the likelihood of democratic change has evolved from a negative one during the cold war to a neutral one in the post-cold war period. The same cannot be said for the relationship between oil revenue and democratic change, which is negative throughout. This suggests that there is something different about aid, such as the presence of a donor with its own objective function and the heterogenous nature of aid funds. In contrast to recent trends, the findings here argue strongly against aggregating across aid and other forms of income.

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