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A Political Economy of Aid

Published online by Cambridge University Press:  15 April 2009

Bruce Bueno de Mesquita  and
Alastair Smith
Bruce Bueno de Mesquita
Affiliation:
New York University, New York, E-mail: [email protected]
Alastair Smith
Affiliation:
New York University, New York, E-mail: [email protected]
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Abstract

We model how the size of a leader's support coalition and government revenues affect trades between policy concessions and aid. We find that aid benefits donor and recipient leaders, while harming the recipient's, but not the donor's, citizenry. The willingness to grant policy concessions for aid depends on how easily leaders can reimburse supporters for their concession. As coalition size increases, incumbents rely more on public goods to reward supporters, making it difficult to compensate for policy concessions. Small-coalition leaders rely more on private goods to retain office, making it easier for them to grant policy concessions for aid. Empirical tests of bilateral aid transfers by Organization for Economic Cooperation and Development (OECD) nations between 1960 and 2001 support the predictions that (1) aid is given by wealthy, large-coalition systems; (2) relatively poor, small-coalition systems are most likely to get aid; but, (3) conditional on receiving aid, the amount increases as the recipient's coalition size, wealth, and policy salience increase. Evidence suggests that OECD members have little humanitarian motivation for aid giving.

Type
Research Article
Information
International Organization , Volume 63 , Issue 2 , April 2009 , pp. 309 - 340
Copyright
Copyright © The IO Foundation 2009

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