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Foreign Aid DEMOCRACY

Foreign Aid DEMOCRACY. And. Helen Brosnan and Rui Hao Puah ECONOMIC DEVELOPMENT AND INTERNATIONAL POLITICS INAF 100-14. Question HYPOTHESIS Methodology Analysis CONCLUSION. DOES AID HELP OR HURT DEMOCRACY?. Aid reduces the probability of regime transition.

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Foreign Aid DEMOCRACY

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  1. Foreign AidDEMOCRACY And Helen Brosnan and RuiHaoPuah ECONOMIC DEVELOPMENT AND INTERNATIONAL POLITICS INAF 100-14 Question HYPOTHESIS Methodology Analysis CONCLUSION

  2. DOES AID HELP OR HURT DEMOCRACY? • Aid reduces the probability of regime transition. • Aid in general has a negative effect on democracy • Positive effect is limited to political aid and conditionality • Local conditions determine the effectiveness of aid for democracy QuestionHYPOTHESIS Methodology Analysis CONCLUSION

  3. Hypothesis Increases regime survival Increases regime longevity. AID Question HYPOTHESIS Methodology Analysis CONCLUSION

  4. Operationalizing DEPENDENT VARIABLES • Regime survival -use Przeworski’s(2000) DD definition • Regime longevity -use TENSYS (DPI 2010)

  5. Foreign aid • Net ODA given by DAC and non-DAC donors, received by 144 countries, from 1975-2004 • DAC countries are dropped • Direct measure -log(net ODA) • Indirect measures -Net ODA as a percentage of GNI -Net ODA as a percentage of central government expense -Log(Net ODA) / Log(population). Question HYPOTHESIS Methodology Analysis CONCLUSION

  6. Controlling for democracy • lGDPpc, PPP at Constant Int Dollars • Adult Literacy Rate (>= age 15) • OPEC or not • Share of surrounding democracies • No. of previous transitions btw dict/demo • former military officer executive leader Question HYPOTHESIS Methodology Analysis CONCLUSION

  7. Empirical strategy • Aid allocation has selection bias • Heterogeneity of donor interests • Log(Net ODA) / Log(population) accounts for population, gdppc is controlled for • Allows for ‘cancelling out’ effect Question HYPOTHESIS Methodology Analysis CONCLUSION

  8. Data analysis • Mean and median netoda%ofgni dictatorships (8.85%, 5.04%) democracies (5.91%, 2.33%) • Mean and median tensys dictatorships (10.65, 8) democracies (9.62, 6) • Dictatorships last longer and receive higher netoda%ofgni than democracies Question HYPOTHESIS Methodology Analysis CONCLUSION

  9. CORRELATION OR CAUSATION?

  10. Results

  11. Results

  12. Conclusion • Foreign aid does not have an effect on regime survival • Foreign aid has an effect on regime longevity. • The effect is greater for dictatorships than democracies. • Our above results are robust to 4 measures of foreign aid and 2 definitions of democracy (Przeworski’sDD and DPI’s EIEC) Question HYPOTHESIS Methodology Analysis CONCLUSION

  13. Limitations & future research • Tensys ~ DD. Controls assumed to be the same. • Insufficient controls for foreign aid • Omitted variable bias in controlling for democracy Question HYPOTHESIS Methodology Analysis CONCLUSION

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