Democracy and Aid Donorship
Nov 1, 2021
Angelika J. Budjan, Andreas Fuchs
American Economic Journal: Economic Policy
Budjan, Angelika J., and Andreas Fuchs. 2021. "Democracy and Aid Donorship." American Economic Journal: Economic Policy, 13 (4): 217-38. DOI: 10.1257/pol.20180582
Note: A version of this article was previously published as an AidData Working Paper.
Almost half of the world's states provide bilateral development assistance. While previous research takes the set of donor countries as exogenous, this article introduces a new dataset on aid giving that covers all countries in the world, both rich and poor, and explores the determinants of aid donorship. It argues and shows empirically that democratic institutions support the setup of an aid program in richer countries but undermine its establishment in poorer countries. The findings hold in instrumental-variable regressions and the pattern is similar for the amount of aid.