Working Papers

Undermining Conditionality? The Effect of Chinese aid on Compliance with World Bank Aid Agreements

Does Chinese development assistance undermine recipient country compliance with aid conditionality? I theorize that the presence of a significant non-traditional donor, which does not utilize conditionality, weakens the material incentives of recipient countries to comply with conditions attached to foreign aid by traditional DAC donors. I argue that Chinese aid marginally decreases the importance of future aid transfers from DAC donors and weakens the impact of punishment for non-compliance on recipient countries’ fiscal position. I test the theoretical predictions using project-level data on government compliance with World Bank project agreements for a sample of 42 Sub-Saharan African countries from 2000-2014. The empirical analysis finds strong support for the hypothesis that Chinese development assistance decreases the likelihood of recipient country compliance with the conditions specified in World Bank project agreements. The results are robust to alternative measures of Chinese development assistance, potential sources of omitted variable bias, and an instrumental variable estimation strategy. [Working Paper]

Foreign Aid and Political Budget Cycles in Developing Democracies

This paper examines the effect of foreign aid on the incidence of political budget cycles in expenditures and taxation in developing countries. I argue that access to foreign aid incentivizes incumbents to manipulate fiscal policy for electoral purposes. Specifically, I theorize that aid increases the likelihood of political budget cycles by providing access to political rents that increase the value of holding office, lowering citizens’ willingness to monitor the government budget, and creating a soft budget constraint that discourages fiscal discipline. Using panel data for over 70 developing democracies from 1990-2012, the empirical analysis finds that political budget cycles in expenditures are statistically and substantively larger as foreign aid within a country increases. The analysis reveals no significant relationship between aid and tax revenue prior to elections. The primary results hold for a host of robustness checks that address concerns related to alternative explanations of political budget cycles, potential sources of omitted variable bias, estimation strategy, and outliers in the data. [Working Paper]

Foreign Aid Projects and Institutional Trust: A Geospatial Approach

This paper investigates the effect of foreign aid on citizens’ trust in local and national political institutions.  Drawing on institutional theories of political trust, I hypothesize that foreign aid projects reduce trust in political institutions by lowering citizens’ perceptions of government performance and increasing perceptions of corruption. To analyze the impact of aid on trust, this study utilizes geolocated survey data on citizens’ trust in political institutions from Afrobarometer Rounds 2-5 (2003-2012) and data on the location of foreign aid projects from AidData’s Aid Information Management Systems (AIMS) datasets for Nigeria, Senegal, and Uganda. Using a spatial difference-in-difference strategy, the empirical results find that active aid projects are associated with decreased trust in the president, parliament, and local government council. The results also indicate that closed aid projects are associated with declines in institutional trust, although the effect size is statistically and substantively smaller than active projects. [Working Paper]

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