Breaking the wave of democracy: The effect of foreign aid on the incumbent’s re-election probability

Grégoire Rota-Graziosi (), Clémence Vergne and Blanca Moreno Dodson
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Grégoire Rota-Graziosi: Centre d'Etudes et de Recherches sur le Développement International(CERDI)
Authors registered in the RePEc Author Service: Grégoire ROTA GRAZIOSI

No 201231, Working Papers from CERDI

Abstract: We investigate whether foreign aid affects the probability of incumbent’s re-election and then the Schumpeterian quality of democracy in developing countries. We present a simple theoretical framework, which captures the competitiveness of elections through the Tullock’s approach based on the Contest Success Function. We obtain an ambiguous theoretical effect of foreign aid on the incumbent probability to be reelected: Foreign aid increases the prize of the electoral contest stimulating the challenger to increase his campaign effort; But, the incumbent may divert part of the aid, improving his advantage and reducing political competition. We investigate empirically this effect using panel data from 60 aid-recipient countries between 1980 and 2005. Our analysis shows that foreign aid increases the incumbent’s re-election probabilities. However, this effect depends on recipients’ democratic level and on the nature of foreign aid, consistently with our theoretical framework. While financial aid increases the probability of incumbent’s re-election, political aid, especially through assistances in developing competitive electoral systems, reduces this probability.

Keywords: Foreign aid; Elections; Incumbent’s advantage (search for similar items in EconPapers)
JEL-codes: D72 F35 O11 (search for similar items in EconPapers)
Pages: 40
Date: 2012
New Economics Papers: this item is included in nep-cdm and nep-pol
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Citations: View citations in EconPapers (8)

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Working Paper: Breaking the wave of democracy: The effect of foreign aid on the incumbent's re-election probability (2012)
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