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When does more aid imply less democracy? An empirical examination

Sarantis Kalyvitis () and Irene Vlachaki ()

European Journal of Political Economy, 2012, vol. 28, issue 1, 132-146

Abstract: Foreign aid flows have increased considerably during the last decades, targeting, apart from development objectives, goals related to democracy. In this paper we investigate whether aid has affected the political regime of recipient countries. To this end, we use annual data on Net Official Development Assistance covering 64 aid-recipients. Because of data limitations, we cover the 1967–2002 period. We find that aid flows decreased the likelihood of observing a democratic regime in a recipient country. This effect is sensitive to economic and social conditions. The negative relation between aid and democracy is moderated when aid flows are preceded by economic liberalization. Aid from the U.S. has a non-significant effect on the political regime of recipients.

Keywords: Democratization; Foreign aid; Binary model; Endogeneity (search for similar items in EconPapers)
JEL-codes: D70 F35 C25 (search for similar items in EconPapers)
Date: 2012
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