Foreign Aid and Political Parties in Latin America Javier Gonzalez INAF – 100 Professor James R. Vreeland

What is the question? Political parties in: o Latin America o Donor countries o Right-wing/Left-wing Influence on foreign aid o Both observed Does the party of the executive power in recipient countries affect the amount of foreign aid that is received by the country? o Does the party of the executive power in donor countries also have an effect?

Introduction Politics o The Right and the Left Donor Recipient o Rise of the Left in LA Executive heads Foreign Aid o 23 OECD-member donors o 17 LA countries

Background Democratization o Reagan administration Economic growth in LA o Exponential in the last decade o Poverty levels Reforms in LA o Led by the Left o Economic Leadership

Hypothesis Donor nations do take political positions of recipients’ executive head into consideration; therefore, they tend to provide more aid to countries that share similar political ideologies, and less to those that do not. Donor interest o Political/Economic o Aid o Hegemony

Methods of Observation Analyze o Party in power Right-wing or Left-wing? Employ o OECD Foreign aid o World dataBank GDP per capita GDP annual growth Conclude o Observe Correlations o Fallacies Error o WB Database of Political Institutions Right or Left?

Observations Recipient countries (17) o North and South America Donor countries (23) o OECD members Australia Austria Belgium Canada Denmark Finland France Germany Greece Ireland Italy Japan Korea Luxembourg Netherlands New Zealand Norway Portugal Spain Sweden Switzerland UK USA Argentina Bolivia Brazil Chile Colombia Costa Rica Ecuador El Salvador Guatemala Honduras Mexico Nicaragua Panama Paraguay Peru Uruguay Venezuela

Observations and Why ? o Political tendencies o Present political preferences 3 Categories: o Leans Right or (1) o Left (3), o Or NP/Centrist (2) Donor ex. o Leans Right : Japan o Leans Left : Sweden o NP/Centrist: Finland Recipient ex. o Leans Right: Colombia o Leans Left: Brazil o NP/Centrist: Mexico

Observations Why? o Principal purpose for FA o Validity Also observed: o From o GDP per capita o Annual GDP growth } Recipient countries

Findings Regressions o Right-wing donors Not statistically significant o p-value of 0.62 o >.05 o Left-wing donors Not statistically significant o p-value of 0.85 o >.05 o NP donors Not statistically significant o p-value of 0.94 o > 0.05

Findings Regressions o All donors (both Left and Right) Not statistically significant o p-value of 0.87 o > 0.05 o All donors & GDP per capita Statistically significant o p-value of 0.00 o < 0.05 o All donors & annual GDP growth Not statistically significant o p-value of 0.13 o > 0.05

Conclusions No political interest apparent Donor nations o If any political interest, poverty is still prioritized o Question of hegemony Recipient nations o Party has no effect Finally, o Social misconceptions o Hypothesis not proved o Poverty and foreign aid Parties and Foreign Aid o No correlation o Right, Left, nor NP GDP and Foreign Aid o Correlation o More poverty = more aid o Validates claims Annual GDP o No correlation

Conclusions The political ideology of the recipient’s executive head seems to have no effect on the amount of foreign aid received Room for error: o Overlooked observations? Time period Human rights o El Salvador o Venezuela Military assistance o Anti-guerrilla/anti-narcotics Brazil, Colombia, Mexico

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