1. Foreign Aid DEMOCRACY And Helen Brosnan and Rui Hao Puah
ECONOMIC DEVELOPMENT AND INTERNATIONAL POLITICS
INAF
Question HYPOTHESIS Methodology Analysis CONCLUSION

2. DOES AID HELP OR HURT DEMOCRACY?
Aid reduces the probability of regime transition.
Aid in general has a negative effect on democracy
Positive effect is limited to political aid and conditionality
Local conditions determine the effectiveness of aid for democracy
Question HYPOTHESIS Methodology Analysis CONCLUSION

3. AID Increases regime survival longevity. Hypothesis
-More aid increase longevity of the current regime, regardless regime type.
-More aid, unlikely to see regime transition
-Benefits of aid are few and far -
Question HYPOTHESIS Methodology Analysis CONCLUSION

4. Operationalizing DEPENDENT VARIABLES
Regime survival
-use Przeworski’s (2000) DD definition
Regime longevity
-use TENSYS (DPI 2010)
Survival of democracy in Yt is denoted by the continuation of democracy or the lack of emergence of dictatorship in Yt+1. Survival of dictatorship in Yt is denoted by the continuation of dictatorship or the lack of emergence of dictatorship in Yt+1.
We operationalize regime survival using Przeworski’s (2000) dichotomous (abbreviated ‘REGD’) variable coded 1 for democracy and 0 for dictatorship. We introduce a lag variable regd1 to analyse regime survival
For a dictatorship, TENSYS measures executive’s years in office (YRSOFFC). For a democracy, TENSYS measures the number of years it has existed as a democracy.
TENSYS uses a different citeria
to code DD

5. Foreign aid
Net ODA given by DAC and non-DAC donors, received by 144 countries, from
DAC countries are dropped
Direct measure
-log(net ODA)
Indirect measures
-Net ODA as a percentage of GNI
-Net ODA as a percentage of central government expense
-Log(Net ODA) / Log(population).
Indirect measures of foreign aid provide an indication of aid intensity (Knack, 2000) relative to size of economy, size of government spending and population.
Question HYPOTHESIS Methodology Analysis CONCLUSION

6. Controlling for democracy
lGDPpc, PPP at Constant Int Dollars 
Share of surrounding democracies
Adult Literacy Rate (>= age 15)
No. of previous transitions btw dict/demo
OPEC or not
former military officer executive leader
Question HYPOTHESIS Methodology Analysis CONCLUSION

7. Empirical strategy Aid allocation has selection bias
Log(Net ODA) / Log(population) accounts for population, gdppc is controlled for
Heterogeneity of donor interests
Allows for ‘cancelling out’ effect
Question HYPOTHESIS Methodology Analysis CONCLUSION

8. Data analysis Mean and median netoda%ofgni Mean and median tensys
dictatorships (8.85%, 5.04%)
democracies (5.91%, 2.33%)
Mean and median tensys
dictatorships (10.65, 8)
democracies (9.62, 6)
Dictatorships last longer and receive higher netoda%ofgni than democracies
We construct an ordinary least squares regression model based on a simple dependent ordinal variable (EIEC+LIEC) regressed against net ODA as a % of GNI and 5 other control variables- log per capita GDP, number of previous regime transitions, former military chief executive, share of adult democracies and literary rate of population 15 years and above.
Question HYPOTHESIS Methodology Analysis CONCLUSION

9. CORRELATION OR CAUSATION?

10. Results

11. Results

12. Conclusion Foreign aid does not have an effect on regime survival
Foreign aid has an effect on regime longevity.
The effect is greater for dictatorships than democracies.
Our above results are robust to 4 measures of foreign aid and 2 definitions of democracy (Przeworski’s DD and DPI’s EIEC)
Foreign aid is not significant in regime transitions, for both democracy and dictatorship
Foreign aid has an equal
Question HYPOTHESIS Methodology Analysis CONCLUSION

13. Limitations & future research
Tensys ~ DD. Controls assumed to be the same.
Insufficient controls for foreign aid
Omitted variable bias in controlling for democracy
Question HYPOTHESIS Methodology Analysis CONCLUSION