Effects of US Foreign Assistance on Democracy Building, 1990-2014: An Update

• In Event: International Influences on Democratization

Abstract

In this article, we update our earlier work (Finkel et al., World Politics (2007)) on the impact of U.S. foreign assistance on democratic outcomes in recipient countries using newly-available USAID Foreign Aid Explorer data covering the 2001-2014 period, as well as new outcome measures derived from Varieties of Democracy (V-DEM) data. Building on the theoretical and empirical framework established in the previous study and in subsequent work in the field, we estimate: a) the effect of overall USAID Democracy, Human Rights, and Governance (DRG) expenditures on general indices of democracy, b) the effects of aid expenditures in four DRG sub-sector program areas (e.g. Rule of Law) on sector-relevant outcomes constructed from V-DEM indices, and c) the conditions that moderate the impact of DRG funding at the country level. We find that the effect of DRG expenditures decreased dramatically in the 2001-2014 period, relative to the modest effect shown in the previous study from the period immediately following the end of the Cold War. We attribute this decline to the decreasing marginal impact of aid at higher levels of investment, to shifting USAID investments to more difficult cases, and to the more challenging world-wide context of increased democratic backsliding. Further analysis demonstrates important conditional effects related to patterns of DRG investment, such that aid has greater impact when investments are stable and when levels of prior investment are low, and conditional effects related to factors such as a recipient country’s level of ethnic heterogeneity and the level of U.S. security sector assistance it receives.

Reference
Finkel, Steven E., Aníbal Pérez-Liñán and Mitchell A. Seligson. 2007. “The Effects of U.S. Foreign Assistance on Democracy Building, 1990-2003.” World Politics 59(3): 404-438.

Authors

• Steven E. Finkel, University of Pittsburgh

• Anibal Perez-Linan, University of Notre Dame

• Michael Neureiter, University of Pittsburgh

• Chris A. Belasco, University of Pittsburgh