Semester

Summer

Date of Graduation

2011

Document Type

Dissertation

Degree Type

PhD

College

Chambers College of Business and Economics

Department

Economics

Committee Chair

Russell S. Sobel

Committee Co-Chair

Christopher J. Coyne

Abstract

This dissertation is a collection of essays on the political economy of foreign aid in the Development Assistance Committee (DAC) countries. Chapter 1 provides an overview of the foreign aid literature, focusing on the practice of aid tying and foreign aid's impact on political support between aid donor and recipient countries. Chapter 2 investigates the hypothesis that institutional factors such as fragmentation of the executive power and the position of government vis-a-vis legislative composition within the governments of DAC countries help explain why levels of tied aid remain significantly above zero despite the push in the development community to untie all bilateral foreign aid. The results show as the executive power becomes more fragmented, particularly as the number of spending ministers and the number of political parties in the governing coalition increases, countries increase the level of tied aid. Chapter 3 empirically tests whether the DAC countries use aid disbursements to exert political influence over aid recipients by influencing how the recipients vote in the United Nations General Assembly. In general, the results show a positive relationship between voting coincidence and foreign aid distribution for Canada, France, Spain, and the United Kingdom while no conclusive link was established for the United States. These results may be considered a lower bound of political influence because of the possibility of free riding among the DAC countries. Chapter 4 extends the work in the previous chapter by disaggregating the aid data to account for the heterogeneity of aid and the possibility that the different categories and forms of aid may differ in their ability to induce political support. The analysis shows, among other things, that in the post Cold War era disaggregated aid measures do not show a robust influence on voting coincidence for most of the DAC countries. These results in chapters 3 and 4 may differ because recipients may value total aid more than individual aid categories because of the fungibility of aid. Chapter 5 concludes the dissertation by summarizing the key findings and offering extensions to the current research.

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