How Do Political Changes Influence US Bilateral Aid Allocations? Evidence from Panel Data

Abstract

Abstract This paper examines the role of US domestic politics in aid allocation using panel data on 119 countries from 1960 to 1997. Employing proxies for four allocation criteria (development concerns, strategic importance, commercial importance, and democratization), we find evidence that each has influence, although the evidence is stronger for some criteria (development, commercial) than for others (strategic, democratization). Their influence depends on the composition of the US government. When the president and Congress are liberal, development concerns receive more weight than when the president and/or Congress are more conservative. When the Congress is more conservative, commercial concerns have more weight than when the Congress is liberal. These findings are important in light of current attempts to overhaul the allocation of aid.

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