More Donors, More Democracy

Abstract

A country’s democracy improves when it receives democracy aid from more donor countries. This finding appears surprising from a development perspective, as the presence of a large number of donors, or more generally “fragmented aid,” has been shown to negatively affect the recipient country. But fragmented aid can be beneficial: diversity among donors provides choice to the local actors involved in the process of democratization. It thus creates a “marketplace for idea support,” which increases the viability of the resulting institutions. In contrast, a highly concentrated donor community can lead to the imposition of an institutional blueprint, designed in advance and not adapted to the needs of the recipient society. An instrumental variable analysis with panel data for 130 countries from 1994 to 2013, explicit tests of the causal mechanism, and anecdotal evidence from Ghana provide strong support for the benefits of diverse democracy aid.

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