Description
The relationship between aid and democracy has long been contested. In recent co-authored work, we take stock of the cross-country evidence, drawing both on systematic review of the quantitative, cross-country literature, and new econometric analysis of the data for 148 countries over the period 1995-2018, using V-Dem and OEDC DAC sources in particular (Nino-Zarazua, et al, 2020). This comprehensive assessment provides rigorous evidence that, although aid has clearly had negative impact on democracy and governance in some contexts, aid has been associated overall with a modest yet positive contribution to democracy. This association is strongest for democracy assistance (as compared to development assistance), especially when channeled to countries already on a democratic trajectory.
This paper extends from these earlier findings to build deeper insight into the channels and mechanisms through which aid influences democracy in different country contexts and what this suggests for the use of aid as a tool for democracy promotion, including new careful consideration of the magnitude of effects.
Building on and extending the earlier cross-country analysis, including the addition of new data through 2021, the paper begins by identifying four core country groupings which vary in terms of regime type (electoral democracy or not) and democratic trajectory (upwards or backsliding). It then presents and discusses expectations based on our models for the influence of aid on democracy in the countries in these four groupings. Next it situates a handful of brief case studies of typical and atypical countries, using them to illustrate and build comparative insight into the aid-democracy link. The paper concludes with discussion of implications of this analysis for policy, as well as of how the hypotheses developed in this paper might be tested and examined further in future research.
