We thank Matt Ryan and Russell Sobel for comments.
The Amplification Effect: Foreign Aid's Impact on Political Institutions
Article first published online: 11 APR 2013
© 2013 Blackwell Publishing Ltd.
Volume 66, Issue 2, pages 208–228, May 2013
How to Cite
Dutta, N., Leeson, P. T. and Williamson, C. R. (2013), The Amplification Effect: Foreign Aid's Impact on Political Institutions. Kyklos, 66: 208–228. doi: 10.1111/kykl.12018
- Issue published online: 11 APR 2013
- Article first published online: 11 APR 2013
How does foreign aid affect recipient countries' political institutions? Two competing hypotheses offer contradictory predictions. The first sees aid, when delivered correctly, as an important means of making dictatorial recipient countries more democratic. The second sees aid as a corrosive force on recipient countries' political institutions that makes them more dictatorial. This paper offers a third hypothesis about how aid affects recipients' political institutions that we call the “amplification effect.” We argue that foreign aid has neither the power to make dictatorships more democratic nor to make democracies more dictatorial. It only amplifies recipients' existing political institutions. We investigate this hypothesis using panel data for 124 countries between 1960 and 2009. Our findings support the amplification effect. Aid strengthens democracy in already democratic countries and dictatorship in already dictatorial regimes.