Domestic Politics and Changes in Foreign Aid Allocation: The Role of Party Preferences

• Published date: 01 June 2018
• DOI: 10.1177/1065912917735176
• Date: 01 June 2018
• Author: Zachary D. Greene,Amanda A. Licht
• Subject Matter: Articles

https://doi.org/10.1177/1065912917735176

Political Research Quarterly

2018, Vol. 71(2) 284 –301

© 2017 University of Utah

Reprints and permissions:

sagepub.com/journalsPermissions.nav

DOI: 10.1177/1065912917735176

journals.sagepub.com/home/prq

Article

Foreign aid offers a potent instrument to incentivize recip-

ient leaders’ behavior, but its effectiveness has long been

questioned.1 For many scholars, aid’s patchy record in

promoting democratization, growth, and cooperation

stems from moral hazard and geopolitics: donors’ strate-

gic incentives diverted aid flows from the neediest or most

deserving states and damaged their credibility. Analysis

focused on which donor-states fell into this trap

(Berthélemy and Tichit 2004), and on aid’s expanded util-

ity after the Cold War (Bearce and Tirone 2010). New

research, however, seeks to explain variation in aid efforts

within countries over time. These studies open up the

democratic donor-state, substituting the domestic political

preferences of governments for the amorphous “national

interest,” but find mixed support thus far (e.g., Dreher,

Nunnenkamp, and Schmaljohann 2015; Fleck and Kilby

2010; Noël and Therién 1995). Yet foreign aid allocations

likely reflect the goals of domestic decision-makers, and

consequently, the preferences of key actors should influ-

ence foreign aid outputs (Dreher, Nunnenkamp, and

Schmaljohann 2015; Fleck and Kilby 2010; Milner and

Tingley 2010; Tingley 2010).

We consider how partisan ideological preferences

affect donors’ allocation decisions across the array of for-

eign assistance sectors. We argue that parties’ preferences

predict their approach to foreign affairs. Changes in the

preferences of governing parties produce shifts in alloca-

tion across aid types. Focusing on the effect of ideology

on the most frequently used aid sectors allows detailed

predictions that would be obscured by aggregate trends.2

Our perspective dovetails with studies of party politics

and public policy, where scholars recognize that policies

and budgets reflect political processes (Bevan and Greene

2016; Green-Pedersen and Mortensen 2010; Soroka and

Wlezien 2010; Whitten and Williams 2011). Elections

and coalition negotiations create governments with vary-

ing preferences over multiple dimensions of politics

(Laver and Shepsle 1996).

Our theory relaxes strong assumptions about tradi-

tional left–right (RILE) ideology by introducing a second

dimension: internationalism. This dimension captures

governments’ preferences for engaging and influencing

foreign countries relative to isolationism. This dimension

has become increasingly salient in donors’ domestic poli-

tics. Internationalism varies across parties with otherwise

735176PRQXXX10.1177/1065912917735176Political Research QuarterlyGreene and Licht

research-article2017

1University of Strathclyde, Glasgow, UK

2Binghamton University, NY, USA

Corresponding Author:

Zachary D. Greene, School of Government and Public Policy,

University of Strathclyde, 16 Richmond St., Glasgow G1 1XQ, UK.

Email: zacgreene@gmail.com

Domestic Politics and Changes in

Foreign Aid Allocation: The Role

of Party Preferences

Zachary D. Greene1 and Amanda A. Licht2

Abstract

Resources for foreign aid come under attack when parties that care little for international affairs come to power.

Internationally focused parties of the left and right, however, prefer to use aid as a tool to pursue their foreign

policy goals. Yet varying goals based on left–right ideology differentiate the way donors use foreign aid. We leverage

sector aid to test hypotheses from our Partisan Theory of Aid Allocation and find support for the idea that domestic

political preferences affect foreign aid behavior. Left-internationalist governments increase disaster aid, while

parochial counterparts cut spending on budget assistance and aid that bolsters recipients’ trade viability. Conservative

governments favor trade-boosting aid. We find consistent, nuanced, evidence for our perspective from a series of

Error Correction Models (ECMs) and extensive robustness checks. By connecting theories of foreign aid to domestic

politics, our approach links prominent, but often disconnected, fields of political research and raises important

questions for policymakers interested in furthering the efficacy of development aid.

Keywords

foreign aid allocation, donor ideology, internationalism, sectoral aid, domestic politics, party politics

Greene and Licht 285

similar ideology and within parties over time. Donald

Trump’s views on aid and trade, for example, strongly

contrast those of the 2012 Republican Party candidate,

Mitt Romney (The New York Times 2012; Thoma 2016).3

The absence of this dimension from prior work may par-

tially explain inconsistent results across analyses using

RILE dichotomies and aggregate aid flows (e.g., Dreher,

Nunnenkamp, and Schmaljohann 2015; Fleck and Kilby

2010; Noël and Therién 1995).

Adding internationalism allows us to identify prefer-

ences of four ideal types of parties: left-pro-international,

left-anti-international, right-pro-international, and right-anti-

international. We predict that internationalist governments

likely use foreign aid as a tool of influence. Subsequent

changes in aid allocations will reflect variation in prefer-

ences, as governments choose types of recipients and aid

channels. Thus, we derive predictions regarding aid provi-

sion across stated purposes.4 For example, a country can tar-

get aid to civil society or economic sectors depending on

their RILE preferences for policy.

We test hypotheses from the Partisan Theory of

Foreign Aid Allocation with data on parties’ priorities for

foreign aid from the Comparative Manifestos Project

(CMP), government composition from ParlGov (Döring

and Manow 2016), and aid allotments from AidData

(Tierney et al. 2011).5 Analysis of twenty-eight donor

countries over nearly forty years supports an explanation

that incorporates ideological preferences. Internationalist

governments pursue economic agendas through aid allo-

cations that reflect their partisan preferences. We submit

our results to a wide range of robustness checks, includ-

ing alternate modeling and measurement strategies in the

online appendix.

This study holds implications for theories of political

development, foreign influence, partisan politics, and

democratic accountability. Our theory suggests an addi-

tional explanation for aid’s failure to induce behavior

from recipient states. This lack of success partially

reflects aid’s politicized nature and the conditions under

which it is given. The donor credibility problem, here,

stems from domestic political competition rather than the

global balance of power. The timing, amount, and nature

of aid allocated should not depend on the politics of the

donor country, lest recipients perceive funds as tools of

political manipulation.

Furthermore, theories of representative democracy

require representatives to pursue campaign statements.

Studies often find weak evidence of partisan priorities

affecting policy change (e.g., Bevan, John, and Jennings

2011). Our findings, however, suggest parties pursue

their stated goals. Previous research may miss nuanced

effects of preferences on foreign policy, as we find that

short- and long-term effects may differ. Moreover, for-

eign aid’s effect on goals such as democracy promotion

and developing foreign markets for trade manifest over

time. More broadly, evidence suggests partisan govern-

ments pursue priorities consistent with their electoral

statements, even in the realm of foreign policy.

Preferences and Government Policy

Scholars link parties’ ideology to government behavior.

Research predicts budgets and policy via either the goals

of parties’ supporters or statements from their campaigns

(Hibbs 1977). While much research emphasizes competi-

tion on the traditional RILE economic dimension of poli-

tics, parties stake out independent positions on a diversity

of issues, including the environment, immigration, and

foreign intervention (de Vries and Hobolt 2012; Lowe

et al. 2011). Domestic electoral competition forces gov-

ernments to outline preferences on diverse issues, while

incentivizing a reputation of accountability for their

statements.

Parties balance their sincere preferences against

office-seeking goals (Strøm 1990). Electoral competition

encourages parties to shift preferences in response to

public opinion (Adams, Haupt, and Stoll 2009), issue-

focused parties’ success (Meguid 2008), competitors’

policy changes, and economic conditions (Williams,

Seki, and Whitten 2016). Voters’ responses to these shifts,

however, are often delayed (Somer-Topcu 2009).

Electoral and intra-party motives drive party mani-

festo content. Parties select issues because of historically

positive associations (Egan 2013; Petrocik 1996), or to

match traditional supporters’ preferences (Hibbs 1977).

Ideologically extreme and governing parties incorporate

new topics (de Vries and Hobolt 2012; Schumacher, de

Vries, and Vis 2013). Parties emphasize topics to appear

responsive (Sigelman and Buell 2004; Spoon and Klüver

2014). Past government experience, economic condi-

tions, and the diversity of their parliamentary delegation

and leadership all influence the breadth of issues in par-

ties’ campaigns (Greene 2016; Greene and O’Brien

2016).

Varied motives drive parties to address topics beyond

the traditional RILE cleavage, such as foreign policy. The

electoral context encourages parties to focus on economic

foreign policy, or broader goals (e.g., Greene 2016;

Hellwig 2012; Williams, Seki, and Whitten 2016).

Distinguishing preferences on such issues from those on

the economic dimension allows researchers to account

for the complexity of party competition and policy change

inside democracies.

On entering office, parties pursue policy consistent

with electoral statements to maintain a positive reputa-

tion. Research connecting electoral statements to behav-

ior in government describes a complex linkage between

parties’ goals and policy-making behaviors. For example,