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Veto players and foreign aid provision

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Abstract

This study investigates how the political institutions of developed economies influence their foreign assistance. Specifically, we argue that the number of effective veto players has a negative effect on the volume of aid provision. To provide foreign assistance, the incumbent government in a donor country must have unanimous support from all effective veto players in policy making. Thus, it has more barriers to overcome when the polity is characterized by many and preference-wise heterogeneous veto players. By examining the official development assistance outflows of 27 OECD countries for the period of 1977–2006, we find empirical patterns that corroborate our argument.

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Notes

  1. In fact, many apparently idealistic foreign aid programs can be explained as the result of rational calculus intended to boost the domestic popularity of the incumbent government. For instance, the impression of pursuing global equality associated with such programs could be an instrument used by an extreme left-wing government to satisfy the ideological demands of its domestic base.

  2. To facilitate cross-national and over-time comparisons, currency-related variables are PPP- and inflation-adjusted in the present study. The corresponding convertor and deflator are from the Penn World Table Version 7.0 (Heston et al. 2011).

  3. Henisz (2000, 2002) elaborates on all the technical nuances involved in gauging the constraining effect of veto players on policy outcome. In particular, Table 2 of Henisz (2000) lists every five-year average value of veto players for 157 countries for the period 1960–1994. Table A2 of Henisz (2002) further lists every 10-year average value of veto players for the same pool of nations back to 1800. Thus, readers might take a look at these articles for how the measure varies both across and within nations.

  4. It is calculated based on the countries’ iron and steel production, military expenditure, military personnel, primary energy consumption, total population and urban population, which is measured as the population living in cities of more than 100,000 people.

  5. It is important to note that veto players, regime type, and FDI outflows are all significant for the post-Cold War subsample but not for the Cold War subsample. This is a piece of evidence in support of our argument.

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Authors and Affiliations

  1. Department of Government and Public Administration, Chinese University of Hong Kong, Shatin, New Territories, Hong Kong

    Yu Wang & Shuai **

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  1. Yu Wang
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  2. Shuai **
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Correspondence to Yu Wang.

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Wang, Y., **, S. Veto players and foreign aid provision. Const Polit Econ 24, 43–56 (2013). https://doi.org/10.1007/s10602-012-9131-6

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