Can Aid Buy Foreign Public Support?

Evidence from Chinese Development Finance 

with Axel Dreher, Andreas Fuchs, Bradley Parks, and  Austin Strange

Forthcoming in Economic Development and Cultural Change.

Bilateral donors use foreign aid to gain soft power. We test the effectiveness of aid in reaching this goal by leveraging a new dataset on the precise commitment, implementation, and completion dates of Chinese development projects. We use data from the Gallup World Poll for 126 countries over the 2006-2017 period and identify causal effects with (i) an event-study model that includes high-dimensional fixed effects, and (ii) instrumental-variables regressions that rely on exogenous variation in the supply of Chinese government financing over time. Our results are nuanced and depend on whether we focus on subnational jurisdictions, countries, or groupings of countries. Overall, Beijing's aid program seems to enhance foreign public support for the Chinese government.

Working Paper: AidData. CEPR. CESifo. Kiel WP. 

Biased Bureaucrats and the Policies of International Organizations

with Valentin Lang and Alexander Kentikelenis

Forthcoming at the American Journal of Political Science. 

Do international bureaucrats shape global governance? In this paper, we build on the view that international bureaucracies matter for global policy-making but call the homogeneity assumption into question. In particular, we argue that bureaucrats have diverging preferences and exert heterogeneous influence on policy output, thereby affecting IO decision-making. We test whether IMF mission chiefs are able to use their influence to design IMF conditionality according to their own preferences. Our identification strategy follows the judge fixed effect approach and exploits the repeated appointment of IMF mission chiefs to various countries. We find that preferences of mission chiefs not only explain differences in the stringency of conditions but also relate to differences in the policy focus of conditionality in areas like labour market regulation and social policy.

Data available at Harvard Dataverse.

The Effect of Foreign Aid on Migration

with Andreas Fuchs, Tobias Heidland, and André Gröger

Policymakers advocate for foreign aid to reduce migration. This study is the first to examine this policy's global effectiveness with micro data. We combine data on World Bank project announcements and disbursements from 2008-2019 with survey data on migration preferences of one million individuals worldwide and bilateral migration flows. Employing event studies and instrumental variable regressions, we find that in the short term, aid improves expectations of the future and trust in institutions, reducing individual migration preferences and asylum seeker flows. In the longer term, aid increases incomes, leading to more regular migration, consistent with the 'mobility transition' theory.

Working Paper: CEPR Discussion Paper No. 19332, 2024.

Media coverage: IfW Kiel. Devex. Sueddeutsche. Welt. WDR.

Under review.