We present a new mechanism to explain politically induced changes in bilateral aid. We argue that shifts in the foreign policy alignment between a donor and a recipient country arising from leadership changes induce reallocation of development aid. Utilizing data from the G7 and 133 developing...

We investigate whether and to what extent Chinese development finance affects infant mortality, combining 92 demographic and health surveys (DHS) for a maximum of 53 countries and almost 55,000 sub-national locations over the 2002-2014 period. We address causality by instrumenting aid with a set...

This chapter discusses the role of military interventionism and aid in nation-building. We argue that (1) intervention strategies of foreign actors like the United States often unfavorably interact with local institutional settings, which (2) produces undesired outcomes not only for the target...

Bilateral donors use foreign aid to pursue 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...

This paper studies the causal effect of transport infrastructure on the spatial concentration of economic activity. Leveraging a new global dataset of geo-located Chinese government-financed projects over the period from 2000 to 2014 together with measures of spatial inequality based on...

We use an excludable instrument to test the effect of foreign aid on economic growth in a sample of 96 recipient countries over the 1974-2009 period. We interact donor government fractionalization with a recipient country’s probability of receiving aid. The results show that fractionalization...

We investigate the effects of short-term political motivations on the effectiveness of foreign aid. Donor countries' political motives might reduce the effectiveness of conditionality, channel aid to inferior projects or affect the way aid is spent in other ways, reduce the aid bureaucracy's...

As is now well documented, aid is given for both political as well as economic reasons. The conventional wisdom is that politically-motivated aid is less effective in promoting developmental objectives. We examine the ex-post performance ratings of World Bank projects and generally find that...

We examine how donor government ideology influences the composition of foreign aid flows. We use data for 23 OECD countries over the period 1960-2009 and distinguish between multilateral and bilateral aid, grants and loans, recipient characteristics such as income and political institutions,...

We analyze the influence of IMF and World Bank programs on political regime transitions. We develop an extended version of Acemoglu and Robinson's [American Economic Review 91, 2001] model of political transitions to show how the anticipation of new loans from in-ternational financial...