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\"Trades of money for political influence persist at every level of government. Not surprisingly, governments themselves trade money for political support on the international stage. Strange, however, is the tale of this book. For, in this study, legitimacy stands as the central political commodity at stake. The book investigates the ways governments trade money for favors at the United Nations Security Council - the body endowed with the international legal authority to legitimize the use of armed force to maintain or restore peace. With a wealth of quantitative data, the book shows that powerful countries, such as the United States, Japan, and Germany, extend financial favors to the elected members of the Security Council through direct foreign aid and through international organizations, such as the International Monetary Fund and the World Bank. In return, developing countries serving on the Security Council must deliver their political support... or face the consequences\"-- Provided by publisher.

This paper investigates the question of whether corruption might 'grease the wheels' of an economy. We investigate whether and to what extent the impact of regulations on entrepreneurship is dependent on corruption. We first test whether regulations robustly deter firm entry into markets. Our results show that the existence of a larger number of procedures required to start a business, as well as larger minimum capital requirements are detrimental to entrepreneurship. Second, we test whether corruption reduces the negative impact of regulations on entrepreneurship in highly regulated economies. Our empirical analysis, covering a maximum of 43 countries over the 2003-2005 period, shows that corruption facilitates firm entry in highly regulated economies. For example, the 'greasing' effect of corruption kicks in at around 50 days required to start a new business. Our results thus provide support for the 'grease the wheels' hypothesis.

We use an excludable instrument to test the effect of bilateral foreign aid on economic growth in a sample of 97 recipient countries over the 1974–2013 period. Our instrument interacts donor government fractionalization with a recipient country’s probability of receiving aid. The results show that fractionalization increases donors’aid budgets, representing the variation over time of our instrument, while the probability of receiving aid introduces variation across recipient countries. Controlling for countryand period-specific fixed effects that capture the levels of the interacted variables, the interaction provides a powerful and excludable instrument. Making use of the instrument, our results show a positive but insignificant effect of aid on growth. We also investigate the effect of aid on consumption, savings, investments and net exports and investigate heterogeneity according to the quality of economic policy, democracy and the Cold War period. We find that aid increases investment and consumption, while it decreases net exports. In no regression do we find that aid affects growth. However, the coefficients from the instrumental variables regressions are also not statistically different from the positive and significant OLS estimates. À l’aide d’un instrument exclusif, nous évaluons l’impact de l’aide étrangère bilatérale sur la croissance économique d’un échantillon de 97 pays bénéficiaires entre 1974 et 2013. Notre instrument met en interaction le fractionnement de l’aide apportée par les gouvernements contributeurs et la probabilité qu’un pays bénéficiaire puisse recevoir de l’aide extérieure. Les résultats suggèrent qu’en matière d’aide, le fractionnement entraîne une augmentation des budgets des pays contributeurs, constituant ainsi la variable dans le temps de notre instrument. La probabilité de recevoir de l’aide, quant à elle, introduit la variable parmi les pays bénéficiaires. Cette mise en interaction, tenant compte des effets fixes spécifiques au niveau des pays et des périodes, et reflétant le niveau des variables dépendantes, offre un outil puissant et exclusif. Grâce à cet instrument, nos résultats indiquent que l’aide extérieure exerce une relation positive mais négligeable sur la croissance. Dans cet article, nous étudions également l’effet de l’aide étrangère sur la consommation, l’épargne, l’investissement et les exportations nettes, ainsi que l’hétérogénéité à l’aune de la qualité des politiques économiques, du niveau démocratique et de la période de guerre froide. Nous constatons que l’aide étrangère permet d’augmenter l’investissement et la consommation, mais à tendance à diminuer les exportations nettes. Hors modèle de régression, nous constatons que l’aide extérieure exerce une incidence sur la croissance. Néanmoins, les coefficients issus des régressions à variables instrumentales ne sont pas statistiquement différents des estimations positives et significatives réalisées par la méthode des moindres carrés ordinaire.

This article introduces a new dataset of official financing from China to 138 developing countries between 2000 and 2014. It investigates whether Chinese development finance affects economic growth in recipient countries. The results demonstrate that Chinese development finance boosts short-term economic growth. An additional project increases growth by between 0.41 and 1.49 percentage points 2 years after commitment, on average. While this study does not find that significant financial support from China impairs the overall effectiveness of aid from Western donors, aid from the United States tends to be more effective in countries that receive no substantial support from China.

We study whether national leaders’foreign education influences their voting behavior at the United Nations General Assembly. We hypothesize that “affinity”—preexisting or developed while studying abroad—makes leaders with foreign educations more likely to vote with their host country. At the same time, such leaders need to show sufficient distance from their host country and demonstrate “allegiance” to their own, which will reduce voting coincidences. To test that theory we make use of data on the educational backgrounds of 831 leaders and the voting affinities between the countries they govern and those in which they studied. Over the 1975–2011 period, we find that foreign-educated leaders are less likely to vote in line with their host countries, but more likely to vote in line with (other) G7 countries. We identify the causal effect of “allegiance” by investigating the differential effect of foreign education on voting in preelection years compared to other years. The difference-in-differences-like results show that G7-educated leaders vote less frequently in line with their host countries when facing an election. Overall, both “allegiance” and “affinity” affect foreign policy.

Abstract Chinese “aid” is a lightning rod for criticism. Policy-makers, journalists, and public intellectuals claim that Beijing uses its largesse to cement alliances with political leaders, secure access to natural resources, and create exclusive commercial opportunities for Chinese firms—all at the expense of citizens living in developing countries. We argue that much of the controversy about Chinese “aid” stems from a failure to distinguish between China's Official Development Assistance (ODA) and more commercially oriented sources and types of state financing. Using a new database on China's official financing commitments to Africa from 2000 to 2013, we find that the allocation of Chinese ODA is driven primarily by foreign policy considerations, while economic interests better explain the distribution of less concessional flows. These results highlight the need for better measures of an increasingly diverse set of non-Western financial activities.

Bailouts sponsored by the International Monetary Fund (IMF) are famous for their conditionality: in return for continued installments of desperately needed loans, governments must comply with austere policy changes. Many have suggested, however, that politically important countries face rather weak stringency. Obstacles to testing this hypothesis include finding a measure of political importance that is not plagued by endogeneity and obtaining data on IMF conditionality. We propose to measure political importance using temporary membership on the UN Security Council and analyze a newly available data set on the level of conditionality attached to (a maximum of) 314 IMF arrangements with 101 countries over the 1992–2008 period. We find a negative relationship: Security Council members receive about 30 percent fewer conditions. This suggests that the major shareholders of the IMF trade softer conditionality in return for political influence over the Security Council.

Using panel data for 188 countries over the 1970-2008 period, this paper analyzes empirically the influence of the IMF and the World Bank on voting patterns in the UN General Assembly. Countries receiving adjustment projects and larger non-concessional loans from the World Bank vote more frequently in line with the average G7 country. The same is true for countries obtaining non-concessional IMF programs. Regarding voting coincidence with the United States, World Bank non-concessional loans have a signifícant impact, while IMF loans do not. This overall pattern of results is robust to the choice of control variables and method of estimation.

While existing research has suggested that delegating foreign aid allocation decisions to a multilateral aid fund may incentivize recipient countries to invest in bureaucratic quality, our analysis links the fund’s decision rules to recipient-country investment by explicitly modeling the decision-making within multilateral aid funds. We find that majority rule induces stronger competition between recipients, resulting in higher investments in bureaucratic quality. Despite this advantage, unanimity can still be optimal since the increased investment under majority comes at the cost of low aid allocation to countries in the minority. The qualitative predictions of our model rationalize our novel empirical finding that, relative to organizations that use a consensus rule, organizations that use majority are more responsive to changes in recipient-country quality.

Foreign aid from China is often characterized as \"rogue aid\" that is guided by selfish interests alone. We collect data on Chinese project aid, food aid, medical staff and total aid money to developing countries, covering the 1956-2006 period, to empirically test to what extent self-interests shape China's aid allocation. While political considerations shape China's allocation of aid, China does not pay substantially more attention to politics compared to Western donors. What is more, China's aid allocation seems to be widely independent of recipients' endowment with natural resources and institutional characteristics. Overall, denoting Chinese aid as \"rogue aid\" seems unjustified. L'aide étrangère de la Chine est souvent caractérisée comme une « aide canaille » guidée par les seuls intérêts du donneur. On a collecté des données sur l'aide de la Chine pour des projets, de la nourriture, du personnel médical, ainsi que l'aide monétaire totale aux pays en développement pour la période 1956-2006, afin de tester empiriquement jusqu'à quel point les intérêts égoïstes de la Chine ont conformé l'aide de la Chine. Bien que des considérations politiques conforment l'allocation de l'aide de la Chine, la Chine ne porte pas une attention substantiellement plus grande aux considérations politiques que les donateurs de l'Ouest. De plus, l'allocation de l'aide de la Chine semble grandement indépendante de la dotation en facteurs ou des caractéristiques institutionnelles des pays récipiendaires. En gros, caractériser l'aide de la Chine comme « aide canaille » semble injustifié.