Foreign Aid Foreign Aid and Political and Political

PartiesPartiesin Latin in Latin AmericaAmerica

Javier Gonzalez INAF – 100

Professor James R. Vreeland

What is the question?What is the question?• Political parties in:

o Latin Americao Donor countrieso Right-wing/Left-wing

• Influence on foreign aido Both observed

• Does the party of the executive power in recipient countries affect the amount of foreign aid that is received by the country?o Does the party of the executive power in donor countries also have an

effect?

IntroductionIntroduction

•Politicso The Right and the Left

• Donor• Recipient

o Rise of the Left in LA• Executive heads

•Foreign Aido 23 OECD-member donorso 17 LA countries

BackgroundBackground

• Democratizationo Reagan administration

• Economic growth in LAo Exponential in the last decadeo Poverty levels

• Reforms in LAo Led by the Lefto Economic

• Leadership

HypothesisHypothesis• Donor nations do take political positions of

recipients’ executive head into consideration; therefore, they tend to provide more aid to countries that share similar political ideologies, and less to those that do not.

• Donor interesto Political/Economico Aido Hegemony

Methods of Methods of ObservationObservation

• Analyzeo Party in power

• Right-wing or Left-wing?

• Employo OECD

• Foreign aid o World dataBank

• GDP per capita• GDP annual growth

• Concludeo Observe

• Correlationso Fallacies

• Error

o WB Database of Political Institutions• Right or Left?

ObservationsObservations• Recipient countries (17)

o North and South America

• Donor countries (23)o OECD members

AustraliaAustriaBelgium Canada Denmark Finland FranceGermanyGreeceIrelandItalyJapan

KoreaLuxembourgNetherlandsNew ZealandNorwayPortugalSpainSwedenSwitzerlandUKUSA

ArgentinaBoliviaBrazilChile ColombiaCosta RicaEcuadorEl SalvadorGuatemala

HondurasMexicoNicaraguaPanamaParaguayPeru UruguayVenezuela

ObservationsObservations• 1960-2010 and 1990-

2010 • Why 1990-2010?

o Political tendencieso Present political preferences

• 3 Categories:o Leans Right or

(1)o Left (3), o Or NP/Centrist

(2)

• Donor ex.o Leans Right:

• Japano Leans Left:

• Swedeno NP/Centrist:

• Finland

• Recipient ex.o Leans Right:

• Colombiao Leans Left:

• Brazilo NP/Centrist:

• Mexico

ObservationsObservations

• Why?o Principal purpose for FAo Validity

• Also observed:o From 1960-2010o GDP per capita o Annual GDP growth}Recipient

countries

FindingsFindings• Regressions

o Right-wing donors • Not statistically

significant o p-value of 0.62o > .05

o Left-wing donors• Not statistically

significant o p-value of 0.85o > .05

o NP donors• Not statistically

significant o p-value of 0.94o > 0.05

FindingsFindings• Regressions

o All donors (both Left and Right) • Not statistically significant

o p-value of 0.87o > 0.05

o All donors & GDP per capita • Statistically significant

o p-value of 0.00o < 0.05

o All donors & annual GDP growth• Not statistically significant

o p-value of 0.13o > 0.05

-500

0500

1000

1500

2000

global_aid

0 2000 4000 6000 8000 10000gdp_per_capita

ConclusionsConclusions• No political interest

apparent• Donor nations

o If any political interest, poverty is still prioritized

o Question of hegemony

• Recipient nationso Party has no effect

• Finally,o Social misconceptionso Hypothesis not provedo Poverty and foreign aid

• Parties and Foreign Aido No correlation o Right, Left, nor NP

• GDP and Foreign Aido Correlationo More poverty = more aido Validates claims

• Annual GDP o No correlation

ConclusionsConclusions• The political ideology of the recipient’s executive

head seems to have no effect on the amount of foreign aid received

• Room for error:o Overlooked observations?

• Time period• Human rights

o El Salvador o Venezuela

• Military assistanceo Anti-guerrilla/anti-narcotics

• Brazil, Colombia, Mexico

Image sources, in order:

http://3.bp.blogspot.com/-4qmNSMIHiyA/T32eArLad-I/AAAAAAAAAvo/amXSz8SM_Jg/s1600/Latin-America-Map.jpg

http://nimg.sulekha.com/others/original700/cristina-kirchner-luiz-inacio-lula-da-silva-dilma-rousseff-2011-7-29-18-41-8.jpg

http://cryptome.org/info/obama-protect42/pict26.jpg

http://www.iamericas.org/images/stories/poverty_latin.jpg

http://graphics8.nytimes.com/images/2009/01/26/timestopics/bolivia_395.jpg