Does Foreign Aid Buy Hearts and Minds?

Recipient Opinions about their Aid Donors

Gina Yannitell ReinhardtBush School of Government

Texas A&M University

What does foreign aid buy?

• Economic Development– Incentivize aid packages properly and target aid

toward healthy policy environments in order to reduce poverty (Burnside & Dollar 2000; Easterly 2002; Collier 2007)

• Policy and Political Outcomes– Target aid toward potential or current allies in

order to garner favor or change behavior (Finkel, Perez-Linan, Seligson 2007; Goldsmith 2001; Knack 2004; Meernik, Kruger, & Poe 1998; McKinlay & Little 1977)

What kind of policy outcomes?

• Elite behavior (Alesina & Dollar)

– UNGA voting correlations– Treaty membership

• Democracy (Finkel et al)

– Social capital– Freedom House/Polity indicators

• Economic openness (Knack, Keefer)

– FDI– Trade

But there’s one more outcome…

• What about hearts and minds?• “Why do they hate us?”

– Muslims, Arabs, Latin Americans, Middle Easterners, Eastern Europeans, Southeast Asians, Chinese, …

• Implicit connection between aid and public opinion

How would Foreign Aid Win Hearts and Minds?

Directly Aid opinion of donor

Indirectly Aid poverty opinion of donor Aid public goods opinion of donor Aid corruption opinion of donor Aid sovereignty opinion of donor Aid elite ties opinion of donor (conditioned on

opinion of local elites)

The Data

• 18 Latin American recipients– Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica,

Dominican Republic, El Salvador, Ecuador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay, Venezuela

• Latin Barometer• World Development and OECD Indicators• 1995-2005• 3 Donors

– US, Japan, EU (total bilateral aid)• Units of analysis: respondent, country-year

The Question

What is your impression of the United States / Japan / the European Union? – Very negative– Fairly negative– Neither positive nor negative– Fairly positive– Very positive

05

10

05

10

05

10

1 2 3 4 5 1 2 3 4 5 1 2 3 4 5

1995 1996 1997

1998 2000 2001

2003 2004 2005

Ave

rag

e O

pin

ion

(Ord

inal

)

Opinion of EUGraphs by year

02

46

80

24

68

02

46

8

1 2 3 4 5 1 2 3 4 5 1 2 3 4 5

1996 1997 1998

2000 2001 2002

2003 2004 2005

Ave

rag

e O

pin

ion (

Ord

inal)

Opinion of USGraphs by year

02

46

80

24

68

02

46

8

1 2 3 4 5 1 2 3 4 5 1 2 3 4 5

1995 1997 1998

2000 2001 2002

2003 2004 2005

Ave

rag

e O

pin

ion

(Ord

inal

)

Opinion of JapanGraphs by year

3.4

3.6

3.8

44

.2A

vera

ge

Op

inio

n (O

rdin

al)

1995 2000 2005Year

Average Opinion of US Average Opinion of JapanAverage Opinion of EU

Average Annual Opinion of Donors

05

01

001

50A

vera

ge

Aid

from

Do

nor

1995 2000 2005Year

Average Bilateral Aid from US Average Bilateral Aid from JapanAverage Bilateral Aid from EU

Average Bilateral Aid from Donors

3.4

3.6

3.8

44

.2

1995 2000 2005 1995 2000 2005

0 1

Average Opinion of US Average Opinion of Japan

Average Opinion of EU

Ave

rag

e O

pin

ion

(Ord

inal

)

Year

Graphs by college_grad

3.4

3.6

3.8

44

.2

1995 2000 20051995 2000 2005

0 1

Average Opinion of US Average Opinion of Japan

Average Opinion of EU

Ave

rag

e O

pin

ion

(Ord

inal

)

Year

Graphs by Sex

A few beliefs

• Both the individual and national levels are important in exploring the effect of aid on the opinions of donors

• It is possible that there are within-country attributes that change the relationship between aid and opinions about donors

• Therefore, the ideal model…

Ideal Model

yij = 0j + 1jXij + ij

0j = 00K + 01KZj + 0j

1j = 10 + 11Zj + 1j

Where each individual’s opinions about each donor are conditional on certain individual-level variables, as well as certain national-level or country-year level variables.

However…. Ordinal DV makes modeling complicatedSo…

Very Basic Modelsologit(yi) = 0 + Xi + i

• individual opinion is conditioned on individual-level variables (opinion about national corruption, poverty, public goods, democracy, national pride)

• controlling for sex, age, education level, economic/political indicators (owning tv, left-right placement)

• fixed effects for countries and years, clustered by country-year

yjy = 0 + Xjy + jy

• aggregate national opinion is conditioned on national-level variables (indicators of corruption, poverty, public goods)

• splitting sample based on sex, education level• controlling for economic/political indicators• fixed effects for countries and years

Individual Level Opinion about US Opinion about Japan Opinion about EU

Aid from Donor -.009*** (.002) .001***(.000) .001 (.001)

Corruption Increase .027(.019) -.005 (.018) -.001 (.019)

Poverty Increase -.004 (.018) -.002 (.017) -.005 (.018)

Education Increase .191*** (.019) .055*** (.018) .031* (.019)

Health Care Increase .164*** (.019) .094*** (.017) .142*** (.179)

Approve Democracy .070** (.033) .101***(.030) .235*** (.032)

National Pride .097*** (.021) .169*** (.019) .128*** (.020)

Male .063** (.030) .191*** (.028) .141*** (.029)

Age .000* (.001) -.004*** (.001) -.001 (.001)

College Grad .048 (.048) .246*** (.045) .364*** (.047)

Television -.096** (.041) -.160*** (.040) -.181***(.006)

Left/Right .053**(.041) .029***(.006) .016*** (.006)

Countries Pos/Neg Nicaragua, El Salvador positive w.r.t. Argentina; else negative

Bol,Col, DR, ElSal, Gua, Hon, Mex, Nic, Pan, Par, Per, Ven/Braz, Chile, Uru

Col, DR, Ecu, ElSal, Hon, Ven/Braz, Mex, Pan, Uru

N 14,973 17,936 16,288

LR X2 1860.52*** 1372.33*** 1613.68***

LL -19178.65 -21788.55 -19418.09

Pseudo R2 .0463 .0305 .0399

National Level Opinion about US Opinion about Japan Opinion about EU

Aid from Donor Fem ( ) Male( ) Fem ( ) Male( ) Fem (***) Male(***)

Poverty (gdppc) Fem ( ) Male( ) Fem ( ) Male( ) Fem (***) Male(***)

Education Spending Fem ( ***) Male(***) Fem ( ) Male( ) Fem ( ) Male( )

Health Spending Fem ( ) Male( ) Fem ( ) Male( ) Fem ( ***) Male(***)

Polity2 Fem ( ) Male( ) Fem (-*) Male(-*) Fem ( -***) Male(-***)

Trade with Donor Fem (***) Male(***) Fem ( ) Male( ) Fem (***) Male(***)

Life Expectancy Fem ( ) Male( ) Fem ( ) Male( ) Fem ( ) Male( )

Left/Right Fem ( -***) Male(-***) Fem ( -***) Male(-***) Fem ( -***) Male(-***)

Countries / Years Nicaragua, El Salvador, Mexico / else negative

Bol,Col, DR, ElSal, Gua, Hon, Nic, Pan, Par, Per, Ven/Braz, Chile, Uru

Col, DR, Ecu, ElSal, Hon, Ven/ Mex, Pan, Uru

N 49 45 37

F 5.01*** 6.02*** 1.86* 2.29** 6.28*** 4.58***

R2 .55 .67 .33 .37 .64 .57

National Level Opinion about US Opinion about Japan Opinion about EU

Aid from Donor No ( ) Coll( ) No ( ) Coll( ) No (***) Coll(***)

Poverty (gdppc) No ( ) Coll( ) No ( ) Coll(-*) No (***) Coll( )

Education Spending No ( ***) Coll( ) No ( ) Coll( ) No ( ) Coll ( )

Health Spending No ( ) Coll( ) No ( ) Coll( ) No ( ***) Coll ( )

Polity2 No ( ) Coll(-***) No (-*) Coll( ) No ( -***) Coll (-***)

Trade with Donor No (***) Coll(***) No ( ) Coll( ) No (***) Coll ( )

Life Expectancy No ( ) Coll( ) No ( ) Coll(**) No ( ) Coll( )

Left/Right No ( -***) Coll(-***) No ( -***) Coll( ) No ( -***) Coll(-***)

Countries / Years Nicaragua, El Salvador, Mexico, Paraguay / else negative

Bol,Col, DR, ElSal, Gua, Hon, Nic, Par, Per, Ven/Braz, Uru

Col, DR, Ecu, ElSal, Hon, Ven/ Mex, Uru

N 49 45 37

F 4.53*** 3.91*** 2.31** 1.46 5.87*** 2.61**

R2 .48 .44 .33 .37 .63 .43

Conclusions?• US:

– Better perceptions of health care, democracy, national pride, self-identified Rightist (individual)

– Increased education spending, increased trade with donor, left-leaning (national), conditional on college education

– Aid matters negatively at the individual level only• Japan:

– Male college graduates with better perceptions of education, health care, democracy, national pride, self-identified Rightist (individual)

– Decreased polity2, left-leaning(national), conditional on college education– Aid matters positively at the individual level only

• EU:– Male college graduates with better perceptions of education, health care,

democracy, national pride, self-identified Rightist (individual)– Poverty indicators, health spending, trade with donor, decreased polity2, left-

leaning(national), somewhat conditional on education– Aid matters positively at the aggregate level only

However…

• There are marked differences between opinion toward all three donors that depend on country and year

• Future work will explore:– HLM to examine country-level variables– Individual information-gathering and

political/economic awareness variables