Abstract
Foreign aid may act much like oil money in reducing voters’ willingness to demand accountability from their government, enabling corruption, clientelism, and repression. This is an important causal mechanism connecting public budgets to quality of governance. Yet other scholarship counters that aid is more beneficial than oil, either indirectly because of donor oversight or directly because aid is more likely to produce citizen pressures on governments. Empirical work on the topic employs observational data at the national, macro level, and has left the question unresolved. At the micro level, in some countries citizens have experience with aid revenues and oil funds, thus possessing information about the political implications of these different revenue sources. This article provides the first experimental tests of the direct mechanism linking aid and oil revenues to demands from citizens for greater political accountability. We report the effects of randomly assigned treatments identifying aid funds compared to oil money on behavior of citizens in six survey and lab experiments in Ghana and Uganda. We find no differences in accountability pressures when subjects are randomly assigned to aid or oil conditions in any experiment, including a survey-based field experiment in Uganda that employed very strong information treatments on the extent of aid and oil funds. Though little evidence suggests that either windfall necessarily reduces accountability demands from baseline in a meaningful way, citizens’ actions for aid money were statistically indistinguishable from oil revenues across all experiments. Aid may well have governance effects through the indirect route of donor oversight, but the results presented here suggest no evidence that aid, compared to oil, directly induces greater accountability demands among citizens.
Highlights
How governments are funded may affect democracy and governance in critical ways
In all six experiments we find no evidence for our alternative hypothesis, inspired by earlier experimental findings, that aid would heighten citizens’ accountability demands compared to oil revenues (Milner et al 2016; Findley et al 2017)
Our study investigates the political ramifications of foreign aid and oil revenues for democratic accountability in lower-income countries
Summary
How governments are funded may affect democracy and governance in critical ways. Some research suggests that public revenue raised from the sale of natural resources, especially oil, relieves leaders from accountability demands and undermines democracy and good governance (Sachs and Warner 1997; Ross 1999, 2001; Mehlum et al 2006; Ross 2012). Since the end of the Cold War, aid from donors acting strategically has promoted democracy and better governance (Dunning 2004; Finkel et al 2007a; Bermeo 2011, 2017; Kersting and Kilby 2014). Donors can structure aid to reduce fungibility and lessen accountability problems, or they can ensure that aid funds are used well through monitoring recipient governments and withdrawing aid from governments that become less democratic or more corrupt (Collier 2006; Kersting and Kilby 2014; Bermeo 2016, 2017). The overall point is that donor governments, acting strategically, may be able to make aid better promote democracy than does oil revenues
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