The democracy dilemma. Aid, power-sharing governments, and post-conflict democratization

Felix Haass

doi:10.1177/0738894219830960

Abstract

How does development aid shape democracy after civil conflicts? I argue that political aid conditionalities and the economic utility that recipient elites gain from office give rise to a rent-seeking/democracy dilemma: recipients can initiate democratic reforms but also risk uncertainty over office and rents. Or they can refuse to implement such reforms, but risk losing aid rents if donors reduce aid flows in response to failed democratic reforms. This dilemma is strongest in power-sharing cabinets. By granting rebel groups temporally limited access to the state budget, such cabinets intensify elites’ rent-seeking motives. Thus, aid-dependent power-sharing elites will hold cleaner elections, but also limit judicial independence and increase particularistic spending to simultaneously reap aid benefits and remain in power. I find statistical support for this argument using data on aid flows and power-sharing governments for all post-conflict states between 1990 and 2010.

Highlights

How does development aid shape democracy after civil conflicts? In 2010, donors committed US$50 billion in development assistance—38% of all aid transfers in that year—to conflictaffected or fragile countries (OECD, 2013: 43)
The end of the Rwandan civil war entrenched the authoritarian tendencies in the country—despite the enormous amounts of foreign aid both countries received
Odd-numbered columns employ a dummy measure of powersharing executives, while the models in even-numbered columns use the finer-grained measure of the number of cabinet seats held by rebels in a power-sharing government

Summary

Introduction

How does development aid shape democracy after civil conflicts? In 2010, donors committed US$50 billion in development assistance—38% of all aid transfers in that year—to conflictaffected or fragile countries (OECD, 2013: 43). My main hypothesis is that large aid flows from democratic donors to extensive power-sharing governments should be associated with improved election quality, and with limits to the rule of law and greater provision of private rather than public goods. I combine data on aid flows and rebel participation in post-conflict cabinets between 1990 and 2010 with indicators for democratic development, election quality, rule of law, and public goods provision.

Results

Conclusion