POL-UA 700 Lecture Notes - Lecture 13: Production Function, United States Agency For International Development
19 Jan 2017
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Document Summary
Aid for policy game: leader al offer leader bl r resources in exchange for policy concession. If bl accepts then resources are transferred so the resource base in nations a and b switch to (ra-r) and (rb+r). The policy concession is worth sigma(a) to citizens in a and costs sigma(b) for citizens in b: both leaders face domestic reselection. Giving aid: al offers just enough aid that bl accepts. At what policy price to the 69,400,000 who don"t get compensated! Predictions: donors are rich large coalition systems, potential recipients, high pr(aid) Small wb, small rb, low sigma(b), high sigma(a: amount of aid (if any) Increasing in wb, rb, and sigma(b: systematic tests for both usaid and oecd giving and un security council membership. Development implications of foreign aid: aid provides leaders with resources to provide public goods, but, unfortunately, incentive to do the opposite, aid increases revolutionary threats, makes public good suppression a more attractive response.
