Allocating Environmentally Beneficial and Harmful Foreign Aid: The Role of Domestic Political Institutions

다국어 초록 (Multilingual Abstract)

While environmental aid flows have increased over time, they pale in comparison to those forms of foreign aid that cause environmental degradation. Understanding the relationship between foreign aid and environmental protection requires paying attention to “dirty” aid, but the allocation of such aid has been neglected in the literature. This article contributes to the literature by showing that in the 1980-2008 period, democratic recipients have received more of both environmental and dirty aid than autocracies. The substantive effects are large, with democratization resulting in more than a twofold increase in environmental and dirty aid. This finding contradicts the “demand side” hypothesis that democratic developing countries are intrinsically opposed to environmentally harmful projects. However, it is consistent with a “supply side” logic: donors trust democracies with dirty aid projects because the latter may be expected to consider environmental problems in their implementation. We also show that the allocation of dirty or environmental aid does not decrease with corruption, indicating that the allocation of such aid depends on political incentives, instead of capacity for good governance.

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