Corvinus University of Budapest Faculty of Economics
Abstract
The paper examines how flows of foreign aid have reacted to events of democratization in developing countries. Using a panel dataset of 136 aid receiving countries between 1980 and 2009, aid allocation regressions reveal that donors in general have tended to react to visible,
major democratic transitions by increasing aid to the partner country, but no significant
increases can be identified in case of countries introducing smaller democratic reforms. The
increases in aid flows are not sustained over time, implying that donors do not provide long
term support to nascent democracies. Also, democratizations in Sub-Saharan Africa do not seem to have been rewarded with higher levels of aid