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on Development |
| By: | Julio Cáceres-Delpiano; Matilde Pinto Machado |
| Abstract: | Using precise data on the residences of municipal election candidates in Chile and regression- discontinuity design based on close elections, we estimate the causal effect of electing a candidate on the emergence of future candidacies within a very narrow radius of their home. We find that the election of a neighbor increases the emergence of candidates from the same neighborhood. We then examine whether these candidacies translate into electoral success and generate persistence in the geographic composition of councils. We find evidence of such persistence, driven by incumbent re-election and concentrated in neighborhoods where elected candidates are pivotal in the council or not politically aligned with the mayor. These dynamics imply that local political processes may perpetuate, rather than alleviate, spatial inequalities within municipalities. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:not:notnic:2026-10 |
| By: | Holden, Stein T. (Centre for Land Tenure Studies, Norwegian University of Life Sciences); Makate, Clifton (Centre for Land Tenure Studies, Norwegian University of Life Sciences) |
| Abstract: | Do economies of scale create an endogenous tendency toward farm consolidation in African agriculture? We address this question using land rental decisions rather than estimated production functions. If larger farms have systematically higher returns to operational expansion, relatively land-rich households should be more likely to rent in land. We test this prediction using nationally representative household panels from Malawi, Nigeria, and Uganda. Repeated observations are used to construct upper-envelope landownership measures and diagnostics for substantial ownership-reporting instability, while dynamic correlated-random-effects models identify how tenant participation varies with households’ ownership position within local land markets. Across all three countries, relatively land-poor households are consistently more likely to rent in land, conditional on productive endowments, previous participation, and reporting reliability. Nonlinear specifications confirm that tenant participation declines from the bottom toward the top of the local ownership distribution, although the shape differs across countries. The revealed direction of operational adjustment provides little evidence that land rental markets generate endogenous consolidation toward larger farms. Instead, rental markets primarily reallocate land toward relatively land-scarce households, suggesting that rural structural transformation need not operate through progressive enlargement of household farms. |
| Keywords: | Land rental markets; Farm size; Economies of scale; Land reallocation; Structural transformation; Sub-Saharan Africa |
| JEL: | D24 O12 O13 Q15 |
| Date: | 2026–10–11 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:nlsclt:2026_010 |
| By: | Antonio León |
| Abstract: | The rise of culturally conservative politicians has been one of the most consequential political developments of recent decades. In large emerging democracies, this trend has coincided with significant reductions in poverty, partly driven by improvements in the allocation of labor. This paper hypothesizes that the reallocation of labor toward large firms—by fostering the growth of a conservative middle class—can help explain the rise of the cultural right. To test this hypothesis, the paper leverages geocoded administrative data and differential exposure to the rise of large firms as employers in Brazil. The findings show substantial increases in support for the cultural right, driven by low-income conservatives who experience upward mobility. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:not:notnic:2026-03 |
| By: | Edgar Bejarano B |
| Abstract: | Since 1990s, social intervention in Colombia undertaken by NGO’s and private companies, as part of their corporate social responsibility policies, has been experiencing a continuous expansion, especially in the field of community based local development models . Particularly in marginal areas where the State has little presence and market development is minimal, there are many cases and projects that have received some kind of support. However, there are very few known assessments that had been made about the benefits, shortcomings or failures from such a proposal and less on their capability to solve the problems from which they arise. Beyond the balance on pros and cons of this proposal, this paper recognizes its importance, and being aware of its future growth focuses on three issues that can significantly affect its efficiency and positive results. Thus they provide valuable signals on factors considered the determinants of growth and development of a nation, a region or a locality; about beliefs and behaviors that characterize the way we view and act as both promoters and implementers of projects and beneficiaries as such, as well as regarding the limitations and weaknesses of the procedures usually followed for the selection and evaluation of projects. |
| Keywords: | Desarrollo; Local; Intervención Social; Comunidad; Proyectos; fundamentos; umbrales; sucesos estilizados |
| JEL: | P48 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:col:000176:023702 |
| By: | Valenzuela, Irina; Nunez-Chaim, Gonzalo; Chiarella, Cristina |
| Abstract: | The PROLENCA project, implemented from 2013 to 2023, aimed to enhance employment opportunities, food security and living conditions for rural people in Honduras, with a focus on vulnerable groups such as women, youth and ethnic minorities. It comprised three main components: Strengthening producer organizations by improving governance and providing technical assistance in areas including financial management and climate adaptation. Financing productive development and business plans formulated by legally recognized producer organizations. Investing in rural infrastructure such as road and irrigation improvements to support agricultural productivity and market access. An impact assessment of PROLENCA was conducted in 2024 using an ex-post quasi-experimental design, based on household survey data collected between March and May 2024. A counterfactual group was selected through careful matching procedures, and impacts were estimated using an Inverse Probability Weighted Regression Adjustment (IPWRA) approach, comparing outcomes between treatment (project participants) and comparison (non-participant) groups. |
| Keywords: | Community/Rural/Urban Development |
| Date: | 2025–07–17 |
| URL: | https://d.repec.org/n?u=RePEc:ags:unadia:413185 |
| By: | Sasiwimon Warunsiri Paweenawat; Lusi Liao |
| Abstract: | This paper investigates the private and social return to higher education in Thailand. First, we analyze the individual return to higher education by using Socio-Economic Survey (SES) panel data and employing three treatment effects including propensity score matching (PSM), endogenous switching (ES) regression and endogenous binary treatment using probit two stage least square (Probit-2SLS) model. Then, we estimate the social return to higher education using Labor Force Survey (LFS). We identify the social return by estimating the effect of share of higher educated workers living in each province on individual wage and provincial wage gap using instrumental variable (IV) and pseudo panel approach at provincial level accounting for cohort effects. The results show that obtaining higher education increases wage by around 0.98 to 1.78 log points, and the increase in the provincial share of higher education raises individual’s wage and reduce the wage inequality among different provinces. The findings suggest that investment in higher education will improve the income distribution as it contributes more to workers with less education and in lower wage occupations. |
| Keywords: | Private returns to education; Social returns to education; Endogenous switching; Pseudo-panel approach; Thailand |
| JEL: | I20 J24 J30 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:pui:dpaper:266 |
| By: | Laura Muñoz Blanco |
| Abstract: | While early marriage continues to be a pressing concern, especially in developing countries, there has been a rapid rise in the number of forcibly displaced individuals. This paper sheds light on the relationship between forced displacement and early marriage for stayers and forcibly displaced women. I generate the results by leveraging a unique data set and exploiting the plausibly exogenous occurrence of earthquakes within Indonesian provinces. I show that exposure to earthquakes and their associated earthquake-induced population outflows increase the likelihood of women marrying before the age of 18 by 44% compared to non-exposed young women. The impacts exhibit substantial heterogeneity, with stronger effects observed among earthquake-induced migrant women compared to those who remain in their original communities (stayers). Financial coping strategies, such as marriage payments, increased labour returns upon the husband joining the household, and improved social integration within receiving communities contribute to early marriage among induced migrants, while stayer women lack these incentives. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:not:notnic:2026-11 |
| By: | Arthur Mendes; Wataru Miyamoto; Thuy Lan Nguyen; Steven Pennings |
| Abstract: | This paper studies the local and aggregate effects of cash transfers in developing countries, and how both change as the cash transfer program scales up. We build a two-region New Keynesian small open economy model and calibrate it to rich pre-treatment microdata from an ongoing cash transfer experiment in Malawi. The model implies a local multiplier on temporary transfers of about one, which depends on price stickiness, the share of liquidity-constrained households, and home bias in consumption. Spillovers to the rest of the country are negative under Malawi’s restricted international capital mobility and parallel exchange rate regimes, as cash transfers appreciate the real exchange rate and reduce exports. Consequently, the aggregate multiplier is less than the local multiplier. As the program scales up, the local multiplier converges toward the aggregate multiplier, so a scaled-up program may have smaller multipliers than micro-level estimates suggest. However, with unrestricted capital mobility, spillovers can be positive, especially under a fixed exchange rate. These results highlight the importance of the macroeconomic policy environment for aggregate multipliers and the effects of scaled-up transfer programs. |
| Keywords: | cash transfers; randomized controlled trials (RCTs); local multipliers; developing countries; exchange rate regimes |
| Date: | 2026–10–13 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedfwp:103935 |
| By: | Oscar Galvez-Soriano† (The University of Chicago); Raymundo Ramirez Peralta (El Colegio de Mexico) |
| Abstract: | We examine the effects of the 2019 expansion of Mexico's Social Pension Program. This reform simultaneously increased benefit generosity and expanded eligibility to individuals previously excluded because they received contributory pensions. Using nationally representative household data and a combination of difference-in-differences and triple-differences strategies, we separately identify the effects of increased transfer generosity and expanded eligibility. We find that the combined reform substantially increased program participation, household income, and reduced both poverty and extreme poverty. However, these gains were driven primarily by the increase in benefit levels. When we isolate the effect of universalization, we find no significant reduction in poverty and a modest increase in extreme poverty by 2024. Consistent with a labor-leisure framework, this increase is concentrated among low-income elderly individuals who reduced labor supply after receiving the pension despite the transfer being insufficient to fully replace forgone earnings. The universalization also expanded participation among low-income elderly who may have previously faced barriers to enrollment while attracting substantial participation among higher-income beneficiaries whose economic behavior remained largely unchanged. In addition, the reform generated heterogeneous effects on household consumption, health expenditures, and educational investments. Overall, the results highlight an important trade-off of universal social pensions: broader access can reduce exclusion, but the welfare consequences of expanding coverage may differ substantially from those of increasing transfer generosity. |
| Keywords: | non-contributory pensions, social protection, retirement behavior, poverty |
| JEL: | H55 I38 J14 O15 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:emx:ceedoc:2026-01 |
| By: | Kotsadam, Andreas (Ragnar Frisch Centre for Economic Research); Pieters, Janneke (Wageningen University); Rossi, Pauline (CREST-École Polytechnique); Villanger, Espen (Chr. Michelsen Institute); Zipfel, Céline (House of Sustainable Society (HoSS)); Getahun, Tigabu (EconInsight Center for Development Research) |
| Abstract: | We conducted an experiment with multiple factories in Ethiopia to test the widespread hypothesis that formal employment among women reduces fertility. Tracking respondents over eight years, we find that women who were randomly offered a job had more children than the control group. The effect on fertility emerged once the effect on wage employment faded away, around three years after baseline. There are clear effects on household income and savings, but not on bargaining power or marriage. These patterns are consistent with a Beckerian model in which the income effect dominates the substitution effect and households are credit constrained. |
| Keywords: | Female employment; fertility; industrialization; sub-Saharan Africa |
| JEL: | J13 J16 J22 O15 O55 |
| Date: | 2026–10–08 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:hamisu:2026_006 |
| By: | Arnaud Natal (BSE - Bordeaux sciences économiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, IFP - Institut Français de Pondichéry - MEAE - Ministère de l'Europe et des Affaires étrangères - CNRS - Centre National de la Recherche Scientifique); Damien Girollet (BSE - Bordeaux sciences économiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | How does social proximity between borrowers and lenders influence informal lending terms in rural areas of the Global South? We answer this question using a unique dataset collected in 2020-2021 in rural South India. We examine four dimensions of loan agreements: interest rates, collateral, services provided by lenders and borrowers. We analyse the role of social proximity (i.e., homophily and strength of ties) in determining credit terms using loan-level probit models. We find two key results. First, social proximity operates as an ambivalent resource: while homophily and strong ties reduce the financial cost of borrowing, they are also associated with reciprocal obligations. Second, the benefits of social proximity are unequally distributed across social groups. These findings suggest that informal credit markets are deeply embedded in local hierarchies and that policies addressing household indebtedness must go beyond financial inclusion to tackle the structural inequalities shaping credit relations. |
| Keywords: | Tamil Nadu, Strength of ties, Homophily, Debt, Interpersonal networks |
| Date: | 2027 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05701286 |
| By: | Onur Polat (Hacettepe University, Informatics Institute 06800 Beytepe, Ankara, Turkiye); Goodness C. Aye (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa; Department of Economics, Landmark University, Omu-Aran, Kwara State, Nigeria); Rangan Gupta (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa); Sonali Das (Department of Business Management, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa) |
| Abstract: | We examine the persistence of climate-risk indicators in South Africa at the national, provincial, and municipal levels using the local Whittle estimator. Using the AgERA5 monthly indicators produced by the Actuarial Society of South Africa for the period January 1981 to May 2026, we estimate the fractional integration parameter over the full sample and re-estimate it within rolling ten-year and five-year windows. Full-sample estimates indicate that aggregate drought risk exhibits non-stationary, mean-reverting long memory, lying close to the unit-root boundary at the national level. In contrast, composite risk, extreme temperatures, and extreme precipitation exhibit shorter memory. Persistence, however, is not constant over time. At the national level, the memory parameters of the composite index and extreme maximum temperature rise almost monotonically over the sample, whereas those of extreme minimum temperature drift downward. At the provincial and municipal levels evidence reveals substantial heterogeneity that broadly aligns with the country's climatic zones. Our results are robust to the use of the alternative CHIRPS dataset. |
| Keywords: | climate risk, long memory, local Whittle estimator, fractional integration, South Africa |
| JEL: | C22 Q54 R11 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:pre:wpaper:202635 |
| By: | Tanu M. Goyal (Indian Council for Research on International Economic Relations (ICRIER)); Shravani Prakash; Ketaki Gaikwad; Keshav Sachdeva |
| Abstract: | This paper examines global trends in gender-responsive trade policy by tracing how gender provisions in regional trade agreements (RTAs) have evolved from declaratory language towards institutionalised mechanisms and what this shift implies for domestic policy space. It assesses the recently enforced India-UK CETA's design against global benchmarks and India's own structural constraints, including export-oriented manufacturing's untapped potential to absorb female labour, capacity constraints due to the dominance of micro, small and medium enterprises (MSMEs) and barriers to network and information access that keep women-led enterprises out of trade. The paper argues that enforceability is not the sole measure of a provision's strength, and that commitments calibrated to national circumstance can generate substantive obligations over time through a robust implementation practice, with India-UK CETA's Working Group as the test case for whether they do. |
| Keywords: | Regional trade agreements, gender, women in manufacturing, women in trade, structural transformation, icrier |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:bdc:ppaper:76 |
| By: | Holden, Stein T. (Centre for Land Tenure Studies, Norwegian University of Life Sciences); Makate, Clifton (Centre for Land Tenure Studies, Norwegian University of Life Sciences) |
| Abstract: | Land rental markets allow households to adjust the area they cultivate without changing ownership, but the direction of this adjustment under increasing land scarcity remains contested. We examine whether rental-mediated expansion in Ethiopia is associated with relatively larger local ownership holdings (ownership-scale gravity) or with complementary productive resources relative to land endowments (factor-ratio gravity). Using three rounds of the Ethiopia LSMS-ISA household panel (2011/12–2015/16), we construct upper-envelope ownership holdings to reduce the influence of instability in reported ownership and measure ownership rank within 𝑘𝑒𝑏𝑒𝑙𝑒𝑠. We distinguish tenant participation, rented-in area conditional on tenancy, and rented-in area relative to ownership. Higher local ownership rank is negatively associated with tenant participation and proportional land rental adjustment. Its association with conditional absolute rented-in area is weakly positive and becomes statistically insignificant when contemporaneous hired-labor use and credit access are included. Cultivation capacity (oxen ownership) is positively associated with all three outcomes, and its association diminishes as ownership rank increases. The negative ownership-rank gradient in proportional adjustment persists under alternative treatments of very small ownership holdings. These findings are consistent with factor-ratio gravity facilitating land rental expansion among relatively smaller owners, rather than a uniform pattern of expansion toward larger landowners. |
| Keywords: | agricultural transformation; land rental markets; farm size distribution; reverse tenancy; land scarcity; Ethiopia |
| JEL: | C12 O13 O15 Q15 |
| Date: | 2026–10–11 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:nlsclt:2026_009 |
| By: | Aya Suzuki (University of Tokyo); Vu Hoang Nam (Faculty of International Economics, Foreign Trade University); Susan Olivia (University of Waikato); Guenwoo Lee (Japan International Research Center for Agricultural Sciences); Kohei Tanaka (Graduate School of Frontier Sciences, University of Tokyo) |
| Abstract: | Maintaining water quality is critical for aquaculture, yet smallholder farmers in developing countries often lack the tools to monitor it. Although earlier digital farming that provides "simple" information to farmers consistently yielded positive effects, when more detailed and personalized information are provided, the results have been mixed. Modern "aquatech" provides complex biophysical data that directly impacts productivity, and the effects likely depend on the capacity of farmers to process the "complex" information. We examine the impact of digital water-quality monitors and a farm-management app through a ten-month experiment involving shrimp farmers in Southern Vietnam. Using primary data from 304 farmers across two survey rounds, we find significant ITT and LATE treatment effects on reducing the disease outbreak as well as increasing revenue and profit, though the financial estimates are weaker evidence than the disease estimates: they sit at the margin of what our sample can detect. While these effects do not differ by human capital indicators of education, experience, and technical knowledge, the recorded data reveals strong association between education and stability of dissolved oxygen (DO) over crop cycles but not experience nor technical knowledge. Further, DO instability is associated with smaller shrimp size, and greater water stress is associated with lower harvest volume and smaller shrimp size. Our findings show that average farmers indeed benefit from even "complex" high-frequency digital information, and while the mechanism is not confirmed, the important role of education in water quality maintenance is suggested. |
| Keywords: | Digital agriculture; Aquaculture; Smallholder farmers |
| JEL: | O12 O33 Q22 |
| Date: | 2026–10–16 |
| URL: | https://d.repec.org/n?u=RePEc:wai:econwp:26/06 |
| By: | Brubaker, Josh; Mendiratta, Vibhuti |
| Abstract: | The PRELNOR project sought to enhance income levels and food security while mitigating vulnerability among impoverished rural households in northern Uganda. Implemented over a decade from 2014 to 2024, and covering 491 villages across nine districts, the project emphasized strengthening community capacities through comprehensive training and capacity-building programs. Complementing these efforts, significant investments were made in road and market infrastructure to improve connectivity and facilitate market access. This integrated approach aimed to promote sustainable rural development and bolster resilience within vulnerable communities. This impact assessment was conducted using household survey data collected at midline (February-April 2021), with an identification strategy based on households’ exposure to project interventions at the time of the survey. |
| Keywords: | Community/Rural/Urban Development |
| Date: | 2025–07–15 |
| URL: | https://d.repec.org/n?u=RePEc:ags:unadia:413191 |
| By: | Castro, Carolina; Chiarella, Cristina; Laajaj, Rachid; Martinez-Gonzalez, Eduard F.; Restrepo, Juan |
| Abstract: | Implemented between 2012 and 2023 across 203 post-conflict municipalities in Colombia, the TOP-El Campo Emprende project aimed to strengthen rural livelihoods through a comprehensive, integrated approach. The project focused on promoting enterprise development by building the capacities of local productive organizations, fostering entrepreneurship, and providing technical assistance. The project also sought to enhance rural financial inclusion by offering financial education, savings incentives, and youth-targeted financial innovations to reduce economic vulnerability. This impact assessment of the project was conducted using a Regression Discontinuity Design (RDD) to estimate causal effects. The analysis is based on household survey data collected across 47 municipalities between June and July 2023. |
| Keywords: | Community/Rural/Urban Development |
| Date: | 2025–07–02 |
| URL: | https://d.repec.org/n?u=RePEc:ags:unadia:413160 |
| By: | Holden, Stein T. (Centre for Land Tenure Studies, Norwegian University of Life Sciences); Makate, Clifton (Centre for Land Tenure Studies, Norwegian University of Life Sciences) |
| Abstract: | Population growth and intergenerational subdivision are reducing landholdings in many parts of rural Africa, while structural transformation has not generated sufficient alternative livelihoods for all households facing increasing land scarcity. Whether shrinking land ownership translates into shrinking access to agricultural land therefore depends partly on land rental markets. We use balanced household panels drawn from nationally representative surveys from Malawi, Nigeria, Uganda, and Ethiopia. Repeated observations of the same households allow us to obtain more reliable measures of land ownership and land rental market participation despite substantial reporting instability across survey rounds. We examine separately who gains access to rented land, how much land participating households obtain, and how important, rented land becomes in their operational holdings. Land rental participation among land-poor households differs across countries, with clear pro-land-poor patterns in Nigeria and Uganda and smaller, less uniform participation differences in Ethiopia. Conditional on participation, near-landless and land-poor tenants obtain fewer hectares than tenants with larger ownership holdings in Nigeria and Uganda, but no comparable gradient is found in Malawi or Ethiopia. Across all four countries, rented land accounts for a progressively larger share of operational holdings as ownership declines and substantially expands operational holdings among many near-landless tenants. Previous participation is strongly associated with current access in Malawi, Uganda, and Ethiopia, but not Nigeria. This pattern is consistent with state dependence arising from initial transaction costs and advantages conferred by established rental relationships. Land rental can therefore loosen the connection between ownership poverty and operational land exclusion, but its contribution depends on who gains access, how much land they obtain, and whether access can be sustained over time. This provides a potential mechanism for sustaining agricultural livelihoods while broader structural transformation remains incomplete. |
| Keywords: | Land rental markets; Land poverty; Operational land access; Rural transformation; Transaction costs; Sub-Saharan Africa |
| JEL: | O13 O18 Q12 Q15 |
| Date: | 2026–10–12 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:nlsclt:2026_011 |
| By: | Barja, Gover |
| Abstract: | This paper examines how business environment pressures, firm capabilities, and establishment scale are related among formal enterprises operating under economic stress. Using the 2025 Bolivia Enterprise Survey, it estimates a survey-weighted path analytic structural equation model linking infrastructure stress, intensity of regulatory and tax interaction with the state, informal competition, and political instability to formal finance, adaptive, technology and standards, and digital transactional capabilities, and subsequently to sales and employment. The preferred model uses 567 establishments. Digital transactional capability, measured by electronic receipt of sales, is positively associated with both sales and employment and remains robust across alternative digital measures, the small-firm subpopulation, corruption controls, and trade extensions. Informal competition is negatively associated with digital transactions and has negative total associations with both outcomes. Formal finance and adaptation are particularly related to employment, while technology and standards are more closely related to sales. Greater interaction with the state is positively associated with formal capabilities and establishment scale, a relationship that remains distinct from corruption. International market integration adds explanatory content for sales without eliminating the digital transaction result. By contrast, the capability structure does not explain recent sales or employment growth. The findings support a framework for capabilities under stress in which heterogeneous external pressures are associated with distinct capability profiles rather than a uniform deterioration in firm performance. Because the data are cross-sectional, the estimated paths are interpreted as conditional associations rather than causal effects. |
| Keywords: | Firm capabilities, Business environment stress, Informal competition, Digital payments, Establishment scale, Bolivia |
| JEL: | O12 O17 L25 O33 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:344131 |
| By: | Pierre André; Paul Maarek; Mickael Melki (CY Cergy Paris Université, THEMA) |
| Abstract: | Why do some democratizing countries receive substantial increases in foreign aid while others receive little or no additional aid? We show that the aid response to democratization is highly heterogeneous. Using a comprehensive bilateral donor–recipient panel combining multiple international aid datasets with democratization episodes identified in V-Dem’s Episodes of Regime Transformation (ERT) dataset, we find that aid increases are concentrated in episodes associated with major geopolitical realignment and among donors with weaker pre-existing aid relationships. These findings provide the strongest support for a strategic interpretation of the democratization premium. They suggest that donors reward democratization primarily to support particular political transitions in specific geopolitical contexts, rather than because they intrinsically value democracy or expect institutional improvements to enhance aid effectiveness. We further show that democratization in one country does not crowd out aid to others, contributes to donor proliferation by increasing the number of active donors, and elicits weaker aid responses in poorer countries, particularly for basic-needs assistance. |
| Keywords: | Foreign aid, Democratization, Aid allocation, Donor heterogeneity, Political economy of aid, Post-communist transitions, Sanctions |
| JEL: | F35 F53 O19 P26 P33 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ema:worpap:2026-13 |