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To Invest or Insure?

How Authoritarian Time Horizons Impact Foreign Aid Effectiveness

Princeton University

In this article, the author argues that the time horizon a dictator faces affects his incentives over the use of aid in three ways. First, dictators have a greater incentive to invest in public goods when they have a long time horizon. Second, dictators with short time horizons often face the threat of challengers to the regime; this leads them to forgo investment and instead consume state resources in two forms that harm growth: repression and private pay-offs to political opponents. Third, dictators with short time horizons have a strong incentive to secure personal wealth as a form of insurance in case the regime falls. Using panel data on dictatorships in 71 developing countries from 1961 to 2001, the author finds that time horizons have a positive impact on aid effectiveness: Foreign aid is associated with positive growth when dictators face long time horizons and negative growth when time horizons are short.

Key Words: foreign aid • dictatorships • growth • time horizons

This version was published on July 1, 2008

Comparative Political Studies, Vol. 41, No. 7, 971-1000 (2008)
DOI: 10.1177/0010414007308538


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