Deepening Our Understanding of the Effects of Us Foreign Assistance on Democracy Building

Does USAID's democracy promotion program work? Although some prior studies have examined specific projects in individual countries, no prior effort has studied the question on a world-wide basis, and no prior study has encompassed the entire post Cold-War period. Vanderbilt University and the University of Pittsburgh have undertaken this research in a two-phased effort. In the first phase of that research, we found that the answer to that question was "yes." That is, on average, in the period 1990-2003, USAID's investments in democracy promotion produced significant increases in the national level of democracy as measured by Freedom House and Polity IV indicators. However, that study left many unanswered questions, and thus motivated this second phase of the research. The current report presents the results of the second phase of the project "Cross-National Research on USAID's Democracy and Governance Programs." This analysis complements and extends the study "Effects of U.S. Foreign Assistance on Democracy Building: Results of a Cross-National Quantitative Study," presented in January, 2006, and a shortened version published in World Politics. The present study expands the initial effort in many ways, covering more years and including more variables. In addition, the current study responds to numerous suggestions made by readers of the prior report and published article, including those from academic and policy settings, as well as to the comments made by the expert panel convened to review the results of this work and to the comments made by the audience present in the public presentation of the study at the Center for Strategic and International Affairs (CSIS) on December 7, 2007. In the current effort, the data set is extended from 14 years to cover 15 years (1990-2004) and 165 countries, yielding 2,416 observations (country-years). This expansion proved to be particularly important because the prior data set ended in 2003, the year of the U.S. invasion of Iraq, and thus did not capture the effect of the surge in democracy spending in that country that occurred in 2004. The main measure of democracy used in the study continues to be the widely used Freedom House index, complemented by the Polity IV index. USAID DG (Democracy and Governance) assistance is measured as "actual appropriated" funds (explained more fully in the text), now in constant 2000 dollars rather than 1995 dollars as in the prior report, both as an aggregated total for each country, and also broken down into four main areas: 1) Elections and Political Process; 2) Rule of Law, 3) Civil Society; and 4) Governance. A fifth category covering regional and sub-regional programs was also included. The revised study includes several new variables, including the percentage of funds invested in particular sub-sectors, the volatility of USAID DG investment, and the trend in USAID DG investment to determine if any of these variables influences the impact of DG spending on democracy. In the revised study, the impact of political culture is measured for the first time in order to determine if certain values can create a more receptive environment for DG dollars. The study also includes other forms of foreign assistance added as controls variables, including total investment in other (non-DG) programs, non-USAID assistance (including funds from the National Endowment for Democracy, NED), total U.S. development assistance not channeled through USAID or NED, bilateral non-US foreign assistance and military assistance. Additionally, in order to better study the problem of "endogeneity" we developed a new measure of the degree to which a given country was a priority for the U.S. State Department. Finally, the revised study includes additional improved control variables, such as a new measure of democratic diffusion, and an expanded set of human rights measures.