Closing the Broken Feedback Loop: Can Responsive Aid Strengthen State Legitimacy?

A guiding principle of counterinsurgency operations and development programming in weak states is that aid projects should flexibly respond to the needs and expectations of local residents because doing so will activate a virtuous circle: citizens will credit government institutions for their responsiveness, voluntary compliance with government policies will increase, and, as governance costs decline, the state will expand the provision of public goods that address citizen needs. However, if aid is subject to high levels of predation and capture by local elites, it may undermine legitimacy. We exploit high-frequency, panel survey data from more than 5,000 Afghan villages to construct a measure of aid responsiveness at the village level. We then examine how aid responsiveness varies with village-level perceptions of local, district, provincial, and national government institutions. We find that aid responsiveness strengthens the legitimacy of local and district government but with diminishing returns at higher levels of treatment.

Funding: We thank the William and Flora Hewlett Foundation for generous funding (through grant #2017-5577) that made this study possible. We also acknowledge that this study was indirectly made possible through a cooperative agreement (AID-OAA-A-12-00096) between USAID’s Global Development Lab and AidData at the College of William and Mary under the Higher Education Solutions Network (HESN) Program.