Coming into Money: The Impact of Foreign Aid on Leader Survival

Donors are more likely to send aid to leaders facing elevated risks of losing power, but targets’ ability to benefit from this assistance is conditioned by regime type and political processes. The institutionalization of winning coalitions’ loyalty across regime type follows opposite patterns, supporting opposite temporal dynamics across regime types. Democratic leaders’ coalitions are firmest immediately after taking office, and aid is of most assistance to them at that time. As competition and dissatisfaction grow, aid becomes a political liability. In small winning coalition systems, however, coalitions become more solid over time, facilitating increasing benefits from aid. Without a firm coalition, however, external resources are destabilizing to autocratic leaders. Analysis of 4,692 leader years from 1960 to 2001 using a censored probit model supports these expectations.