TY - JOUR
T1 - The perils of unearned foreign income
T2 - Aid, remittances, and government survival
AU - Ahmed, Faisal Z.
N1 - Funding Information:
The final channel is through the exporting of politics from influential oil producers. Three oil producers were active in the 1970s and 1980s in the domestic affairs of other countries: Iran, Libya, and Saudi Arabia. Following the Islamic Revolution in 1979, Ayatollah Khomeini actively sought to spread the revolution by funding and training armed groups in other countries. Mu’ammar Qadhafi used Libya’s oil windfall to fund violent antigovernment movements in a host of countries, including rebels in southern Sudan from 1975 to 1985, the Polisario movement in Morocco, an aborted coup in Gambia in 1981, and struggles in Chad, Somalia, and Zaire (Lemarchand 1999). Finally, the rise of Saudi Wahhabism and its support for Islamist movements in other countries may have been influential in government crackdowns in many poor Muslim countries. I am unaware of data measuring the extent (and nature) of external financing of antigovernment movements. Indeed, although it is impossible to rule out the effect of extremism funded by Gulf oil windfalls, the
PY - 2012/2
Y1 - 2012/2
N2 - Given their political incentives, governments in more autocratic polities can strategically channel unearned government and household income in the form of foreign aid and remittances to finance patronage, which extends their tenure in political office. I substantiate this claim with duration models of government turnover for a sample of 97 countries between 1975 and 2004. Unearned foreign income received in more autocratic countries reduces the likelihood of government turnover, regime collapse, and outbreaks of major political discontent. To allay potential concerns with endogeneity, I harness a natural experiment of oil price-driven aid and remittance flows to poor, non-oil producing Muslim autocracies. The instrumental variables results confirm the baseline finding that authoritarian governments can harness unearned foreign income to prolong their rule. Finally, I provide evidence of the underlying causal mechanisms that governments in autocracies use aid and remittances inflows to reduce their expenditures on welfare goods to fund patronage.
AB - Given their political incentives, governments in more autocratic polities can strategically channel unearned government and household income in the form of foreign aid and remittances to finance patronage, which extends their tenure in political office. I substantiate this claim with duration models of government turnover for a sample of 97 countries between 1975 and 2004. Unearned foreign income received in more autocratic countries reduces the likelihood of government turnover, regime collapse, and outbreaks of major political discontent. To allay potential concerns with endogeneity, I harness a natural experiment of oil price-driven aid and remittance flows to poor, non-oil producing Muslim autocracies. The instrumental variables results confirm the baseline finding that authoritarian governments can harness unearned foreign income to prolong their rule. Finally, I provide evidence of the underlying causal mechanisms that governments in autocracies use aid and remittances inflows to reduce their expenditures on welfare goods to fund patronage.
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U2 - 10.1017/S0003055411000475
DO - 10.1017/S0003055411000475
M3 - Review article
AN - SCOPUS:84857947712
SN - 0003-0554
VL - 106
SP - 146
EP - 165
JO - American Political Science Review
JF - American Political Science Review
IS - 1
ER -