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The Effect of Leader’s Visits on Foreign Aid

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  • Kodila-Tedika, Oasis
  • Khalifa, Sherif

Abstract

This paper examines the effect of the number of visits by U.S. officials to a country, and the number of visits of the country’s leaders to the United States, on foreign aid. To achieve our objective, we compile novel variables that indicate the number of official visits from 1960-2015 from the historical archives of the U.S. State Department. To deal with potential endogeneity, we introduce novel instrumental variables for the official visits variables, namely aviation safety, capital distance, and urban distance. The 2SLS estimations provide evidence that the visits by the U.S. leaders to the country, and the visits of the country’s leaders to the United States, have a statistically significant negative effect on multilateral aid, but an insignificant effect on bilateral aid flows from the United States. This indicates that other donors take the visits by U.S. Presidents as a signal that the country does not need aid either due to the costly reception of the American dignitary or because they assume that the country will be able to secure aid from the U.S. and will be less in need of their assistance. This also indicates that the costly official visits by the country’s leadership to the United States cause the donors to become reluctant to provide aid as these types of expenditure send a negative signal that the country is not administering its finances adequately to avoid the need for aid.

Suggested Citation

  • Kodila-Tedika, Oasis & Khalifa, Sherif, 2020. "The Effect of Leader’s Visits on Foreign Aid," MPRA Paper 99368, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:99368
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    References listed on IDEAS

    as
    1. Kodila-Tedika, Oasis & Khalifa, Sherif, 2020. "Leaders’ Foreign Travel and Democracy," MPRA Paper 105601, University Library of Munich, Germany, revised 26 Jan 2021.
    2. Alesina, Alberto & Dollar, David, 2000. "Who Gives Foreign Aid to Whom and Why?," Journal of Economic Growth, Springer, vol. 5(1), pages 33-63, March.
    3. Alberto Alesina & Beatrice Weder, 2002. "Do Corrupt Governments Receive Less Foreign Aid?," American Economic Review, American Economic Association, vol. 92(4), pages 1126-1137, September.
    4. Knack, Stephen, 2013. "Aid and donor trust in recipient country systems," Journal of Development Economics, Elsevier, vol. 101(C), pages 316-329.
    5. Maizels, Alfred & Nissanke, Machiko K., 1984. "Motivations for aid to developing countries," World Development, Elsevier, vol. 12(9), pages 879-900, September.
    6. Heinrich, Tobias & Kobayashi, Yoshiharu & Bryant, Kristin A., 2016. "Public Opinion and Foreign Aid Cuts in Economic Crises," World Development, Elsevier, vol. 77(C), pages 66-79.
    7. Kodila-Tedika, Oasis & Khalifa, Sherif, 2020. "Leaders’ Foreign Travel and Foreign Debt," MPRA Paper 98627, University Library of Munich, Germany.
    8. Bermeo, Sarah Blodgett & Leblang, David, 2015. "Migration and Foreign Aid," International Organization, Cambridge University Press, vol. 69(3), pages 627-657, July.
    9. Kodila-Tedika, Oasis & Khalifa, Sherif, 2020. "Leaders’ Foreign Travel and Foreign Investment Inflows," MPRA Paper 98625, University Library of Munich, Germany.
    10. Chong, Alberto & Gradstein, Mark, 2008. "What determines foreign aid? The donors' perspective," Journal of Development Economics, Elsevier, vol. 87(1), pages 1-13, August.
    11. Heinrich, Tobias & Kobayashi, Yoshiharu, 2020. "How Do People Evaluate Foreign Aid To ‘Nasty’ Regimes?," British Journal of Political Science, Cambridge University Press, vol. 50(1), pages 103-127, January.
    12. Acht, Martin & Mahmoud, Toman Omar & Thiele, Rainer, 2015. "Corrupt governments do not receive more state-to-state aid: Governance and the delivery of foreign aid through non-state actors," Journal of Development Economics, Elsevier, vol. 114(C), pages 20-33.
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    Cited by:

    1. Kodila-Tedika, Oasis & Khalifa, Sherif, 2020. "Leaders’ Foreign Travel and Foreign Investment Inflows," MPRA Paper 98625, University Library of Munich, Germany.
    2. Kodila-Tedika, Oasis & Khalifa, Sherif, 2020. "Leaders’ Foreign Travel and Foreign Debt," MPRA Paper 98627, University Library of Munich, Germany.
    3. Kodila-Tedika, Oasis & Khalifa, Sherif, 2020. "The Effect of U.S. Officials’ Visits on Conflict," MPRA Paper 98909, University Library of Munich, Germany.

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    More about this item

    Keywords

    Foreign Aid; Executive; Leader Trip;
    All these keywords.

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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