Veto Players and Foreign Aid Inflows

This paper argues that a larger number of effective veto players within an aid-recipient country tend to reduce its foreign aid inflows. This is because offers of foreign aid often require aid-recipient countries to adopt policy concessions. Since significant policy changes require at least the tacit assent of all effective veto players, countries with more numerous and more diverse veto players are less likely to be able to make aid-for-policy deals with donors. The pattern of aid inflows in 115 aid-recipient countries over the period 1978--2007 is shown to be consistent with this hypothesis. Countries with more effective veto players receive considerably less official development assistance than countries with fewer effective veto players.