Buying the best favor: Foreign aid for cooperation or convenience

This article demonstrates that donors seek the optimal allocation of foreign aid by matching specific recipients with specific concessions. A formal model shows that aid encourages more democratic recipients to participate in costly collective actions to produce transnational public goods. Democratic political institutions mitigate recipient leaders' perverse incentives to divert aid from collective effort to pork-barrel spending when aid is tied to an opportunity to produce such goods. This commitment to effort in turn incentivizes other participants to cooperate, which is required for the operation to succeed. In contrast, donor-specific concessions are bought from less democratic recipients. I test the above claims against data on US multilateral coalitions providing regional security and data on United Nations (UN)-voting alignment. The results confirm that the US faces a tradeoff between the two concessions and that it buys cooperation in peacekeeping operations from more democratic recipients, while buying off predominantly autocratic recipients in the UN General Assembly.