Why do countries delegate the distribution of foreign aid to international institutions? Why would governments relinquish control over their aid if they are a useful instrument of statecraft? Governments delegate aid delivery to international institutions when their publics lack information about the consequences of aid and fear that their governments will deviate from their preferences concerning its use. By using the international organization to send aid, the government issues a credible signal to domestic groups about the use of foreign aid. This signal leaves all actors better off by helping to solve a principal-agent problem in domestic politics. When publics are more skeptical about the benefits of aid, governments are more likely to turn aid over to multilateral organizations in order to reassure taxpayers that their money is being well spent. Using data on about 20 donor countries of the OECD from 1960-2000, I investigate the sources of multilateral giving, showing that public opinion has the expected negative relationship to multilateral aid-giving.
1. Introduction. 2. A Brief Review of the Books. 3. The Role of the International Economic Institutions. 4. The Experience of the Developing Countries. 5. Theories about the Functions and Benefits of International Institutions. 1) Constraining the Great Powers. 2) Providing Information and Reducing Transaction Costs. 3) Facilitating Reciprocity. 4) Facilitating Reform in Domestic Politics. 6. Four Sources of the Problems with International Institutions. 1) No Impact. 2) Capture by the Powerful Developed Countries. 3) Capture by Private Producers and Investors. 4) Internal Dysfunctions and Failure of Accountability. 7. International Justice and Institutions: Normative Perspectives. 1) Distributive Justice is Global. 2) Current Counterfactual Assessments are Insufficient. 3) The "Nationalist" Research Agenda Must Change. 8. Conclusions: What is to be Done?
Rising international trade flows are a primary component of globalization. The liberalization of trade policy in many developing countries has helped foster the growth of these flows. Preceding and concurrent with this move to free trade, there has been a global movement toward democracy. We argue that these two trends are related: democratization of the political system reduces the ability of governments to use trade barriers as a strategy for building political support. Political leaders in labor-rich countries may prefer lower trade barriers as democracy increases. Empirical evidence supports our claim about the developing countries from 1970–99. Regime change toward democracy is associated with trade liberalization, controlling for many factors. Conventional explanations of economic reform, such as economic crises and external pressures, seem less salient. Democratization may have fostered globalization in this period.
Are there noticeable differences among political parties in a country over their trade policy positions? Do left parties advocate different trade policies than right parties? In the advanced industrial countries where labor tends to be scarce, are left parties more protectionist than right ones, which represent capital owners? Political institutions within these democratic countries may affect the role of partisanship. We also investigate whether increasing globalization has led to more or less partisan polarization over trade policy. We examine 25 developed countries from 1945 to 1998 to see how their parties have competed over trade policy. Controlling for various factors, partisanship matters. Right parties consistently take more free trade stances than do left ones. Globalization and other international forces have also shaped both the nature and the extent of the domestic debate over exposure to international trade.