Doing well by doing good: foreign aid improves opinions of the US

Over the last decade, comments made by politicians in a number of OECD countries have suggested that they are eager to see domestic benefits born of foreign aid provided for developing countries. Given their own countries’ fiscal constraints, as well as pressing economic and social problems, they outspokenly argue against the provision of foreign aid unless they see tangible rewards back to their own countries. Understandably, these comments have been a cause for concern among people who want foreign aid to be genuinely aimed at helping the poor in recipient countries. This is because some of the worst failures of foreign aid programs in the past have been aimed foremost at bringing economic or domestic political benefits to donors. These programs – often not carefully planned to solve problems in recipient countries and thus ineffective in producing desirable outcomes for those recipient countries – have been an easy target of criticism by the anti-aid camp. They condemn foreign aid that is not only ineffective in helping the poor but also fuels corruption in recipient countries.

A fundamental question, therefore, is whether helping the poor in recipient countries and bringing benefits to donor countries are ever compatible. In our new paper just published in Quarterly Journal of Political Science, we argue that they are indeed compatible when the benefit sought is enhanced international standing of the donor country, at least for certain types of aid programs.

Using a multinational survey and an econometric tool (specifically, multiple regression using instrumental variables), we show that a United States aid program specifically targeted to address the problems of HIV and AIDS – the President’s Emergency Plan for AIDS Relief (PEPFAR) – has improved perceptions of the US among mass publics in recipient countries. HIV and AIDS are still major problems in much of the developing world. Among a variety of initiatives aimed to combat them, PEPFAR stands out in its scale (15% of all US development aid in some years) and in its significantly positive health impacts. It was established under the Bush Administration in 2003, and has been provided to more than 80 developing countries, in particular, in sub-Saharan Africa. It has continued to receive support under the Obama administration, although in a modified form integrated into a broader plan for improving global health outcomes. Importantly, PEPFAR is well publicised and thus visible among publics. The US government carefully and deliberately branded PEPFAR-funded work to “ensure appropriate recognition for US programs and contributions to this effort” (PEPFAR’s Branding Guidance, Updated 2012).

Considering these important aspects of PEPFAR, our theory is that in addition to its potential humanitarian benefits, a foreign aid program that is targeted, sustained, (perceived to be) effective and visible can serve an important strategic goal for those countries that give it: fostering positive perceptions among foreign publics.

The estimated impacts are substantial. The figure below (not in our paper) is based on the estimates of our regression model with instrumental variables (Table 1, 2007-2010 average). To interpret the main findings in an intuitive and direct manner, we focus on selected African countries that received comparatively large amounts of PEPFAR, and simulate the percentage of each country’s population who approve of the performance of US leadership under a counterfactual scenario (code to make this figure and replication data are available from the authors). Specifically, the arrows in the figure show how much less popular the US would have been in these countries if it had not provided PEPFAR. The magnitude of the impact is not trivial.

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So what? We argue that these results indicate an important possible virtuous circle or race-to-the-top dynamic for the emerging global order. As great powers, especially the US and China, are increasingly constrained by the costs that militarised conflicts would impose on their trade and investment interests, they may increasingly seek to pursue their international interests through currying favor among foreign elites and publics. Foreign aid is an obvious potential tool for this. If targeted, sustained, effective and visible aid gives the best chance of influence, this may compel great powers to actually do good, and to be seen to be doing so, in order to do well in their global competition for influence.

But is enhanced international standing valuable enough for great powers to pursue vigorously?  Much of the buzz about “soft power” and China’s standing in Africa and Latin American would seem to indicate that it is. In a companion paper published in World Politics in 2012, we (Goldsmith and Horiuchi) also show that positive foreign public opinion can have tangible foreign policy benefits when the US seeks cooperation on an issue important to publics abroad. More generally, with the expansion of democratic governance globally, it seems intuitive that public opinion will matter more in international relations.

This article was originally published in The Monkey Cage (The Washington Post) on April 14.

Benjamin E. Goldsmith is an Associate Professor in the Department of Government and International Relations at the University of Sydney. Yusaku Horiuchi is Associate Professor in the Department of Government at Dartmouth College and holds the Mitsui Chair in the Study of Japan at Dartmouth. Terence Wood is a Research Fellow at the Centre for Democratic Institutions at the Australian National University.

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Benjamin E. Goldsmith

Yusaku Horiuchi

Terence Wood

Terence Wood is a Fellow at the Development Policy Centre. His research focuses on political governance in Western Melanesia, and Australian and New Zealand aid.


  • Thanks for your comment Stephen,

    As an empirical puzzle whether aid improves opinions is not easy to answer. The challenge here is reverse causality. Thanks to the Gallup World Poll good data from around the developing world exist on publics’ opinions of donor countries. And thanks to the OECD DAC’s database and other donor publications we have good data on aid flows. But we learn little from regressing amounts of aid on public opinion looking for correlations. This is because, just as it is possible that aid is influencing people’s opinion in recipient countries, it is equally plausible that opinions of donor countries influence how much aid is given in the first place. Maybe donors give more money to countries where they are unpopular to try and gain influence. Or maybe they give less, saving the money to reward allies. These possibilities make it much harder to answer questions about aid’s impact on opinion.

    In the QJPS study we attempted to resolve the issue of reverse causality and shed at least some light on aid’s impact in fostering favourable opinions of donors. Specifically focusing PEPFAR, afforded a neat piece of methodological leverage. It enabled us to use instrumental variables to overcome the problem of reverse causality. We were able to use HIV incidence as a tool to estimate the amount of PEPFAR funding which was given for reasons completely independent of existing public opinions of the United States. And these estimates were able to be used, in turn, to estimate PEPFAR’s impact on opinion. We ran two stage least squared regressions with a suite of control variables to ensure results weren’t being driven by other factors. And it’s from the results of these which our findings came.

    With regards to your second question the paper linked to in the last para of the first blog post does this to an extent.

    Thanks again


  • Terence et al,

    Very interesting findings, but do you think you could briefly explain the study in a little more detail? In particular, how exactly did you show that the PEPFAR program has lead to improved perceptions of the US in recipient countries?

    Also, does you paper discuss how or to what extent fostering positive perceptions among foreign publics might lead to enhanced international standing?

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