The Dictator's Handbook: Why Bad Behavior is Almost Always Good Politics

Bueno de Mesquita and Smith explore five elements related to foreign aid. The first element is who gets aid. Leaders in democratic countries give aid to foreign governments. Leaders in the aid-receiving country often do not use aid to help their people. Instead, they use the aid to first pay off their supporters and then enrich their own pockets.

The second element is how much aid donors spend on buying concessions from foreign governments. Coalition size and what the policy concessions are worth determine this answer. Bueno de Mesquita and Smith suggest that “buying policy from a democracy is expensive because many people need to be compensated for their dislike of the policy. Buying policy from autocracies is quite a bit easier” (170). However, if the policy concession is unpopular in the aid-receiving country, then the donor will typically have to provide larger amounts of aid.

The third element examines why donors give foreign aid. Foreign aid is not about alleviating poverty or misery. Each side has something that the other wants. A democratic leader wants the foreign government to implement policies that constituents in the democratic country favor, and the autocratic leader wants money to enrich their supporters and themselves.