Local Partisan Biases in Allocations of Foreign Aid: A Study of Agricultural Assistance in India

abstract :In principle, aid from donor organizations to developing countries should be based on need and the likelihood of positive impact, but political biases may intrude into decisions about aid allocations. This article elaborates a theory about why a particular form of bias, one based on partisan affiliations, can affect where aid goes and whether the goals of aid are met. Party networks can facilitate coordination of decisions and leverage bureaucratic capacity, but they can also ensure that resources, such as aid, stay in the control of copartisans to boost reelection goals. The empirical analysis evaluates whether partisan bias is evident in the locations and impact of World Bank agricultural aid to India. The authors analyze georeferenced data on aid projects, election results, and cropland coverage at the levels of state parliamentary electoral constituencies and administrative districts from 1995 to 2008. They find that alignment between local legislators and the political parties that govern state and national governments is associated with a greater number of new aid projects and with anomalous changes in cropland coverage. The evidence is consistent with arguments that partisan bias works primarily through patronage to achieve strategic party goals.