Donor-Side Determinants of Disaggregated Foreign Assistance: A Sur Approach to Understanding U.S. Economic, Military, and Food Aid Commitments
Publication made available electronically January 13, 2012.
Abstract
This study addresses whether the absolute and relative impact of economic, political, and humanitarian variables that restrain or boost U.S. foreign assistance varies for different types of aid, from a strictly domestic decision-making framework. Using a SUR analysis for U.S. economic, military, and food aid obligations, the various aid budgets indeed behave differently with respect to the explanatory variables. GDP growth, the military budget, and Congressional orientation are more suitable predictors for economic assistance than for food or military assistance. Food aid is less likely to be correlated with the ideological orientation of the Congress and President, and is not significantly related with the military budget and GDP growth. It is, however, positively related with U.S. agricultural subsidies, and is the only variable with any significant (albeit weakly) relationship with U.S. FDI. Military assistance budgets prove to be more difficult to model in contrast to food and economic aid. Domestic poverty appears to enhance economic and food aid budgets, while restricting military assistance granted to strategic U.S. allies. In the aggregate, natural disasters, the ideological orientation of the President, and commercial interests embodied via trade-to-GDP do not appear to significantly influence any of the aid budgets.