Foreign Interests: Immigration and the Political Economy of Foreign Aid

Foreign Interests: Immigration and the Political Economy of Foreign Aid Sarah Blodgett Bermeo (Duke University) and David Leblang (University of Virginia) Meeting of the International Political Economy Society College Station, TX November 2009

Aid and Immigration More aid flows to recipients with greater migrant stock in donor Causal Mechanisms: Aid as immigration policy Lobbying by migrant groups in donor Could serve as complements

Building on Existing Literature Foreign aid as tool in foreign policy (alliances, trade, colonial ties) (e.g. Maizels & Nissanke, 1984; Alesina & Dollar, 2000; Bueno de Mesquita & Smith, 2007 & 2009) Domestic determinants of aid allocation: interest groups (e.g. Fleck & Kilby, 2001; Milner & Tingley, 2010) Migrant influence on host-country political outcomes (e.g. Shain, 1994; Levitt & de la Dehese, 2003; Jones-Correa, 2001; Itzigsohn 2000)

Data Dependent variable: log of aid flows from donor to recipient 22 donor countries, dyadic data for 1992-2005 Independent variables Migrant stock Donor immigration policy preference Migrant voting rights in donor Controls: income, population, bilateral trade, distance, former colonial status, US military assistance, democracy, civil war, refugees in recipient, natural disaster, time trend.

Hypotheses H1: When a donor country claims that decreasing immigration is a policy goal, the link between immigration and aid flows will be stronger than when a donor is seeking to maintain or increase the number of immigrants. H2: When a donor country grants voting rights to migrants, the link between immigration and aid flows will be stronger than when a donor country does not allow migrants this form of direct access to the political process H3: When a donor country is actively seeking to decrease immigration, and it grants voting rights to migrants in the country, then the impact of migrant stock on aid flows will be higher than if only one of these conditions is true.

Impact of Immigration, Migrant Voting Rights, and Immigration Policy on Aid Flows Model 1 Model 2 Model 3 Model 4 Migrant Stock 0.644*** 0.615*** 0.587*** 0.535*** Policy -0.613*** -1.040*** Policy*Stock 0.061** 0.066*** Voting Rights -0.420-0.926*** Vote*Stock 0.103** 0.102** Policy*Vote*Stock 0.161*** Observations 25218 25218 25218 25218 Dependent Variable is log(aid); 1992-2005. Dyadic Random Effects Tobit estimation. *Significant at the 10 percent level. **Significant at the 5 percent level. ***Significant at the 1 percent level. Additional controls: income, population, bilateral trade, distance, former colonial status, US military assistance, democracy, civil war, refugees in recipient, natural disaster, time trend.

Extensions H4: While migrant stock is likely associated with an increase in aid flows, increasing the number of refugees from a recipient living in a donor is associated with a decrease in aid flows. H5: When faced with a banking crisis in the donor country, the impact of migrant stock on aid flows increases.

Extension Results Model 5 Model 6 Model 7 Migrant Stock 0.526*** 0.660*** 0.603*** (0.03) (0.03) (0.03) Refugees in Donor -0.041* (0.02) Bank Crisis -0.984*** -2.552*** (0.11) (0.20) Crisis*Stock 0.307*** (0.03) Dependent Variable is log(aid); 1992-2005. Dyadic Random Effects Tobit estimation. *Significant at the 10 percent level. **Significant at the 5 percent level. ***Significant at the 1 percent level. Additional controls: income, population, bilateral trade, distance, former colonial status, US military assistance, democracy, civil war, refugees in recipient, natural disaster, time trend.

Conclusions Donors use aid as a tool to implement immigration policy Migrants (but not refugees) lobby for increased aid to their country of origin These two effects are complementary: donors work with diaspora communities to promote development in countries of origin in an attempt to decrease unwanted immigration

Impact of Immigration, Migrant Voting Rights, and Immigration Policy on Aid Flows Model 1 Model 2 Model 3 Model 4 Immigrant Stock 0.644*** 0.615*** 0.587*** 0.535*** Policy -0.613*** -1.040*** Policy*Stock 0.061** 0.066*** Voting Rights -0.420-0.926*** Vote*Stock 0.103** 0.102** Policy*Vote*Stock 0.161*** Income -2.360*** -2.373*** -2.359*** -2.370*** Population 1.066*** 1.059*** 1.076*** 1.063*** Trade 0.211*** 0.213*** 0.209*** 0.212*** Distance -1.562*** -1.578*** -1.596*** -1.575*** Colony 4.130*** 4.096*** 4.415*** 4.368*** US military 0.060*** 0.061*** 0.060*** 0.060*** Democracy 0.115** 0.114** 0.114** 0.120*** Civil War -0.483*** -0.487*** -0.482*** -0.484*** Refugees in Recipient 0.094*** 0.094*** 0.093*** 0.094*** Disaster 0.003 0.003 0.003 0.003 Year 0.137*** 0.132*** 0.135*** 0.127*** Constant -258.833*** -248.105*** -253.223*** -236.361*** Observations 25218 25218 25218 25218 Dependent Variable is log(aid); 1992-2005. Dyadic Random Effects Tobit estimation. *Significant at the 10 percent level. **Significant at the 5 percent level. ***Significant at the 1 percent level.