Women as policy makers and donors: Female legislators and foreign aid

https://doi.org/10.1016/j.ejpoleco.2015.10.007Get rights and content

Highlights

  • We estimate the causal impact of women in national legislatures on foreign aid.

  • Higher female representation increases aid both in total and as a percentage of GDP.

  • Gender related aid reallocations occur predominately through bilateral aid.

  • Aid is also reallocated in favor of education and health-related projects.

  • Female representation yields the largest aid increases for less-developed countries.

Abstract

This paper investigates whether the gender composition of national legislatures in donor countries impacts the level, composition, and pattern of foreign aid. We provide evidence that the election of female legislators leads countries to increase aid both in total and as a percentage of GDP. Consistent with existing research examining domestic expenditures, we find that the empowerment of women in national legislatures is associated with a reallocation of aid flows in favor of education and health-related projects. These increased flows occur predominately through bilateral aid and reflect a redistribution of aid toward developing countries.

Introduction

A recent strand of economic research has documented that individual politicians can play a significant role in shaping country level outcomes.1 Many of these studies robustly associate individual characteristics such as educational status, ethnicity, and gender with particular policy outcomes.2 In the case of gender, the empowerment of women in governance has been associated with lower levels of corruption and higher levels of spending, both in total and on public goods in particular (Lott and Kenny, 1999, Abrams and Russell, 1999, Swamy et al., 2001, Dollar et al., 2001, Chattopadhyay and Duflo, 2004, Duflo and Topalova, 2004, Aidt and Dallal, 2008, Svaleryd, 2009, Bertocchi, 2011, Brollo and Troiano, 2012).3

This paper's primary contribution is to advance the causal analysis of impacts of improvements in women's political empowerment by examining how the election of female legislators impacts another sphere of government policy, foreign aid.4 Using donor-level panel data on aid flows for the period 1965–2011, we find a robust, positive association between the election of women to national legislatures and levels of foreign aid commitments, both in total and as a percentage of GDP. In addition to larger flows, the inclusion of greater shares of women in governance is associated with changes in the composition of aid flows by intended purpose, and the pattern of aid flows by recipient region. Specifically, we document higher levels of aid earmarked for health, education, and social capital projects as well as reallocations of aid in favor of less developed countries (LDCs). Our analysis suggests that it is the election of women, and not confounding factors, which directly influences these outcomes and we provide multiple pieces of evidence consistent with this hypothesis.

The principal obstacle to examining the causal effect of the election of women to political offices on aid flows is that electoral outcomes are nonrandom and potentially correlated with preferences of the electorate concerning both the level and composition of aid. In our benchmark specification, we limit potential sources of endogeneity by including both time and country fixed effects and controlling for an array of commonly studied time-variant determinants of aid. Our fixed effects strategy restricts identification to that arising from within donor country changes in the gender composition of national legislatures over time. This eliminates the possibility that the effects we observe could result from variation across donors in terms of their preferences for aid and for female legislators.

A key remaining concern for identification within this framework is the potential co-evolution of voter preferences for foreign aid and for the election of women to office. For instance, estimates of the impact of the empowerment of women on aid policy would be biased upwards if donor country electorates became more progressive over the sample period, deciding to elect more women to office and to support more foreign aid, which is a plausible scenario. We employ three novel strategies to address this possibility.

First, we attempt to isolate variation in aid flows that is specifically attributable to policymakers. We do this primarily by controlling for the level of private aid flows originating in the donor nation. Observable variation in private aid flows should capture the underlying preferences of the portion of the electorate concerned with how much foreign aid should be given, leaving the variation due to the election of female legislators. Our results are robust to this inclusion. We further supplement this with two alternative measures of electoral preferences and show that the observed relationship between female legislators and aid flows holds when we include a control for the ideological preferences of the median voter or for the economic ideology of the majority political party in office.

Second, we contrast aid provided bilaterally with aid sent through multilateral channels. The logic behind this comparison is that individual legislators should have relatively more influence over bilateral aid, since multilateral aid is subject to the collective decision making process of cross-country negotiation and is typically channeled through international organizations where it could be impacted both by the existence of formulaic contribution rules and by organizational priorities. Consistent with this logic, we find that the expansion of female representation within donor governments is primarily associated with changes in bilateral aid.

Third, we show that our results hold when we employ a set of time-varying instrumental variables for the election of women to national legislatures. In particular, we employ two different instrumental variables for female representation in government, one based on the adoption of gender quotas and the other on the accumulated electoral experience of women in donor nations. Both instrumental variable strategies produce results consistent with those of the fixed effects estimates.

The impacts we identify are both highly statistically significant and economically meaningful. A 10 percentage point increase in female representation is on average associated with a 30% increase in aid committed as a fraction of GDP per capita. For illustrative purposes, this would imply that if the mean donor in 2010 were to move from the current gender distribution in which 22% of seats are held by females, to a legislative composition in which one third of the seats were held by women, foreign aid would be expected to rise from 0.51% to 0.69% of GDP per capita.

The remainder of this paper is organized as follows. Section 2 examines related literature and provides motivation for the exercises in the paper. Section 3 describes the construction of our data. Section 4 details our empirical strategy and provides evidence that the gender composition of donor legislatures has a causal impact on the level of aid. Section 5 shows that the election of female legislators further affects the composition and pattern of foreign aid flows. Section 6 concludes.

Section snippets

The political economy of foreign aid

A range of donor and recipient country characteristics have been shown to influence foreign aid flows. Early research highlighted the importance of political economy factors, documenting that donors are more likely to give aid to former colonies, ideologically aligned nations, and allies in the Middle East (Alesina and Dollar, 2000). Subsequent work expanded this list dramatically, painting a complicated picture of the decision making process in aid assignment, and including determinants such

Data

We construct a panel dataset for 28 countries reporting positive foreign aid commitments during the period 1965–2011.6

The relationship between foreign aid and female leadership

This section examines the association between government resources allocated to foreign aid and the level of female representation in donor country legislatures. Fig. 2 reveals a strong positive association between foreign aid commitments as a percentage of GDP and the share of legislative seats held by women across OECD countries and years in our sample.

However, naïve estimates of the relationship between the share of women in national legislatures and foreign aid are likely to reflect

Purpose of aid

A robust finding in the literature examining the impact of expanded gender equality on policy making has been an increase in total spending and an increase in the share of expenditure devoted to public goods (Lott and Kenny, 1999, Abrams and Russell, 1999, Chattopadhyay and Duflo, 2004, Duflo and Topalova, 2004, Aidt and Dallal, 2008, Svaleryd, 2009, Bertocchi, 2011, Brollo and Troiano, 2012). The previous sections have demonstrated that increased female representation is associated with higher

Conclusion

Previous research suggests that males and females differ in their median preferences. These differences have been shown to alter both the scale and scope of domestic expenditure. In this paper, we examine the possibility that the empowerment of women in politics may similarly have an impact on foreign aid. We document a robust correlation between the share of female representatives in national legislatures and foreign aid, both in terms of the level of aid and in terms of aid as a percentage of

Acknowledgments

Jordan Naylor provided valuable research assistance. We would also like to thank Priti Kalsi, Fidan Ana Kurtulus, Edward Miguel, Eric Werker, and Xiaobo Zhang as well as seminar participants at the 2013 NEUDC meetings, the 2014 Public Choice meetings, and the 2014 AEA CSWEP meetings for helpful comments and discussions. Any errors are our own.

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