Ethically, the foremost reason for giving aid is to help people in recipient countries. If aid does this alone I think we have good enough reason to give aid. Still it would be interesting to know if there were any benefits to donors of giving aid. In particular it would be interesting to know if donors received some sort of popularity dividend — where the fact they gave aid increased positive perceptions of them in recipient countries.
Like all the big questions in aid this is an empirical one. Like all the big questions on aid it is also a hard one to answer empirically. In particular, correlations between aid levels and opinion about aid are limited in what they can tell us because it’s just as likely opinions about donor countries influence how much aid a recipient country gets as it is that the amount of aid a country receives from a donor influences how popular the donor is.
In a recently published paper in the Quarterly Journal of Political Science two co-authors and I look use instrumental variables to try and overcome this methodological challenge and find out whether PEPFAR, the U.S aid fund for tackling HIV, has increased U.S popularity. The abstract is below; the paper is here; a blog post based on the paper is here (and here ungated).
Does foreign aid extended by one country improve that country’s image among populations of recipient countries? Using a multinational survey, we show that a United States aid program targeted to address HIV and AIDS substantially improves perceptions of the U.S. Our identification strategy for causal inference is to use instrumental variables measuring the magnitude of the HIV/AIDS problem in aid recipient countries. Our finding implies that in addition to its potential humanitarian benefits, foreign aid that is targeted, sustained, effective, and visible can serve as an important strategic goal for those countries that give it: fostering positive perceptions among foreign publics. By doing good, a country can do well.