Chapter 1 develops a two-period general equilibrium trade-theoretic model to examine if foreign aid discourages the recipient countries from pursuing trade liberalization. In the model, foreign aid is given to the recipient in period two and its amount is negatively related to the period-one real income. The recipient optimally chooses a tariff on imports. It can also choose domestic investment endogenously in period one, and this choice has an important bearing on our main result. We consider two variants of the model depending upon whether the recipient can or cannot have access to international borrowing. In the case without international borrowing, when domestic investment is exogenous, optimal tariff is zero. In contrast, when domestic investment is endogenous, optimal tariff is positive. This positive optimal tariff is induced by the link of aid negatively to the period-one real income. In the case with international borrowing, even though domestic investment is exogenous, optimal tariff is positive. But the reason for the positive tariff is its beneficial effect on an improvement in the terms-of-trade of international borrowing. When, in addition, domestic investment is endogenous, the tying of aid increases positive optimal tariffs further. Chapter 2 develops a microeconomic model of health policies and the optimal allocation of health aid in a poor recipient country. In the model, each poor household in the country chooses the optimal number of sick children taken to hospitals to maximize its lifetime utility. There are three policy options for policymakers to improve public health: raising the quality of health care, providing more preventive care and reducing the cost of health care. We examine how three policy options influence the optimal number of sick children who are medically treated. Also, the country's health authority allocates health aid for three policy options to support poor households' lifetime utility maximization. We find that more health aid should be allocated for cost reduction in health care so as to help poor households maximize their lifetime utility. Chapter 3 primarily examines the hypothesis that there is heterogeneity in health aid, that is, different types of health aid work differently for health outcomes in aid-recipient countries. In order to test our hypothesis, we first disaggregate health aid per capita data into three policy options: health aid per capita for improving the quality of health care, health aid per capita for providing preventive care and health aid per capita for reducing the cost of health care. Then, we empirically examine the effects of disaggregated health aid on three different health indicators: child mortality, life expectancy and death rate. Using a panel data set of 119 aid-recipient countries from 1975 and 2010, we find supporting evidence for the hypothesis of heterogeneity in health aid. We find no empirical evidence of the beneficial effects of health aid on reducing child mortality. In contrast, we find that an improvement in life expectancy and a reduction in death rate are driven mostly by health aid for reducing the cost of health care. We also find that there is heterogeneity in the allocation of health aid. Health aid for preventive care and the cost reduction of health care is allocated by the needs of the recipients. However, more health aid for the quality of health care flows to countries with better health status.

This thesis investigates the effect of US development aid on US exports to 134 recipient countries over the time period 1993 to 2015 with an application of the gravity model of international trade. Estimates of one-way panel dataset, specified by a dummy approach and estimated with OLS and PPML, suggest that for every aid dollar spent by the United States, US exports significantly increase by 1.59 US dollar. By lagging the aid variable for several years after disbursement, we find a declining effect of US aid on US exports, which indicates that tied aid is an important channel of the effect's magnitude. The effect does not vary systematically across income groups. Yet for geographical regions with a higher US export share, the impact of US aid on US exports is significantly larger suggesting that existing trading relations contribute to a larger effect of aid on donor's exports. The evidence shows that US aid increases US exports and reinforces economic relations with recipient countries and, thus, can be regarded as an important motive for the donor to provide development aid.

Magister Legum - LLM / This paper seeks to examine the relationship between foreign aid and corruption in Zambia. Drawing from the analysis of the two, it then explores whether the existing legal instruments are adequate and effective to combat corruption in the aid context.

The goal of this dissertation is to investigate how foreign aid can be used as means to induce a recipient country to engage in trade policy reforms. For this purpose, we develop a two-good and two-country model where the donor commits to give foreign aid in the first period and disburses in the second period. The donor`s commitment for foreign aid is based on an equation where the volume of foreign aid is a function of the recipient tariff rate. We analyze the donor and the recipient actions in two types of game: a passive donor game and an active donor game. The active donor game has two sub-games: a simultaneous game and a sequential game. This dissertation is composed of two theoretical chapters and one empirical chapter. The two theoretical chapters use a similar theoretical model but they differ on the assumptions we make the recipient country economy. In the first chapter, we assume that the recipient country government is lobbied by interest groups that own its stock of capital. We find evidence that the donor can, under certain conditions, influence the recipient`s trade policy even when interest groups lobby the government. In the second chapter, we assume that the recipient country has borrowing constraints because it faces a quantitative restriction on its borrowing set by the international credit markets. Our results suggest that the recipient engages in trade liberalization depending on the type of games that the recipient and the donor participate. In the third chapter, we ask two questions: First, is the allocation of aid based on trade policy reforms; particularly, trade liberalization? Second, does foreign aid spur economic growth when we take into account the allocation of foreign aid based on trade liberalization? For this purpose, we use a panel data set of 137 countries from 1995 to 2009 which we estimate using the system GMM estimator. We find evidence of a negative relationship between trade liberalization and foreign aid. Our results suggest that foreign aid spurs economic growth.

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The United States has viewed promoting democracy as a longstanding tenet of its foreign policy. This has manifested itself in many ways, including in its foreign aid projects. This thesis sought to better understand what the U.S. did in promoting democracy through its foreign aid. Specifically, it what the U.S. did with its democracy and governance aid to Kenya from 1993 through 2008. It reviewed the scholarly literature to identify recommended best practices and evaluate the evidence supporting the effectiveness of aid. Having determined what projects were better to support than others, I reviewed documents available from the United States Agency for International Development (USAID) and assessed what types of projects the U.S. supported. This thesis also reviewed other project data available from USAID to ensure a full picture of U.S. democracy and governance aid to Kenya. Additionally, this thesis reviewed additional outside assessments of Kenya to provide full context for the U.S. aid efforts there. My research identified three clear trends in U.S. aid to Kenya. First, democracy promotion was a tenet in many USAID projects even beyond those specifically intended to promote democracy. Second, USAID's projects largely conformed to the best practices of the literature. Third, there was a significant increase in aid to Kenya starting in 2001 that largely predated the terrorist attacks on September 11, 2001. This provides a basis for further research into the effectiveness of U.S. democracy aid to Kenya. / Master of Arts / This thesis examined how the United States Agency for International Development (USAID) promoted democracy in Kenya from 1993 through 2008. The promotion of democracy has been a standing goal of U.S. foreign policy for decades, this thesis reviewed the history of U.S. democracy promotion, discussed the theories underlying U.S. democracy promotion efforts and identified best practices from academic and other literature. Having determined best practices, this thesis then examined U.S. democracy promotion efforts in Kenya from 1993 through 2008 to assess what the U.S. did and whether it comported with the recommendations from the literature. This research identified three trends in U.S. aid to Kenya. Democracy promotion was a tenet in many USAID projects even beyond those specifically intended to promote democracy; USAID's projects largely conformed to the best practices of the literature; and there was a significant increase in aid to Kenya starting in 2001 that largely predated the terrorist attacks on September 11, 2001.This research provides a basis to assess USAID democracy promotion efforts in other times and countries and will enable research into the effectiveness of U.S. democracy promotion efforts in Kenya.

In the contemporary international system, non-state actors pose an acute threat to the interests of states. Transnational terrorism is a particularly notable example of the security threats that non-state actors pose. While the literature on international agreements has focused on state-level compliance, much of international law concerns the behavior of non-state entities such as terrorist groups, transnational crime organizations, corporations, and individuals. This study considers whether the international counter-terrorism regime developed over the past five decades has been effective at reducing transnational terrorism and consider the implications for the study of other instruments of international law which regard non-state actor behavior. Because these agreements establish clear benchmarks, they provide observable outcomes for donors that may want to give foreign aid, but are uncertain about whether aid recipients will use aid for its intended purpose. Agreements allow donors to condition aid allocation on benchmarks set by treaties, rather than observed levels of non-state behavior alone, increasing donor-recipient trust and capacity building aid flows. I find that countries ratifying counter-terrorism agreements see a significant increase in foreign aid receipts. I then assess the effectiveness of eight UN counter-terrorism conventions individually, using terrorism data germane to the type of terrorist activity the specific agreement attempts to curtail. I find support for the hypothesis that counter-terrorism agreements reduce transnational terrorism for five of the agreements in issue areas of terrorist bombing, kidnapping, hostage-taking, and financing. I conclude by discussing how the variation in effectiveness of counter-terrorism agreements found may help shed light on the design of effective international agreements when the locus of compliance is non-state actors and treaty design more generally. / text