Masaki, Takaaki. “The Political Economy of Aid Allocation in Africa: Evidence from Zambia.” Forthcoming at African Studies Review.
Does electoral politics influence the allocation of foreign aid within aid-recipient countries? Despite the abundance of studies on the determinants of aid allocation, the existing literature offers little leverage on this question, largely due to the paucity of data on the locations of donor-funded projects. In this essay, I utilize newly available data on the geographical distribution of development projects in Zambia to test whether electoral incentives shape aid allocation at the sub-national level. Challenging a widespread belief in African politics that autocrats reward their own core supporters with more resources, I argue and find strong evidence that when they have limited knowledge to specifically target distributive goods to swing voters, political elites allocate more donor-funded projects to districts where opposition to the ruling party (or incumbent president) is greater. In contrast, I find that fewer projects are allocated to districts where the ruling party (or incumbent president) enjoys greater popularity; and districts where a majority of voters share the ethnicity of the incumbent president.
Masaki, Takaaki. “Lagged Explanatory Variables and the Estimation of Causal Effects.” (with Marc F. Bellemare and Thomas B. Pepinsky). 2017. Journal of Politics 79(3).
Lagged explanatory variables are commonly used in political science in response to endogeneity concerns in observational data. There exist surprisingly few formal analyses or theoretical results, however, that establish whether lagged explanatory variables are effective in surmounting endogeneity concerns and, if so, under what conditions. We show that lagging explanatory variables as a response to endogeneity moves the channel through which endogeneity biases parameter estimates, supplementing a “selection on observables” assumption with an equally untestable “no dynamics among unobservables” assumption. We build our argument intuitively using directed acyclic graphs and then provide analytical results on the bias of lag identification in a simple linear regression framework. We then use Monte Carlo simulations to show how, even under favorable conditions, lag identification leads to incorrect inferences. We conclude by specifying the conditions under which lagged explanatory variables are appropriate responses to endogeneity concerns.
Masaki, Takaaki. 2016. “Don’t Jettison the General Error Correction Model Just Yet: A Practical Guide to Avoiding Spurious Regression with the GECM” (with Peter Enns, Nathan Kelly and Patrick Wohlfarth). Research and Politics 3(2): 1-13.
In a recent issue of Political Analysis, Grant and Lebo authored two articles that forcefully argue against the use of the general error correction model (GECM) in nearly all time series applications of political data. We reconsider Grant and Lebo’s simulation results based on five common time series data scenarios. We show that Grant and Lebo’s simulations (as well as our own additional simulations) suggest the GECM performs quite well across these five data scenarios common in political science. The evidence shows that the problems Grant and Lebo highlight are almost exclusively the result of either incorrect applications of the GECM or the incorrect interpretation of results. Based on the prevailing evidence, we contend the GECM will often be a suitable model choice if implemented properly, and we offer practical advice on its use in applied settings.
Masaki, Takaaki. 2016. “Coups d’État and Foreign Aid.” World Development 79: 51-68.
Do international donors penalize coups d’etat by reducing aid? How significant is the impact of coups on aid flows? These questions have become increasingly important over the past three decades as the concept of political conditionality has gradually permeated the donor community, pushing for stringent actions to be taken against democratic transgressions like coups. I argue that the end of the Cold War was a historical juncture that reshaped the international donor community’s aid-based sanctioning policy towards coups. However, I also posit that the U.S. does not comply with the growing international norm of political conditionality due to its geopolitical interests trumping its rhetorical commitment to penalizing coups. This paper exploits exogenous variation in the success and failure of coups to estimate the causal effect of coup-led regime change on aid flows. My empirical evidence supports the preposition that since the end of the Cold War, the donor community on average has reduced the amounts of aid disbursements in response to coups d’etat although the U.S. has been inconsistent in applying aid sanctions against coups both during the Cold War and post-Cold War periods. While demonstrating a genuine shift in the international community’s collective responses towards coups since the end of the Cold War, my findings also attest to potential heterogeneity across major bilateral donors, which may undermine the overall effectiveness of aid and political conditionality.
Masaki, Takaaki and Nicolas van de Walle. 2015. “The Impact of Democracy on Economic Growth in Sub-Saharan Africa, 1982-2012.” In The Oxford Handbook of Africa and Economics (Oxford University Press).
Does democracy promote economic growth? There is still an ongoing debate over the economic implications of democracy, and this question has gained critical importance particularly in the African context, where a wave of democratization in the early 1990s coincided with the start of a new era of rapid economic growth. In this paper, we revisit this important topic and argue that the existing literature is inadequate in distinguishing the effects of regime transitions and democratic consolidation on economic growth. Through the analysis of the latest economic and political data, which include up to 43 countries in sub-Saharan Africa for the period of 1982- 2012, we find strong evidence that democracy is positively associated with economic growth, and that this `democratic advantage’ is more pronounced for those African countries that have remained democratic for longer periods of time. Our findings call for more nuanced studies that carefully distinguish potentially divergent effects of regime transitions and democratic consolidation on economic growth.
“The Impact of Intergovernmental Transfers on Local Revenue Generation: Evidence from Tanzania.” UNU-WIDER Working Paper 2016/113. United Nations University.
Do intergovernmental transfers reduce revenues collected by local government authorities (LGAs)? There is already a well-established body of literature in public finance, which argues that intergovernmental grants “crowd out” local revenues. Most existing studies, however, explore the fiscal implications of intergovernmental transfers in high-income countries where sound fiscal systems are taken for granted. In this paper, I explore the impact of intergovernmental transfers on local revenues in sub-Saharan Africa, a region where local fiscal capacity is limited and endogenously determined by financial support from international donors and the central government. I argue that in places where the existing capacity of LGAs to administer tax collection is weak and political costs of enforcing taxation are low—which are perennial features of many rural districts in Africa—intergovernmental transfers facilitate local revenue generation instead of undermining it. Analyzing newly available quarterly fiscal data on local revenues in Tanzania, I show that intergovernmental grants improve the mobilization of local revenues, and also that the positive effect of fiscal transfers on local revenue collection is particularly pronounced in rural districts.
“Aid Management, Trust, and Development Policy Influence: New Evidence from a Survey of Public Sector Officials in Low- and Middle-Income Countries.” (With Brad Parks, Jorg Faust, and Stefan Leiderer). Under Review
Bilateral and multilateral development agencies spend a great deal of time, money, and effort trying to shape the reform priorities and processes of their counterpart countries. However, the means by which development agencies can achieve these ends are poorly understood. This article draws upon the first-hand experiences and observations of more than 1,000 public sector officials from 70 low- and middle-income countries to better understand which external sources of reform advice and assistance are most and least useful to public sector decision-makers—and why. We find that donors more effectively shape reform priorities when they choose to deliver their funding through the public financial management systems of counterpart countries, rather than using channels of aid delivery—in particular, technical assistance programs—that bypass host governments and signal a lack of trust in the motivations and capabilities of the local authorities. This finding holds true even after controlling for institutional quality, or the trustworthiness of public sector institutions, in aid-receiving countries. As such, our results call attention to the fact that development agencies can amplify their policy influence by entrusting their counterpart governments with aid management responsibilities.
“When Do Performance Assessments Influence Policy Behavior? Micro-Evidence from the 2014 Reform Efforts Survey” (With Brad Parks)
Scholars and policymakers generally agree that global performance assessments (GPAs) can influence the policy priorities and actions of public sector decisionmakers. However, there is little systematic evidence about the conditions under which GPAs—and performance assessments, more generally—instigate changes in state behavior. There is also a lack of understanding about the causal mechanisms through which GPAs and other types of performance assessments translate into policy changes. We seek to close this evidence gap by leveraging a survey of 1,788 host government officials that provides comparative data on the agenda-setting influence and reform design influence of nearly 100 government performance assessments. We argue that GPAs function as signaling devices that provide credibility assurances to foreign investors and donors. However, the net benefits of credibility signaling to these external actors must be sufficiently large and certain for policymakers in assessed countries to recalibrate their domestic reform priorities and efforts. We posit that this condition is met when the supplier of a cross-country performance assessment allows assessed governments to participate in the assessment process. Using a multilevel linear model to account for the hierarchical structure of our survey data, we find evidence that performance assessments yield greater policy influence when they make an explicit comparison of government performance across countries and allow assessed governments to participate in the assessment process. This finding is robust to a variety of tests, including country-fixed or respondent-fixed effects.