Bypass Aid and Unrest in Autocracies

Scholars and policymakers argue that donors can pursue development goals without bolstering autocratic regimes by bypassing recipient governments and channeling aid through intergovernmental and nongovernmental organizations. However, I argue that bypass aid can subsidize government transfers to citizens and thus reduce popular resistance to autocrats. By providing goods and services that benefit individuals under the status quo, bypass aid may affect citizens’ willingness to challenge an incumbent regime. In particular, aid may lower the concessions that an autocrat needs to make to, on the one hand, deter unrest or, on the other hand, increase the opportunity costs of political resistance. As such, aid may have political effects regardless of whether or not recipient governments have managerial control over aid. Statistical tests show that bypass aid is associated with less frequent domestic unrest in autocracies. To address potential endogeneity, I use an original data set that records instances in which governments are suspected of, or actually caught, misusing aid to proxy for the distribution of aid across channels.