Foreign Aid, Government Spending, and Contributions toward Public Goods: Experimental Evidence from the Philippines
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Foreign Aid, Government Spending, and Contributions toward Public Goods: Experimental Evidence from the Philippines Gabriella R. Montinola 1 & Timothy W. Taylor 2 & Gerardo L. Largoza 3 # Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract Scholars have long argued that government spending crowds out contributions to public goods through taxes or through nonprofit organizations. In developing countries where public goods are often financed by foreign donors, foreign aid may have a similar inhibiting effect. Aid, it is argued, leads citizens to question the legitimacy of their state and reduces their willingness to comply with taxes. Recent studies show that externally funded non-government organizations and programs fail to catalyze collective action as expected. Bringing together these strands of research, we examine whether information on government and/or foreign financing crowds out willingness to contribute to public goods, and explore mechanisms linking the information and individuals’ responses. Using a survey experiment on elite university students in the Philippines, we find that both government spending and foreign aid reduce willingness to contribute to the public good, albeit not uniformly across different modes of engagement. Moreover, we find that individuals are likely to reduce their contributions, not because they view government and foreign financing as perfect substitutes for their contributions, as the classic crowding out thesis suggests, but because they have little confidence that existing resources will be properly disbursed. Our results point to a general lack of confidence in the state as well as other intermediary institutions involved in the implementation of government and aid programs. Keywords Crowding-out . Foreign aid . Public goods . Civic engagement . Experiments
* Gabriella R. Montinola [email protected] Timothy W. Taylor [email protected] Gerardo L. Largoza [email protected] Extended author information available on the last page of the article
Studies in Comparative International Development
Introduction Voluntary contributions to public goods have always been an important feature of social life, even with the rise of modern welfare states. Interest in the issue, however, has increased significantly over the last couple decades, spurred largely by the international development community and scholars of governance and development. Citizen engagement, it is argued, can make a difference, and indeed is necessary, for a host of development outcomes, including the provision of public services, good governance, and democracy (World Bank 2016). Based on this argument, foreign donors have been financing citizen engagement initiatives aimed in part at promoting contributions to public goods. How might foreign aid affect citizens’ contributions to public goods? The editors of this special issue (Blair and Winters, this volume) outline two families of mechanisms linking aid and citizens’ interactions with the state. The first focuses on the
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