Foreign aid can help stem the decline of democracy, if used in the right way

Democracy is having a hard time. In India, once the world’s largest democracy, the pandemic has hastened the country’s slide toward authoritarianism. In the US, the Trump administration’s attacks on democratic norms reached new lows when the former president, backed by the Republican party, refused to accept his loss in the November 2020 elections.

In fact studies show democratic norms are in decline worldwide. Freedom House recently argued that democracy has been declining since 2005, while the latest report from the Varieties of Democracy Institute reveals that 68% the world’s population now live in autocracies.

More countries have slid down the democracy ladder in the last decade than have moved up. States such as Hungary, Turkey and Venezuela that enjoyed a period of growing democratic norms now see a dramatic freefall in political freedoms. Several countries in south Asia, sub-Saharan Africa and the Middle East are moving towards authoritarianism, while Brazil, Mexico and South Africa have recently experienced deterioration of democratic institutions.

This entails not just loss of civil liberties and political rights for those in “backsliding” countries, but also a major shift in the international liberal order, with potentially far-reaching consequences for economic progress, prosperity and peace worldwide.

Champions and sceptics of foreign aid

These trends alone could make the case for investing in promoting democracy, through democracy aid: foreign aid specifically to support core democratic processes and institutions including elections, political parties, civil society groups, the media and human rights.

The use of diplomatic carrots and sticks also plays a role. For example, in 2019 Sweden launched its Drive for Democracy, which made democracy central to its foreign policy including security, development and trade. Germany’s foreign minister, Heiko Maas, recently advocated for a “Marshall Plan for democracy”, while US President Joe Biden has called for a Global Democracy Summit.

But we should not paint too rosy a picture of democracy aid. Since its origins in the US Marshall Plan of 1948, foreign aid has been closely linked to the strategic political considerations and interests of the donor country. The implications and potential impact this has on local needs deserves careful attention.

In fact, a number of researchers have long claimed that foreign aid is actually bad for democracy. US economist William Easterly argues that foreign aid empowers dictators. Other research lays out the ways in which aid can weaken local accountability, governance processes and state institutions.

Equally, there is research that challenges these positions, showing how effective democracy aid specifically can be. For instance, support that facilitated Mozambique’s transition from war to peace and multiparty politics in the early 1990s, or symbolic and financial assistance in support of multiple free and fair elections in Benin.

New insight into aid’s effectiveness

Our new study built on existing evidence to create a new analysis of the impact of democracy aid in 148 countries between 1995–2018. Our approach married quantitative analysis to the large amount of research on democratisation to present a framework that addresses how aid should, in theory, support democracy.

We had three main findings: first, aid specifically aimed at improving democratic infrastructure and institutions has a modest but positive impact overall. This impact is clearer than for the impact of development aid generally, but there is no evidence that either has a negative impact on democracy on average.

Second, aid aimed at supporting civil society, media freedom, and human rights seems to be the most effective in terms of its impact on democracy. Third, democracy aid is more effective at supporting ongoing democratisation than at halting democratic backsliding.

In short, democracy aid works, but it’s not magic. The sums invested are usually pretty modest in comparison to the funds available to domestic opponents of democracy, such as in electoral autocracies like Russia, Nicaragua and Turkey. And democratisation of a country tends to be a long, hard road – demonstrating that something has a specific impact along the way is a challenge.

A three-point plan for supporting democracies

The international community needs to staunch democracy’s global decline, and our analysis identifies some clear recommendations.

First, maintain and consider increasing democracy aid. It surely will not work everywhere, but the evidence shows it can be effective. At the same time, domestic expectations need to be managed.

Second, recognise that prematurely cutting democracy aid can increase a country’s risk of democratic backsliding into authoritarianism, at which point it is harder for aid to help. This means we should reconsider the role of aid in middle-income countries. It is many of these countries in Latin America, eastern and central Europe that have seen sharp cuts in development and democracy assistance over the past decades, where there is now a pronounced slip into authoritarianism.

Third, direct aid toward the core elements of democracy: human rights, democratic participation and civil society, and a free media. A recent analysis, for example, reveals 70% of the world lives in countries with limited media freedom. Assistance to other areas can support democracy as well, but this is where the best democratic returns on investment can be made.

Which nations among the international community can we expect to act? Embroiled in its own domestic politics, the role of the US in promoting democracy remains in question, although the new Biden administration has signalled a more active position to push back the advance of authoritarianism. Against this backdrop, support for democracy from the heart of Europe is now more important than ever.