Foreign aid and the rule of law: Institutional diffusion versus legal reach

Abstract

This paper examines the role of bilateral foreign aid in supporting the diffusion and enactment of common models and institutions of the rule of law among aid‐recipient low‐ and middle‐income countries. We ask whether aid targeted at security‐sector reform and the rule of law influences the adoption of constitutional and legal reforms over time (institutional diffusion), and whether aid also supports more effective implementation of the rule of law, writ large (legal reach). We use event history and fixed‐effects panel regression models to examine a sample of 154 countries between 1995 and 2013 to answer these questions. Our findings suggest that aid does increase the likelihood of adopting several rule of law reforms, but its effect on increasing the depth or quality of rule of law over time within countries is much less substantial. These findings suggest that though aid may play a role in supporting the diffusion of models contributing to state isomorphism among countries, it is less effective at increasing the pervasiveness and quality of such model’s implementation. This discrepancy between the effectiveness of bilateral aid in promoting law on the books versus law in action in aid recipient countries calls into question the current approach to rule of law reforms.