U.S. Official Visits and Foreign Aid

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Abstract This paper examines the effect of the visits by U.S. officials to a country on foreign aid. To achieve our objective, we compile variables that indicate the official visits of U.S. Presidents and Secretaries of States from 1960-2019 from the historical archives of the U.S. State Department. We examine the effect of these variables on U.S. aid and total official development assistance flows to the country. To deal with potential endogeneity, we use the Endogenous Treatment Model. The estimation results show that the visits of U.S. officials have a statistically significant positive effect on U.S. aid only when the visit is part of a multilateral meeting, while the effect of the visits of U.S. Presidents have a statistically significant positive effect on total official development assistance only when the visit is in the form of a bilateral meeting. A potential interpretation is that U.S. aid is provided as part of a multilateral effort intended to induce other countries to provide assistance to the country as well. However, donors could take the flow of U.S. aid as a signal that the country will be able to secure aid from the U.S. and will be less in need of their assistance. On the other hand, a bilateral visit by an American President can signal to other donors the confidence the United States have in this country, the close ties it has with this country, or the stakes it has in preserving stable economic conditions in this country. This could induce the donors to aid the country by offering official development assistance. JEL Code: D72, F54, F35, H11, O19

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