Foreign aid funnel? A placebo-based assessment of aid flows to non-permanent United Nations Security Council members

Abstract

A number of recent studies have found that temporary members of the United Nations Security Council (UNSC) experience increased foreign aid inflows. We use a constrained permutations approach to replicate analyses found in Vreeland and Dreher (2014). Permuting the timing of country membership on the Security Council, we create placebo UNSC membership histories which plausibly could have been observed. We use these placebos to construct a reference distribution for the null hypothesis that there is no relationship between UNSC membership and foreign aid flows and then observe whether or not the observed test statistic for the correlation found in the real-world data is in the tails of this distribution. In other contexts, such empirically based hypothesis tests have revealed a high false-positive rate for traditional, model-based time-series cross-sectional inference. Given the controversial nature of studies about increased aid flows as secondary benefits of UNSC membership, it is valuable to subject such analyses to additional scrutiny. Our reanalysis largely validates existing findings.