Foreign Aid and Judicial Autonomy

Foreign aid donors embrace judicial autonomy as an important component of advancing democracy and promoting investment abroad. They attempt to augment judicial autonomy through technical assistance, which involves donor-sent experts who assist in the design and supervision of judiciary-strengthening projects. We argue that recipient governments recognize the importance of judiciary reform for improving the investment climate at home. Because judicial autonomy carries political costs for the incumbent government, however, it is difficult for incumbents to credibly signal commitment to judicial reform. Aid to promote judicial autonomy and democracy serves as one commitment mechanism. We thus expect democracy aid to increase judicial autonomy. During contested election periods, however, when judicial autonomy can directly influence the outcome of elections, incumbents have an incentive to undermine aid efforts to promote judicial autonomy. We employ an instrumental variable model to test this argument and find robust evidence in a global sample of aid-eligible countries.