State Capacity and the Provision of EU Democracy Aid

Democracy aid constitutes a significant component of EU development cooperation. As a share of total aid, it has steadily increased since the mid-1990s. Most of the EU democracy aid is allocated to states in close proximity to the EU which vary in their capacity to administer funds. We assume that this variety in state capacity impacts aid effectiveness. In this article, we explore the important nexus between aid effects and domestic state capacity and investigate how democracy aid provided to countries with varying levels of state capacity affects their level of democracy. We argue that depending on existing state capacity, the effects of aid may vary. We build on original panel data covering EU democracy aid allocation (2000-2023) to 23 countries in the EU’s neighborhood, including Eastern Europe, the MENA region, and the Western Balkans. We test our hypothesis by conducting a multivariate regression analysis. We show that aid allocated to countries with existing and functioning state institutions is more likely to have a positive effect on the level of democracy compared to aid allocated to countries with weaker state capacity. In doing so, we breach the gap between democratization and public administration literatures and show that