Given the further expansion of democracy across the globe and the growing pressure for aid e ectiveness since the mid-1990s, general budget support to recipient countries has become a popular instrument among donors of official development assistance (ODA). Aside from institutional prerequisites for this type of aid, donors have explicitly introduced political conditions such as respect for human rights and democratic policy-making. Hence, countries undergoing steps towards democratization should be more amenable to general budget support, at least when the initial period of political instability has waned. The paper conceives democratization as a two-phase process that consists of early transition and democratic consolidation. Using a sample of 143 recipients in the period from 1995 to 2009, it assesses the evolution of budget aid in the
event of democratization through various approaches. It turns out that previous non-recipients of budget aid are signi cantly more likely to be selected for general budget support in the year after a polity improvement (by about 24 percentage points). Conversely, established recipients enjoy short-term rewards for polity improvements already in the immediate run-up to a polity reform (by about 90 percent). With respect to the long-term eff ect of stable democratization, results are always insigni cant.
There tends to be considerable heterogeneity in the responses of budget aid after democratization that needs to be explored further.
