The Roles of Aid in Politics
Putting China in Perspective
An Annotated Bibliography
Ward Warmerdam with Arjan de Haan
February 2011
Abstract
International development cooperation is, one again, under pressure. Many authors have argued ‘aid’
has failed, and global politics are rapidly changing the contours of international development. This
publication draws together observations and conclusions from the realms of development studies,
political science, international relations and economics written over the last sixty years, concerning the
roles of foreign aid in politics. The bibliography charts recurring and emerging trends, enhancing the
understanding of how current global circumstances, and domestic political forces, can and will shape the
future political roles of foreign aid. Additionally, this should provide a comprehensive understanding of
the patterns of foreign aid policies emerging donors – particularly China – could take, and it highlights
possible methods and theoretical lenses through which emerging economies’ foreign relations with
other developing countries could be analyzed.
Introduction
The perceived failure of aid promulgated in the popular media, the expected failure of many aid
recipient nations to attain their Millennium Development Goals, the apparent failure of the military and
development missions in Afghanistan and Iraq to quell terrorism and bring about socio-economic
development, and the deepening global recession tightening national budgets have caused many
governments to re-evaluate their development assistance programs and priorities. Political parties
leaning more to the political right are, in many countries, demanding a reduction in foreign aid
expenditures in light of their own nation’s struggling economies and welfare systems, with some, in
contradiction to OECD best practices, advocating for development assistance programs that also benefit
the donor nation’s economies. The fiscal questioning of foreign aid has further led to the questioning of
aid’s political roles and its value within and benefits to national governmental frameworks, calling for it
to justify its continued existence and its budgetary demands.
Furthermore, the increasingly prominent role of emerging donors such as China and India has
provided an altered international political situation in the context of which traditional donor
governments must re-evaluate their foreign policy and foreign aid strategies (Broadman 2007). The (re)emergence of such donors could provide new opportunities for cooperation with traditional donors and
improved insights into processes and methods through which to stimulate socio-economic development,
in light of South-South cooperation (e.g. Bräutigam 2009; de Haan 2009, 2010; Dollar 2008; Gill et al
2007; IOSCPRC 2005; Ravallion 2008; Tjønneland et 2006). Cooperation could also reduce the burden of
traditional donors in the development assistance programs, and might provide the appropriate levels of
aid flows to the developing world in order for it achieve much aspired development goals (Eisenman and
Kurlantzick 2006). The (re-)emergence of China as donor and the increasingly global reach of its
economic relations have often been met with a certain degree of suspicion (noted by e.g. Bräutigam &
Tang 2009; Bräutigam 2009). During the Cold War, much of China’s relations with other developing
countries were viewed in the context of the global ideological battle and the Communist geo-strategy
for world domination (Black 1968; Li 2007; Mushkat 1972). However, post-Cold War post-Economic
Reform and Opening Up, China’s foreign policy and foreign aid strategies have markedly changed (Li
2007), and should be studied as such in light of the altered global and domestic contexts.
It is in response to these new circumstances that the politics of aid needs to be reevaluated. This
bibliography was compiled with the intention of providing an exploratory first step in this process. It
draws together observations and conclusions from the realms of development studies, political science,
international relations and economics, written over the last sixty years, concerning the roles of foreign
aid in politics. This time period was chosen as it saw: the birth of the modern incarnation of foreign aid;
post-war reconstruction in the centers of pre-war wealth and power; former colonies gaining their
independence; the geo-strategic ideological battle of the Cold War; the collapse not only of the second
largest superpower of the time but also of the socio-political and economic framework that sustained it
and its allies; political and economic transitions in these former Communist states; civil wars based on
opposing ideologies; civil wars in countries where, with the departure of imperial powers, there were no
viable political systems within which power struggles could be mediated; the establishment of
multilateral intergovernmental organizations such as the UN, the World Bank and IMF, and regional
organizations like the EU; the emergence of global terrorism; the growing popular awareness in
developed nations of the plight of the suffering in developing nations; the emergence of new donors,
some of whom are themselves still foreign aid recipients, who, some have argued, have different
political and economic agendas than the traditional donors; in addition to countless humanitarian
disasters and a number of regional and global recessions. The broad time period in which and
concerning which publications contained in this compilation were written should allow recurring and
2
emerging trends to become apparent, leading to an increased understanding of how current global
circumstances, and domestic political forces, can and will shape the future political roles of foreign aid.
Additionally, this should provide a comprehensive understanding of the patterns of foreign aid policies
that emerging donors could take and highlight possible methods and theoretical lenses through which a
more thorough investigation in China’s foreign relations with other developing countries could be
analyzed.
Domestic Origins of Foreign Aid
A natural starting point for an investigation into the politics of aid is to consider the domestic
determinants of foreign aid. Foreign aid policies are, like domestic and foreign policies, formulated in
consideration of domestic political realities and the context international circumstances. This means
that as domestic political situations change and the international context changes, foreign aid policies
are reformulated to adapt to the new set of conditions. There are a number of factors within domestic
political contexts that can influence the ways in which foreign aid policies are formulated and
reformulated. Lancaster (2007a: 18) calls these the domestic political forces which she defines as falling
into four categories:

Ideas: Lancaster argues that the most fundamental “ideas” shaping aid are “worldviews”, the
values shared by a given society based on their culture, religion and/or ideology. These
worldviews are the origins of the norms and principled beliefs of a society.

Political institutions: According to Lancaster these form the “rules of the political games”
(2007a: 18). She analyzes the electoral rules, role of legislatures, role of local governments and
semi-public entities, the political system (parliamentary and presidential) and the effects these
have on shaping the purposes of foreign aid.

Interests: These, she argues, broadly fall into three different groups, namely: 1) commercial
interest groups, 2) NGOs and public interest groups, 3) as well as groups that have religious,
ethnic or otherwise associations with specific foreign countries.

Organization of aid refers to the way that aid is managed within the government structure,
particularly whether there is a dedicated development ministry, or whether it is a department
within another ministry or ministries. She argues that the organization of aid has a strong
influence on the purposes of aid.
Lancaster argues that as the international situation changes, and the domestic political forces react,
purposes of aid change as well (ibid.). She (2007a) states that the traditional purposes of foreign aid
include: diplomatic, developmental, commercial, cultural, and aid for humanitarian relief. She adds that
more recent purposes of foreign aid include: promoting economic and social transitions, promoting
democracy, addressing global issues (such as the environment and HIV/AIDS), and mitigating and
managing post-conflict transitions (ibid.).
The current authors believe that the interaction of these domestic political forces can be
represented as depicted in figure 1 below:
3
IDEAS
INTERESTS
INSTITUTIONS
ORGANIZATION
Figure 1. Interaction of Domestic Political Forces, based on Lancaster (2007a).
In her compilation of cases studies Lancaster analyzes the US, Japanese, French, German, and
Danish models of foreign aid policy determination using the above described framework. Her findings
suggest that foreign aid can only be understood through the lenses of both constructivism and realism
(ibid.). She argues that although foreign aid was initially a realist response to the Cold War, by the end of
the century the notion that more affluent states have an obligation to provide aid to less-well-off states
has become a widely unchallenged norm (ibid.). Lancaster attributes this in part to the establishment of
a political constituency for development aid in most donor countries, both inside and outside of the
government (ibid.). She states that outside the government NGOs grew in number, size and influence,
while inside many governments aid agencies were created with increasing budgets and staff sizes along
with a progressive strengthening of professional capacities, and programs to inform the general public
about development issues (ibid.). Lancaster cites the Japanese and French cases as proof of the
influence of the domestic constituencies in guiding foreign aid towards its increased use for
development purposes, as in both these countries, such constituencies are weak or lacked access, and
therefore the development purpose of their aid allocation is weakest (ibid.). The author finds that
domestic constituencies also increasingly took the role of monitoring government aid for development
purposes, complementing international pressures from multilateral organizations such as the OECD-DAC,
the World Bank, and UN agencies, promoting the use of aid for development purposes (ibid.).
Interestingly, Lancaster notes that acceptance of the aid-for-development norm is dependent on
whether the aid-giving nation’s socio-economic condition is sufficiently healthy that foreign aid
allocations are not seen to be sacrificing the needs of the poor at home (ibid.). Furthermore, she adds
that its acceptance is also dependent on the perceived effectiveness of government aid allocated for
development purposes (ibid.). In her compilation of cases studies she observes a number of differences
in the domestic political forces affecting aid, most notably varying influences of the different ideas and
institutions which shape the purposes of aid. Lancaster’s broad analytical framework captures many of
the aspects concerning the roles of aid in politics as discussed below.
These authors believe that the figure below, based on Lancaster’s framework, provides a
simplified yet adequate representation of the interaction of domestic political forces and their further
interaction with other members of the international system:
4
FOREIGN POLITY
FOREIGN POLITY
IDEAS
INTERESTS
IDEAS
INTERESTS
ORGAN-
INSTIT-
ORGAN-
INSTIT-
IZATION
UTIONS
IZATION
UTIONS
DOMESTIC POLITY
FOREIGN POLITY
IDEAS
INTERESTS
ORGAN-
INSTIT-
IZATION
UTIONS
FOREIGN POLITY
IDEAS
INTERESTS
IDEAS
INTERESTS
ORGAN-
INSTIT-
ORGAN-
INSTIT-
IZATION
UTIONS
IZATION
UTIONS
Figure 2. Simplified representation of the interaction between domestic and other members of the international
system, based on Lancaster (2007a).
Goldstein and Keohane (ed.) (1993) investigate the influence of ideas on policy through a
compilation of essays on different aspects and forms of ideas and their influence on policy formation
and practice. They categorize ideas as being: world views, principled beliefs, and causal beliefs (ibid.).
The authors define principled beliefs as consisting of the normative ideas used to determine right from
wrong (Goldstein & Keohane 1993: 9). They further define causal beliefs as beliefs concerning causeeffect relationship, based on the shared consensus of recognized elites (Goldstein & Keohane 1993: 10).
Goldstein and Keohane argue that principled or causal beliefs affect policy formulation when these have
become ingrained in political institutions and provide ‘road-maps’ to assist actors in policy formulation
in strategic situations where there is no unique equilibrium (ibid.). They conclude that it is the
combination of interests and ideas that has causal weight in the explanation of actions.
In a similar vein Cingranelli (1993) analyzes the effects of different moral positions on the
relations of the US with the Third World through an historical analysis. He states that foreign policy
formulation in the US is guided by a political culture composed of the values of: individualism, capitalism,
civilian control of the government, rule of law, political equality and democracy (ibid.). The author
further identifies four moral positions prevalent in American politics based on who the political leaders
5
are willing to be held responsible by and whose interests these leaders should promote (ibid.). He
categorizes these positions as: nationalist, exceptionalist, progressive, and radically progressive,
although the latter position has less of a voice due to its similarity to the Marxist moral position. He also
analyzes Marxism as a moral position taken in relations with the Third World. The author states that
different presidential administrations cannot be classified as falling solely within these four categories,
rather their positions will, on average, tend to fall in one category, though their positions will vary in
relation to different issues (ibid.). Cingranelli defines these positions as shown in the table below, and
analyzes how these positions have affected US relations with the Third World and other weaker nations
throughout US history until the Reagan and Bush senior administrations. He concludes that there has
been a general trend towards the Progressive moral position, although this has been gradual with
regular fluctuations towards the nationalist position (ibid.).
Leaders Should Be Held Responsible to:
Their Own Citizens
The Community beyond
International Borders
National Ideals
Nationalist
Exceptionalist
Universal Ideals
Progressive
Radical Progressive
Leaders Should Promote:
Table 1. Moral positions regarding foreign policy as defined by Cingranelli (1993: 6)
Cingranelli finds that US policymakers, especially after the Second World War, have increasingly
recognized the importance of universal values and their duties towards people outside their borders
(ibid.). He identifies these universal values, with relevance to foreign policy, as:
(1) [S]elf-determination or autonomy, (2) nonintervention into the affairs of other states except under
extraordinary circumstances, (3) the rejection of certain means no matter how worthy the ends, (4) social,
political, and economic justice, (5) the existence of (and obligation to protect) universal human rights (as
those rights are defined in international agreements, and (6) a commitment to multilateral as opposed to
unilateral action … (Cingranelli 1993: 7-8).
Cingranelli argues that this trend towards a more Progressive moral position is driven by institutional
changes in foreign policy making structures and processes initiated by Progressive administrations, the
Cold War rivalry, the altered role of the US in the international structure and the shifts in American
values (ibid.).
Stokke (1989) also describes how aid policies are formulated through the interaction of the
external environment with a country’s domestic environment, norms, interests and traditions. His
compilation of analyses regarding the foreign aid policies of five Western middle powers1 seeks to
identify the extent to which different outcomes of foreign aid policy formulation can be explained with
reference to the basic values and ideologies predominant in the nations under analysis, which, for the
nations in question, he defined as being generally varieties of humane internationalism (ibid.). In the
context of foreign aid policy Stokke argues humane internationalism implies: the recognition of the
responsibility of developed nations to assist the Third World, a belief that a more just world is in the
long-term interests of developed countries, and an understanding that this is not in the disinterest of
their own national economic and social welfare policies. Stokke analyzes the foreign aid policies of these
five Western middle powers in relation to variations of this ideology, and concludes that there has been
a general move towards liberal internationalism in these five nations within the period of study (ibid.).
Liberal internationalism, according to Stokke’s definition shares the core concepts of humane
internationalism, and adds to it a commitment to an open and multilateral trading system as well the
1
Canada, Denmark, the Netherlands, Norway and Sweden.
6
realist internationalism notion that nations ought to pursue economic and political self-interest in the
short- and long-term (ibid.). Liberal internationalism, he states, recognizes a responsibility towards the
South and aims for economic growth there, through seeking to promote common interests between rich
and poor countries (ibid.). Stokke argues that this is motivated by the humanitarian aspects of humane
internationalism while recognizing the opportunities for both the North and South in integrating the
Third World into the Western market economy (ibid.). Liberal internationalism, he notes, is further
characterized by a general objection to state and interstate intervention, as well as procurement tying,
rather it favors the mobilization of the private sector in development efforts and the use of ODA to
support this, in addition to favoring multilateral agencies which practice open bidding (ibid.). Stokke’s
descriptions of different forms of internationalism provide useful measures with which to evaluate
foreign aid policies, including the foreign aid policies of China and other emerging donors.2
Pratt (1989) similarly conducted an analysis of humane internationalism in four Western middle
powers, through a compilation of country cases studies.3 He identifies three reasons for the sensitivity of
these middle powers to the development needs and aspirations of the LDCs, although none, bar the
Netherlands,4 had any direct ties to them. These reasons are: 1) the internationalist orientation of their
policies; 2) their responsiveness to cosmopolitan values, which he argues stems from an extension of
the dominant political cultures of their domestic social welfare systems, based in Christian and social
democratic ideologies; and the influence, to greater or lesser degrees, of reform internationalists in the
political arenas; 3) the political considerations that caused them to attach greater importance to their
relations with the global South, such as the domestic political gains and the favorable consideration of
recipients concerning other international political issues (ibid.). Pratt concludes, however, that the
efforts of these middle powers to create a more equitable world have ebbed slightly, since 1981, in the
face of an unfavorable political and economic climate internationally, the stronger influence of national
loyalties compared to global responsibilities, and the lack of cohesiveness, coordination and consistency
in their efforts. Pratt’s conclusions provide part of the explanation as to why the current international
order can still not be described as an equitable world order. Nevertheless, his descriptions of why
certain countries are more sensitive to the needs of the developing world allow the comparison of these
characteristics to those prevalent in the engagement of China and other emerging donors with the
developing world.
A number of authors have looked more specifically at certain aspects of domestic politics which
influence foreign aid policy. Thérien and Noël (2000), for example, look at the influence of political
parties on foreign aid. Their findings suggest that the impact of political ideologies on foreign aid goes
beyond the mere support for or opposition to foreign aid policies, but that a political party which
remains in power for a longer period of time is able to make its own particular concepts of social justice
central to the political debates of their nation (Thérien & Noël 2000). The centrality of these conceptions
of social justice in political debates, the authors argue, shapes the formulation of foreign aid policies and
priorities (ibid.). Additionally, Thérien and Noël show that social-democratic parties have an influence on
levels of development assistance, though the effects of this are only apparent in the long-term (ibid.).
Moreover, alongside the influence of political parties on foreign aid expenditures, the authors also
identify the significant roles played by welfare institutions and social spending in determining foreign aid
spending (ibid.). These findings reflect those from their earlier study (Noël & Thérien 1995), which
proposes that the institutionalization of socialist welfare principles at the domestic level shape the
nature and practices of a nation’s foreign aid policy, arguing that states with more institutionalized
2
See Table 2 for further descriptions of the different forms of internationalism as defined by Stokke (1989).
Canada, the Netherlands, Norway and Sweden.
4
The Netherlands has direct ties to a number of developing nations due to its colonial heritage.
3
7
welfare principles at the domestic level are more likely to provide foreign aid and development
assistance and to base the provision of aid on similar principles. The influence of a governing party’s
prolonged rule on a nation’s concepts of social justice, and therewith the impact on its foreign aid
policies is a vital consideration in the analysis of the foreign aid policies of China and other emerging
donors, and will provide useful information on which predictions regarding the future directions of these
policies can be made. Additionally, and investigation into the extent to which socialist welfare principles
are institutionalized in the domestic polities of China and other emerging donors will give an indication
of the moral principles on which their aid provision is based.
Thérien (2002) has further argued that evolution of foreign aid is the result of an ongoing
conflict between the political Right and Left regarding aid policies. This conflict, he argues, is based on
the relative importance each attaches to the issues of cost-benefit analysis and moral principles.
According to Thérien the Right is seen to be more concerned with the results of the former while the
Left is more concerned with the latter (ibid.). He states that these differences have often led the Right to
decry foreign aid as wasteful, ineffective, and inefficient, and to argue that poverty alleviation is
ultimately not the obligation of the international community but each individual state (ibid.). The author
argues that these concerns have been reflected in the introduction of new administrative practices in
donor countries that increase accountability and monitor quality in the form of new ‘results-based’
management systems (ibid.). In contrast, Thérien adds, the Left believes that aid to poor countries is a
moral obligation, it argues that the benefits are larger than the costs, and it is concerned about
inadequate levels of aid (ibid.). As Thérien and Noël noted above, the Left’s convictions on foreign aid
are based on the similarities it perceives between the domestic and international order, believing that
international aid is an extension of the responsibilities of the domestic welfare state (ibid.). Thérien
states that the Left argues that market mechanisms are incapable of achieving the optimal allocation of
resources, thus state intervention is necessary to protect the poorest and most vulnerable (ibid.).
Thérien states that the Left holds the belief that foreign aid and development cooperation have been
responsible, to a large extent, for the socio-economic developments in the Third World, such as
increased health indexes, reduced poverty, improved infrastructure, and the fall in birth rates (ibid.).
Thérien further argues that it is these divergent concepts, concerns and arguments that have developed
the international and domestic aid regimes current today (ibid.). Thérien’s findings describe the
evolution of foreign aid both domestically in the countries included in his study, and to some extent
within the international system. Understanding the political debates leading to the evolution of foreign
aid in China and other emerging donors would be useful for predicting future trends of foreign aid as
shaped by these new donors.
Fleck and Kilby (2001) have studied the relationship between the allocation of USAID contracts
across different congressional districts and voting on foreign aid policies in US Congress. Although USAID
activities do provide direct economic benefits to most states in the US, Fleck and Kilby find that the level
of contract spending is not significantly related to the support for foreign aid by a representative, or
other political factors (ibid.). The authors find no evidence that USAID manipulates contract allocation in
order to gain political support (ibid.). Their findings also suggest that the level of aid contract spending
only had a marginal impact on representatives’ support for foreign aid (ibid.). Fleck and Kilby state that
their results concerning the influence of economic benefits on the support for aid are only considered
from one dimension of the issue and they find little evidence that the two are positively correlated in
the US (ibid.). They conclude that this appeal to commercial interests in the post-Cold War period,
though a natural substitute for the ideological motivation, is unlikely to garner the desired levels of
political support and increased funding (ibid.).
8
Milner and Tingley (2010) analyze whether there are any systematic political economy factors
which shape foreign aid policies. They find that domestic politics and the distributional consequences of
aid have an influence on foreign aid (ibid.). Notable factors influencing the support for aid, according to
their findings, are the economic characteristics and the right-left ideological disposition of voting
districts (ibid.). The authors find that for economic aid votes which have domestic distributional
consequences, districts which are better endowed with capital are more supportive of economic aid,
while those better endowed with labor are less supportive (ibid.). Additionally, Milner and Tingley (2010)
find that districts and legislators of a more egalitarian ideological disposition and who believed in a
larger role for government in the economy, are more likely to vote in favor of economic aid. Moreover,
the authors also identify the sensitivity of legislators towards the pressures of organized interest groups
(ibid.). They find that campaign contributions by organized groups may account for legislator voting
behavior that deviates from their dominant party ideology (ibid.). Milner and Tingley further argue that
although the foreign policy concerns of the executive also play a role in foreign aid policy, the positions
and preferences of the president are not seen to significantly affect legislators’ votes on economic aid,
meaning that support for foreign aid policies must also be gained in Congress, where legislators vote in
accordance with the concerns of their constituents and organized pressure groups within their
constituency (ibid.).
In a separate article dealing with the effects of the economic ideology of US governments on
foreign aid Tingley (2010) finds that economic ideology plays in important role in determining aid
allocations. He suggests that progressively more conservative governments commit progressively less of
their GDP to foreign aid efforts than more liberal governments (ibid.). This, Tingley states, is especially
the case with aid allocations to poorer countries and multilateral organizations, which he purports
indicates that conservative governments attach higher importance to trade and geopolitics than
development assistance (ibid.). These findings reflect those of a number of studies mentioned above,
such as that of Thérien (2000).
An even deeper look into the workings of foreign aid appropriations procedures was taken by
Irwin (2000). His findings provide a deeper understanding of the importance of person-to-person
negotiations and personal favors, consensus building, issues coalitions, key legislative actors, and publicprivate issue management. Irwin states that foreign aid proponents have grown adept at using a variety
of means and steps in order to achieve legislative success, and finds that respondents generally believed
that people rather than procedure was the most important determinant of legislative success for aid
policy decisions (ibid.). Chong and Gradstein (2008) analyze the factors which influence popular support
for foreign aid based on World Values Surveys. Importantly, they find that satisfaction with own
government performance and individual incomes has a positive influence on the support for foreign aid
(ibid.). Additionally, Chong and Gradstein find that richer more egalitarian governments provide higher
levels of aid, while inefficient governments provide lower levels (ibid.). Finally, the authors argue that
whereas recipients’ economic conditions do not affect aid levels, their levels of corruption, inequality,
political leaning and tax systems do (ibid.). Chong and Gradstein’s (2008) findings regarding the
determinant of domestic political support for aid, provide useful standards against which to evaluate
popular support for aid in China and emerging donors. Their findings concerning the effect of a number
of characteristics of recipient countries on aid levels, also provide useful aspects to investigate in
comparison to the aid level determinants for China and emerging donors.
Nelson (1968) gives a comprehensive insight into the aid allocation and program planning
procedures in the US during the Cold War period. Although his study was performed around 40 years
ago, these procedures and considerations seem to have changed little, as evidenced by more recent
studies, although their general emphasis might have changed with the end of the Cold War. Nelson
9
identifies the steps as: identifying US objectives in the recipient country, assessing the situation and
trends in the recipient country, evaluating the role of other donors in the recipient country, selecting
specific goals, and devising the most important and appropriate measures to achieve these goals (ibid.).
A similar in-depth study into the workings of the domestic politics in the US in the formulation of foreign
policy and foreign aid policies, was conducted by O’Leary (1967). He analyzes the effects of the
American political culture and political opinion, the influence of Congress, and the situation of the
executive on foreign aid policies. He concludes that official government commitment is not sufficient for
the successful conduct of policy (ibid). O’Leary emphasizes that public support is vital for the success of
aid programs, although, he argues, this often seems to be lacking in the US, and many government
foreign policymakers frequently believe that US public opinion works against them (ibid.). The extent to
which public support is essential to the success of aid programs implemented by China and other
emerging donors, is something that needs to be investigated in more detail. Understanding the levels of
influence publics in China and other emerging donors have on foreign aid policies can give an indication
as to the motivation for aid provision. In conjunction with a deeper understanding of the evolving values
and beliefs of these publics resulting from their own socio-economic development, knowledge on the
extent to which these publics influence their foreign aid policies will provide a sound basis on which to
evaluate the future trends of their aid policies.
Putnam (1988) applies a “two-level games” approach which recognizes the efforts of central
decision makers to simultaneously reconcile both domestic and international imperatives in order to
analyze the linkages between domestic politics and diplomacy. His findings highlight a number of
significant features of these linkages, among which are the effects on international pressures on the
domestic political arena, the finding that domestic political cleavages actually cultivate international
cooperation, and the divergence of interests between a national leader and the people for whom he is
negotiating (ibid.). Putnam’s “two-level games” approach and his findings provide useful tools, in
addition to those of Chong and Gradstein, and O’Leary, with which to analyze in more detail the
domestic politics of foreign aid policies in China and other emerging donors.
Murshed (2003) analyzes the strategic interaction in aid donor processes through principalagent models and through endogenous policy determination. In his analysis legislators are considered as
the principals and the aid agencies executing the wishes of the principals are considered the agents. His
findings suggest that agents’ motivation is improved when their efforts are seen to be taken into
account by the principals (ibid.). Furthermore, Murshed finds that when principals with divergent
interests, e.g. commercial, strategic, and developmental interests, interact with the same agent, their
interests are best served if their efforts are combined and their interests harmonized (ibid.). The author
also notes the influence of powerful lobbies on aid policy (ibid.). Murshed’s analysis provides insights
not just into the public politics and lobbing in aid policy formulation, but also into the internal politics of
principal-agent interaction, an essential component in the analysis of China and emerging donors.
Domestic socio-economic and political conditions are clearly taken into consideration when
foreign aid policies and priorities are devised. These and other publications contained in this
bibliography should give insights into the nature of the domestic political forces that shape foreign aid,
and how these interact with international circumstances to formulate aid policies. Similar studies on the
nature of the domestic political forces, as most comprehensively formulated by Lancaster (2007a), in
China and other (re-)emerging donors will also provide understandings into the possible changes in
international foreign policy and foreign aid system.
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Motivations for Foreign Aid
Related to the analysis of the influence of domestic political forces on foreign aid is the analysis of the
motivations for providing foreign aid. The analysis of the motivations for (bilateral) foreign aid also
includes analysis of government executive objectives and geo-strategic concerns. As is evidenced in, for
example, Stokke (1989), Lancaster (2007a), Pratt (1989), and Hook (1995, 1996), foreign aid is deployed
for a number of reasons and in pursuit of a number of goals. Whether it be to present an image in the
international community of generous nation or to appease commercial interest groups domestically,
whether it be for humanitarian and moral reasons or in the interests of national security and regional
dominance, whether it be to encourage the recipient nation to adopt more democratic forms of
government and respect human rights or stimulate regime change, foreign aid is always deployed for a
reason or a mixture of reasons. This bibliography contains a number of publications which present and
analyze the different motivations, and combinations of motivations, for aid and various aid allocation
priorities.
An early analysis of the donor interest5 and recipient needs models of donor aid provision
motivation was conducted by Maizels and Nissanke (1984). They find that while aid from multilateral
institutions is provided on a recipients’ needs basis, bilateral aid from different donors is provided to
greater or lesser degrees in support of their own political, economic and security interests (ibid.). In the
periods they studied the authors find that there were shifts in the relative emphasis on donor interest in
aid allocation, with trends towards more consideration for recipient needs during the early and mid1970s, with a reversal of these trends in the latter half of the decade (ibid.). The authors attribute this
trend to shifts in bilateral aid budgets during the 1970s away from donor interest, and an increased
emphasis on multilateral sources (ibid.). Maizels and Nissanke state that the reversal of this trend is
explained by two factors. Firstly, donor contributions to multilateral organizations were cut during the
1970s (ibid.). Secondly, a number of donors, most notably the US, have been more overtly using bilateral
aid as a foreign policy instrument, or tying their aid allocations to their export orders (ibid.).
A later study by Berthélemy (2005) also concerning the donor interest and recipient needs
models of donor aid provision motivation confirms Maizels and Nissanke’s findings that donor interests
take precedence in the aid allocations of certain nations. He finds that while most donors provide at
least target some of their aid to their most significant trading partners, they do so to varying degrees,
and most provide at least at part of their aid to the neediest recipients (ibid.). Furthermore, Berthélemy
(2005) indicates that on average aid is provided to recipients with better governance indicators, for
example, the absence of violent conflict or more democratic political and economic systems (ibid.). He
identifies Austria, Denmark, Ireland, Norway, and Switzerland as being more altruistic than other donors,
while Australia, France, Italy, Japan and the US are more egotistic (ibid.). The Chinese government
emphasizes recipient ownership and aligns its foreign aid with the national priorities of recipient
governments (Davies 2007). This differs from traditional donor concepts of ownership and alignment
which emphasize broad based participation (ibid.). Regardless of which concept of ownership and
alignment is taken, the above mentioned approaches and findings of Maizels and Nissanke (1984) and
Berthélemy (005) concerning the recipient needs and donor interest models provide useful measures
against which to evaluate the foreign aid practices of China and other emerging donors.
Through a comparative analysis of the foreign aid policies of the US, France, Japan and Sweden
Hook (1995) finds that there is a strong relationship between national interest and foreign aid.
5
This includes, for example, donor self-interest with regard to political, economic or national security
considerations.
11
Additionally, he compares performances of these countries to the humanitarian objectives
institutionalized in the OECD-DAC, of which all are members. He concludes that US foreign aid policy is
dominated by national security concerns, while France is concerned more with maintaining colonial
relationships and influence, Sweden provides most of its aid (80%) to recipients with Marxist or socialist
economies similar to its own domestic world views, and Japan’s foreign aid policy is driven more by
commercial interests (ibid.). Hook argues that Japan’s security interests are protected by America,
Sweden is neutral, and France has security agreements with la Francophonie therefore these three
countries had little need for security considerations in their foreign aid policies (ibid.). Hook draws on
Holsti’s typology to categorize the roles these donors thus play in the international system, identifying
France as an “active independent,” Japan as a “regional-subsystem collaborator,” Sweden as a
“mediator,” and the US as a “bloc leader” (Hook 1995: 156). Hook further analyses the differing
influences of the domestic politics in the nations under study, on their foreign aid policies. He finds that
in the US domestic politics are very important because of the lack of public support for foreign aid, while
Sweden enjoyed high levels of public support as their aid policies project their own social values and
their political system is one based on the principle of consensus (ibid.). Furthermore, although there
were also relatively high levels of support for foreign aid in France and Japan, the domestic political
forces had little influence over policy formulation due to the political distance between the executive
and the general public (ibid.). Lancaster (2007a) provides similar conclusions concerning the influence of
domestic political forces in France, Japan and the US.
Sogge (2002) dedicates a large part of his book to analyzing the nature of the act of foreign aid
provisio. He identifies in the foreign aid relationship inseparable acts of giving and taking (ibid.). While
also noting the commercial, strategic and humanitarian motives of aid, Sogge states that donor nations
also benefit from the brain drain and capital flight from the South to the North, Northern trade barriers
and dumping in the South (ibid.). He concludes that foreign aid is not deployed in proportion to the
levels of poverty of the recipient, and these insignificant levels of aid flows should be seen in the context
of huge flows from poor to rich (Sogge 2002: 36). Sogge’s study raises our awareness of the less
immediate effects of foreign aid provision. In later chapters he takes a closer look at the structures and
institutions of the aid system to understand how they enable the perpetuation of the give and take
relationship of foreign aid and what effect this has on aid policies. Sogge’s analysis of the North-South
relationship, provides a useful framework within which to conduct an analysis of the South-South
cooperation relationship of China and emerging donors. Whether the aid flows to and from recipients in
the (poorer) South – (more) developed South relationship, when taken beyond the narrow definition of
financial aid flows, are similarly disproportionate needs to be investigated.
In the same vein of the recognition of the interdependent relationship between the global North
and the South, Cassen et al (1982) analyze the terms in which it is in the interests of the North and South
promote and develop their interdependence. They state that there is no clear or simple set of
conclusions which emerges from their study (ibid.). The authors argue that the interests and concerns
vary both within and across developed nations, creating a complexity which they find difficult to
summarize (ibid.). One general characteristic that they are able to identify is the absence of any effort in
the North to construct a new form of interdependence or North-South interdependence on different
terms (ibid.). Cassen et al argue that economic interactions among states of the North are considered to
be real economic issues, while those between the North and the South are regarded as political
diplomacy (ibid.). They propose that the findings from their case studies show that in actual fact the
Third World is of economic importance, there are areas of mutual interest that can be pursued to
stimulate global economic activity, and structural adjustments facing the North with regard to energy,
trade and finance, and food production have given it greater incentives to engage in new forms of
12
economic relations with the South (ibid.). However, Cassen et al also state that they see little evidence
of economic gain from relations with the poorest developing nations, arguing that continued relations
with these states should be based on notions of common humanity, poverty eradication and other
humanitarian grounds and not on arguments of economic self-interest used to garner domestic political
support (ibid.). Additionally, the authors find evidence of class stratification and class consciousness
among nations, preventing the rich nations of the North entering alliances with groups of Third World
countries (ibid.). Cassen et al conclude by questioning the ability of world order at the time of study to
provide a truly equitable interdependent relationship in which Third World needs are truly taken into
consideration (ibid.). The observations and conclusions of Cassen et al’s study provide an impetus for
analyzing the strengthening South-South relationship, especially with consideration as to how this will
affect the international political and economic order and whether or not this has the potential of
initiating the process of establishing a more equitable world order, or whether it will perpetuate a world
order of dominators and dominated where a number the players have merely changed roles.
Johansson (2011) investigates the determinants of bilateral donor grant aid. She notes that the
grant component of bilateral aid has been increasing over the past decades, reaching as high as 97% of
bilateral aid in 2005. However, she finds that the grant-concessional loan ratio for bilateral aid varies
across different recipients (Johansson 2011). Johansson argues that this variation is partly explained by
recipient needs as the grant component for poorer countries is higher between 1975 and 2005, however,
she finds no evidence that more indebted countries receive a higher grant component (ibid.). In a
related analysis, Chauvin and Kraay (2007) examine the determinants of debt relief allocation across 62
low-income countries. Their findings are similar to those of Johansson as more indebted countries are
not much more likely to receive debt relief, however, larger countries are more likely to receive debt
relief, especially from multilateral creditors (ibid.). These findings indicate that the relief of debt is not
necessarily the main motivation for provision of debt relief (ibid.).
In his analysis of the determinants of debt forgiveness Neumayer (2002) finds that one powerful
determinant is the recipient’s need for debt forgiveness, while political interests, excluding US military
interests, are not significantly influential in the allocation debt forgiveness. However, he also indicates
that good governance in general is not a clear determinant for debt forgiveness, rather a number of
aspects of good governance are seen to have a greater influence than others, though the influence is
still modest (ibid.). These aspects include: respect for democratic rights; accountability of the recipient
government; and the extent to which the recipient government does not impose burdens of businesses
through burdensome economic policies. He concludes that debt forgiveness has not often been used to
reward good governance (ibid.).
The above discussions on the determinants of debt relief, and grant-concessional loan ratios are
particularly relevant to emerging donors. There are fears that the emergence of new creditors such as
China and India, will endanger the debt sustainability efforts of traditional donors (see for example
AFRODAD 2008; Dahle Huse & Muyakwa 2007). China has granted debt relief and debt reductions to a
number of developing countries (AFRODAD 2007; Davies 2007; McCormick 2008; MoFAPRC 2006), as
has India (McCormick 2008). Investigations into the determinants of these debt relief and debt
reduction policies, as well as the grant-concessional loan ratio determinants, of China and other
emerging donors should provide fruitful comparisons to the determinants of similar traditional donor
policies.
Arguably one of the more seminal papers on the effects of donor motivations for aid on aid
effectiveness is that of Alesina and Dollar (2000). They analyzed the different motivations for aid of a
number of countries, finding that while US and Nordic countries targeted poverty, democracy, and
13
openness, with the US placing an emphasis on the Middle East, France was more concerned with former
colonies and not with democracy or poverty, and Japan was more concerned with investment and trade
relationships (ibid.). The authors conclude that the patterns of aid flows from donor nations are one the
reasons for the only partial success of foreign aid in promoting growth and reducing poverty (Alesina &
Dollar 2000). The influence of donor motivation for providing foreign aid on aid effectiveness is a theme
that permeates much of the literature on the politics of foreign aid provision (see for example Bearce &
Tirone 2009, Burnside & Dollar 2000 and 2004, Kilby & Dreher 2009 and McGillivray 2003, 2004). In light
of the above finding that the patterns of aid flows from traditional donors are responsible for the only
partial success of foreign aid in promoting economic growth and reducing poverty, it is pertinent that
the patterns of aid flows from emerging donors such as China and India need to be evaluated and
considered in comparison to those of traditional donors. This should provide indications of similarities
and differences that will help to highlight areas that need particular attention in order to discovers
mechanisms that will truly help to promote economic growth and reduce poverty in recipient countries.
Cold War & Post-Cold War Politics of Aid
Although the Cold War clearly had an influence on the nature of foreign aid relations, the strategic and
security interests of aid played a greater or lesser role for different nations. Unsurprisingly, strategic and
security interests played the dominant role in US aid provision during this period (Lebovic 2005). Other
countries, however, were more concerned with commercial interests or maintaining dominant relations
with former colonies (ibid.). Therefore, publications on the role and motivations for aid during this
period can help to highlight continuities and discontinuities in trends leading up to the present day. This
bibliography contains a number of publications written during, or concerning, the Cold War period, their
findings should provide a deeper understanding of the relative importance of geo-strategic and
ideological considerations for different donors in their formulation of foreign aid policies.
Schraeder et al’s (1998) study of the aid flows from the US, Japan, France and Sweden in the
final decade of the Cold War, analyzed the influence of different foreign policy interests on foreign aid
allocation. Their findings refute the altruistic rhetoric of these donors, including Sweden who is often
regarded with other middle powers as being more concerned with humanitarian interests (ibid.)
Furthermore they identify the importance of the ideological posture of African recipient regimes, stating
that capitalist regimes which were willing to support US containment policies were targeted by US aid
(ibid.). Swedish aid flows, the continue, concentrated particularly on like-minded progressive regimes in
Southern Africa, while Japanese aid policymakers preferred capitalist regimes over Marxist ones (ibid.).
With regard to French aid, Schraeder et al find that ideological considerations in the form of political
stance were not significant, instead French aid was motivated by the perceived necessity to ensure the
spread of French culture (ibid.). Moreover, Schraeder et al present the emergence of trade as an
important determinant for aid even for the perceived altruistic Sweden (ibid.). The authors argue that
the importance of trade as an aid determinant emerged as increasingly vocal and influential domestic
actors demanded that there be a connection between foreign aid allocation and the promotion of their
national economy (ibid.). They cite the OECD as stating that the trend of creating a linkage between aid
and national economy promotion was prevalent during the 1980s (ibid.). Schraeder et al further propose
that with the ending of the Cold War the importance of the ideological posture of recipients will decline.
However, this current author argues that the promotion of democracy as a motive for foreign aid can
also be interpreted as an ideological determinant of aid provision as it is based on concept of democracy
being ideologically superior to its alternatives, and as such deserves to be spread around the world.
14
Guess (1986) takes a closer look at US aid provision (including military aid) to Latin America, Asia
and the Middle East during the Cold War. His comprehensive and in-depth study, shows the effects of
different forms of aid packages to a variety of regimes in achieving their goals. Guess also analyzes the
domestic political processes of foreign aid, and how these shape the formulation of aid packages,
including the effects of Congressional distrust of the executive and the influence of the different
responsibilities of different governmental departments in the formulation and implementation of
foreign aid (ibid.). Guess conducts his analysis through the Bureaucratic Role Conflict model. He argues
that while foreign aid is planned and funded like most US domestic policies, it differs from these as it has
both a domestic and an international component (ibid.). He states that foreign aid has often lacked its
own political base due to the fact that its clients are abroad, as a result it has been moved around by
conflicting pressures from all directions, most often in response to the perception of military threats or
developmental needs by actors such as the DoD, State Department, Congress or the Presidency (ibid.).
Aid allocation decisions have not been based on field assessments as the foreign aid policy making
institutions are primarily concerned with other issues (DoD with defense; Congress with domestic policy;
USDA with agriculture, etc.) (Guess 1986: 257). As such foreign aid becomes a byproduct of other policy
considerations (ibid.). Guess describes the effects of this divergence of interests in foreign aid
allocations on a number of countries in Asia, Latin America and the Middle East.
Black (1968) analyzed the foreign aid strategy of the US at the height of the Cold War. He
investigates the political, economic, defense, and humanitarian rationales for foreign aid provision
during this period. He concludes that the political rationale for the US is clearly the dominant one during
this period of ideological battle with Soviet and Chinese Communism (ibid.). He argues that Communist
aid is “different” from US aid as it is part of the Communist geo-strategy for achieving world domination
(ibid.). Black finds that other countries in the “Free World” have similar rationales to that of the US,
though they are more limited in scope and often place a greater emphasis on trade (ibid.). An interesting
study by Goldman (1967) analyzes Soviet foreign aid during a similar period. He concludes that Soviet
aid was provided for a number of reasons, including: economic interests, especially during the earlier
stages in postwar Communist Europe; humanitarian motives, as the Soviet government felt a certain
sympathy for nations that had suffered under colonial and imperial rule; and political self-interest (ibid.).
Although these motives were often mixed, Goldman observes that there was a general dominance, as in
the US, of the political motives (ibid.).
During the Cold War McKinlay (1978) and McKinlay and Little (1977, 1978a, 1978b, 1979)
conducted research into British, French, German, and US aid relationships with the Third World. A
comparative analysis of the findings of the separate studies is presented in McKinlay (1979). McKinlay
relates their findings on the nature of aid relationships to the concept of imperialism in which any nation
maintains direct or indirect political or economic control or dominance over another (ibid.). He
attributes this to the structure of the international system, rather than domestic structures, in which
there are high levels of competition due to a lack of a basic normative order and collective goal
formulation and actions in the international system (ibid.). McKinlay argues that this differs from the
domestic orders in which there are extensive formal and informal regulatory frameworks, which in turn
create a basic normative order (ibid.). He argues that the asymmetries within the relatively unregulated
international environment encourage dominant nations to promote their own interests and maintain
dominance through the use of control strategies (ibid.). Formal and informal rules do exist, however,
McKinlay argues, these are far from extensive, and sanctions to reinforce these are weak (ibid.). The
author states that although the most highly developed systems of rules, sanctions and collective goals
are institutionalized within Intergovernmental Organizations (IGOs), these only have limited resources
and implementable sanctions (ibid.). The resources IGOs have, McKinlay observes, are dependent on
15
contributions from donor countries, and their aid provision patterns reflect, and reinforce, the
international hierarchy and prevalent cleavages and tensions (ibid.). The author identifies two forms of
imperialism active within this essentially unmoderated international framework in which asymmetries
encourage dominant actors to promote their own national interests and maintain dominance through
the use of control strategies such as foreign aid (ibid.). The first form, McKinlay argues, is political
imperialism which is driven by concern for national security, therefore control strategies are employed
to enhance national security (ibid.). The second form identified by McKinlay is economic imperialism
which is driven by trade and investment concerns, where control strategies are employed in order to
enhance the actor’s material well-being (ibid.). The author concludes by emphasizing that there are,
however, important differences among donors on which interests are promoted and how systematically
and comprehensively developed the foreign policy of their aid relationship is (McKinlay 1979: 450).
With the increasing importance of intergovernmental organizations, an increasingly influential
global civil society, and collective goal formulations in the forms of, for example, the Millennium
Development Goals, it would seem that a number of the aspects of the structure of the international
system that facilitated the imperial aid relationships, have progressed into more just forms. However,
the asymmetrical relationships between donors and recipients remain, and still remain a concern for
those in or sympathetic to Third World countries.
Meerink et al (1998) analyze the explanatory models of researchers concerning the US foreign
policy behavior during and immediately after the Cold War. They suggest that it was still too early to
clearly identify the altered importance of the determinants of foreign aid such as ideological motivations,
as the new international distributions of power and levels of systemic threat had not become settled yet
(ibid.). However, the authors provide precursory evidence indicating that strategic considerations are
declining while ideological goals are becoming more prominent, though they state that this evidence is
not yet conclusive (ibid.). Meerink et al argue that as the US has not been an active participant in an
international environment where there was not an all-consuming threat, therefore it lacks experience in
formulating foreign policy and foreign aid policy in the new international system (ibid.). These current
authors believe that the recent Global War on Terror might be seen as the all-consuming threat in
response to which the US is experienced in drawing up its foreign policy strategies.
An earlier study by Griffin (1991) attributes the proliferation of foreign aid programs to the
domestic political support for aid during the Cold War. He too identifies motives other than ideological
ones, such as commercial and humanitarian interests, during this period (ibid.). However, he states that
these motives played a greater role in sustaining aid programs than in initiating them, which he
attributes to ideological motives prevalent at the time (ibid.). He concludes by questioning the future of
foreign aid post-Cold War, wondering if the loss of ideological motives and the reduction of the national
security threat will mean a reduction in foreign aid, thus hindering development in the Third World
(ibid.).
Hook’s (1996) compilation of case studies regarding the patterns and practices of foreign aid
provision during the Cold War and toward the new millennium, similarly, finds that there was a lack of a
common goal for aid donors immediately after the Cold War. However, he notes that there is a general
transnational trend towards promoting sustainable development, coming out of the ‘two-level game’ of
domestic politics and the international situation (ibid.). He further discusses the implications of this for
recipients, as well as the ‘development paradox’ which, he argues, is the inability of the planet to sustain
the development of all nations if current development patterns persist (ibid.). Hook states that most
foreign aid programs were launched in the context of superpower rivalry and decolonization, and this
context provided the justification to domestic constituents for foreign aid expenditures (ibid.). As many
16
aid budgets were reduced at the end of the Cold War, Hook observes, plans to implement UN programs
for sustainable development were cut back (ibid.). During this period, he continues, governments faced
difficulties justifying and legitimizing large-scale aid expenditures that were not directly related to their
own perceived national interests in the post-Cold War period (ibid.). The author finds that aid flows in
this immediate post-Cold War period were generally towards strategic allies of the US, former colonies
of France and Britain, and Japanese trading partners, as well as former Soviet bloc transitions states and
highly indebted middle-income countries (ibid.) Hook observes that the political meddling of the major
superpowers in the world’s poorest states during the Cold War, has frequently been replaced by
indifference and neglect after its end (ibid.). He argues that recipients often have to continue to align
their economic, political and security interests with wealthy donors, as they had to during the Cold War
(ibid.). Additionally, Hook notes that during the early 1990s, the US was affected by an executivelegislative impasse due to democratic administration being opposed by a majority republican Congress,
which caused a preoccupation with domestic politics that obstructed the redefinition of US foreign aid
strategy to address the new political and economic situation created by the end of the Cold War (ibid).
He adds that Europe similarly became preoccupied with the domestic political priorities which emerged
as the Cold War ended (ibid.). However, Hook argues, leaders of the industrialized world have become
increasingly aware of the dangers of rising foreign debt, unrest and regional conflict resulting from
socioeconomic distress, rapid population growth in LDCs and exhaustion of finite natural resources, and
have found common cause with the IFIs, OECD, and other multilateral organizations concerned with aid
(ibid.). This expanded political economy of the aid regime, he posits, has assured its longevity, although
he states that there is still a lack coherent collective action to protect the global commons (ibid.).
Lancaster (2007a) similarly finds that there has been a general trend towards an increased use of foreign
aid for development purposes.
Boschini and Olofsgård (2007) confirm Griffin’s fears, and Hook’s findings, in their analysis of
foreign aid during and after the Cold War. After testing the argument that the reduction of aggregate aid
levels was due to the end of the Cold War, they too, conclude that aid budgets were cut with the end of
Cold War, although they find no clear impact on aid allocation (ibid.). They find that these results are
consistent across the 17 donor countries panel analysis (ibid.). The authors also argue that countries
considered to be of strategic importance receive higher levels of aid, not only during the Cold War
period, but also in the 1990s (ibid.). However, donor specific aid allocation patterns, they observe, are
more scattered, likely reflecting slight variations in their motivations (ibid.). Boschini and Olofsgård also
indicate that the ‘war on terrorism’ could have a similar effect in increasing aggregate aid flows as the
Cold War did (ibid.). They draw attention to increased aid commitments made by a number of rich
industrialized nations in the global war on terror (ibid.). Government development aid and national
security policy publications contained in this bibliography from, for example, the Australian, Danish and
American governments,6 also indicate the role of foreign aid in the global war on terror.
Fleck and Kilby (2010) similarly draw comparisons between the geo-political roles of aid during
the Cold War and the war on terror. The authors argue that the GWOT and the Bush administration
have altered many aspects of the US foreign policy and foreign aid policy and its emphasis (ibid.). They
find that the US aid budget has increased with the war on terror, however, aid to poor countries with
less immediate political importance has also increased (ibid.). Nevertheless, the emphasis on recipient
needs has decreased (ibid.). Additionally, Fleck and Kilby find that conservative governments provide
lower levels of economic assistance than liberals, ceteris paribus (ibid.). They state that this
6
See also USAID (2002), Foreign Aid in the National Interest: Promoting Freedom, Security and Opportunity,
Washington, DC: USAID.
17
demonstrates the great impact that the war on terror has had on aid given that increased levels of aid
were allocated by the conservative Bush administrations (ibid.).
Lancaster (2008a), in her analysis of the Bush administration’s foreign aid policy and its
renovation, similarly describes the rapid increase in aid volumes following statements by President Bush
on the new security strategy, which elevated development to the same level of priority as diplomacy
and defense. Aid levels reached their highest level in their history during the Bush administration, with
the Department of Defense also playing an increasingly prominent role in development aid. Aid for
diplomacy started to include fighting the Global War on Terror (GWOT) however, the Bush
administration also increased levels of aid for global health (ibid.).
Rather than giving space to more humanitarian considerations in development assistance
allocation motivations in the period immediately after the Cold War, the publications mentioned above
describe a reduction in aid expenditures and a preoccupation with domestic political concerns. The
world’s poorest were neglected (Hook 1996) as strategic concerns and colonial relations continued to
motivate aid. Furthermore, aid flows were directed away from the poor nations of little strategic
importance, towards former Soviet bloc transition states, likely also due to strategic and security
concerns (ibid.). Additionally, the increased aid flows to heavily indebted middle-income countries could
be seen as a means of safeguarding economic and financial investments (ibid.). Lancaster (2007a) finds
that during this period of reduced aid budgets, domestic constituencies for development aid began to
campaign for the increase in aid levels and a greater focus on development. During this period too, an
increasing number of governments desired to align their aid-giving policies with the development aid
standards set by the OECD (ibid.). Lancaster argues that these efforts increased in the wake of the 9/11
and other terrorist attacks in Europe (ibid.). Nevertheless it was the debate on whether or not these
poor states, and fragile or failing states, have provided safe havens for terrorism that has to a large
extent motivated highly increased aid allocations in the Global War on Terror, as is evidenced by the
policy statements of the Australian, Danish and US governments.7
China’s foreign aid motivations likewise moved away from the Cold War ideological and political
motivations in the post-Cold War period (Chaponnière 2009; Cheng & Shi 2009; Li 2007). An analysis of
other emerging donors might show similar trends indicating a more global shift in foreign aid allocation
motivations. Noting the changes in foreign aid levels and priorities of the US and other Western
industrialized states in the global war on terror, an investigation into the effects of the war or terror on
the foreign aid policies of China and different emerging donors might likewise indicate global or simply
regional trends.
Aid Allocations and Political Coalitions in the UN
A number of researchers have been concerned with the relationship between aid allocations and
political coalitions in the UN. Alpert and Bernstein (1974), Rai (1972, 1980) and Wittkopf (1973)
conducted their analyses of this relationship at the height of the Cold War. Although Rai’s first study
concluded that more evidence was needed in the discussion of the causal relationship of foreign policy
7
For further discussion concerning terrorism and failed states see for example: Newman, Edward (2007), “Weak
States, State Failure, and Terrorism,” in Terrorism and Political Violence, Vol. 19, No. 4, pp. 463-488; Patrick,
Stewart (2006), “Weak States and Global Threat: Fact or Fiction,” in The Washington Quarterly, Vol. 29, No. 2, pp.
27-53; Rice, Susan E. (2003), “The New National Security Strategy: Focus on Failed States,” The Brookings
Institution Policy Brief No. 116, Washington, DC: The Brookings Institution.
18
and particular voting behavior, his findings did suggest that certain aspects of US and Soviet foreign
policy were closely related to voting in the General Assembly (Rai 1972). His later study observed a
difference between the American and Soviet uses of aid in relation to voting in the General Assembly
(Rai 1980). He finds that American aid was effectively used as an inducement for voting behavior, even
though this also varied in different time periods within the study period (1967-76), whereas evidence on
Soviet aid highlights its use as a reward or punishment rather than inducement (ibid.). However, Rai
urges caution by arguing that causality cannot be concluded from correlations. Wittkopf (1973), who
analyzed the US, the Soviet Union and 12 members of the UN also serving on the OECD-DAC, similarly
refrains from concluding that there is a causal relationship between aid allocations and voting behavior
in the UN, however, he does find associations between the two for many donors. He states that while
these associations were weaker and differed in intensity for different donors in different periods under
study, the associations between aid allocations and UN voting behavior remained consistently strong for
the US (ibid.).
A post-Cold War study of the relationship between aid allocation and UN voting behavior
conducted by Wang (1999) found more conclusive evidence of a causal relationship with regard to US
aid allocation and recipient voting behavior. The author focuses the study on UN voting behavior on
issues considered important to the US (ibid.). He states that the US government has made great efforts,
especially since the linkage policy of Reagan administration, to send the signal to recipient nations that
US aid allocation levels are used as reward or punishment for voting behavior in the UN on issues
deemed important to the US (ibid.). Wang argues that evidence from his study suggests that the US has
been successful in these efforts to induce voter compliance on issues important to the US (ibid.). He
further argues that with the end of the Cold War, the US is still unable to use its military might to force
political compliance, and thus continues to rely on the “economic statecraft” to induce political
compliance (ibid.). Furthermore, Wang indicates that as aid budgets have been reduced in recent years,
the marginal utility of each dollar received by recipients has increased, thus the ability of aid to induce
voter compliance has also increased (ibid.).
The findings in the study conducted by Dreher et al (2008), using panel data for 143 countries
from 1973-2002, also reveal the importance attached to pursuing voter compliance in UN General
Assembly through US bilateral aid allocations. When disaggregating the effectiveness of various forms of
foreign aid in promoting voter compliance they indicate that general budget support, grants and untied
aid are the most effective forms (ibid.). Other forms of aid, they continue, are generally preferred for
other objectives (ibid.). They argue that project aid and concessional loans may be preferred forms to
encourage the productive use of aid in recipient countries, especially in countries where local
governance is not strong (ibid.). Dreher et al add that tied aid might be favored in cases where the
commercial interests of the donor are more prominent than commercial interests (ibid.). The authors
conclude that there is strong evidence to suggest that US aid allocations have bought voter compliance
(ibid.).
Kuziemko and Werker (2006) further analyze US aid allocations to nonpermanent members of
the UN Security Council. They find that developing countries serving on the UN Security Council receive,
on average, an additional $16 million in aid, while in important time periods this figure can rise to as
much as $45 million (ibid.). The authors state that rotating members of the Security Council receive at
least 59 percent more US aid when they serve on the Council, having reached a 170 percent increase
during important voting periods (ibid.).
In their analysis of post-Cold War voting patterns in the UN General Assembly, Kim and Russett
(1996) observe that voting alignment is no longer along the East-West split current in the bipolar
19
international order of the Cold War, rather, they assert, it is now characterized by a North-South split.
The authors argue that voting alignments are likely to be influenced by varying notions of selfdetermination and economic development, reflecting differences between rich and poor countries
(ibid.). They argue that although the importance of North-South issues is not new, these issues were
subordinated to East-West concerns during the Cold War (ibid.) Kim and Russett (1996) also note that
due to the composition of the Security Council permanent membership, namely the dominance of
Western industrialized powers, and their voting patterns and alignments, members of the Security
Council have been able to hold it to a different course than the General Assembly.
In a similar study of Cold War and post-Cold War voting patterns in the UN General Assembly,
Voeten (2000) rejects the structuralist hypothesis of Kim and Russett (1996) who posited that a NorthSouth voting alignment has superseded the Cold War East-West alignment. He argues that much of the
East-West alignment of the Cold War has been carried over in the post-Cold War period. Voeten
presents a ‘Stability Hypothesis’ in which voting alignment is motivated by security concerns as each
state is seen as a potential threat (ibid.). He maintains that besides the fact that a number of former
Soviet bloc countries now align their security concerns with the West and a number of major European
countries have shifted their alignment slightly away from the US in order to balance US power, voting
behavior in the UN General Assembly is still very similar to that of the Cold War period (ibid.). Voeten,
however, does observe the emergence of a counter hegemonic voting bloc consisting of China, India and
some other countries (such as Iran, Iraq, Libya and North Korea) challenging the hegemony of the US
and its Western allies (ibid.). Furthermore, he finds that more democratic countries tend to vote more in
line with the “West” on issues concerning political and economic liberalism, though he adds that
evidence of the influence of regime type on general voting behavior is inconclusive (ibid.). Finally,
though he rejects the hypothesis that the post-Cold War global conflict is characterized by a “clash of
civilizations”, Voeten does find some evidence of divisions between Western and non-Western
countries’ voting behavior, and also between non-Western, Asian, African and Muslim countries (ibid.).
Given the above findings on the correlation between foreign aid allocations and UN voting
behavior, India’s aspirations for permanent membership on the UN Security Council,8 and the fact that
China’s UN Security Council membership can be attributed, at least in part, to its foreign aid efforts in
the 1950s and 1960s (Li 2007), investigation in into the correlations between foreign aid allocations of
China and other emerging donors and UN (both Security Council and General Assembly) voting behavior
in vital in order to highlight foreign policy strategies with regard to pursuit of UN voting objectives. This
is even more pertinent given the observations of Kim and Russett (1996) on the North-South alignment,
and the South-South cooperation of emerging donors strengthening these trends, as well as Voeten’s
(2000) finding indicating the emergence of a counter hegemonic bloc, composed of China, India and a
number of other states, to challenge the hegemony of the US and its Western allies.
Donor Influence on International Financial Institutions
Another important aspect of foreign aid policy is the influence a number of donor countries exert on the
International Financial Institutions such as the IMF, the World Bank and regional development banks. As
these institutions play an increasingly important role in aid policies and financial disbursements, a
number of governments have attempted to exert pressure on them in order to pursue their own
national foreign policy strategies.
8
See, for example, this article on the BBC News website: http://www.bbc.co.uk/news/world-south-asia-11711007
20
Investigating IMF conditionality agreements, Kang (2007) observes that conditions attached to
loans varied both qualitatively and quantitatively, this is despite the IMF’s official economic rules meant
to determine conditionality. Kang notes that the five biggest contributors to the IMF (namely the US, the
UK, Japan, Germany and France) all exert influence upon the IMF in order to determine IMF
conditionality that is not in accordance with official IMF economic rules, in order to promote their own
strategic agendas in developing countries (ibid.). He argues that this influence allows countries with
national characteristics that are considered important to the five biggest contributors to enjoy easier
borrowing conditionality than those that do not have such national characteristics (ibid.). Kang
concludes that the failure of IMF loan conditionality to address the economic problems of certain
recipients can be attributed, at least in part, to the political economic processes within IMF which have
led to conditionalities not appropriate to the situation (ibid.).
Taking a political-economy analysis approach to study IMF lending practices Barro and Lee (2005)
identify a number of variables that explained the probability of IMF loan approval, the size of IMF loans
and the frequency of participation in IMF lending programs. The authors find probability and size of IMF
loans to be larger if a country has a higher level of political and economic proximity to the US and other
major Western European countries, if it has a bigger quota, and if it has more nationals working on the
IMF staff (ibid.). Although this finding does not show an active effort on the part of the US and other
major Western European countries to influence IMF lending practices, their influence is implied through
the positive correlations between probability and size of IMF loans and the political and economic
proximity to the US and other major Western European countries. Barro and Lee proceed to analyze the
effects of this political economy of recipient selection, suggesting that, in general, participation in IMF
loan programs is bad for economic growth (ibid.).
Vreeland (2004) similarly investigates the impact of politics on IMF arrangements and thereby
IMF conditionality. He finds in that IMF agreements signed with countries which are favored by the US,
conditionality is not very strict or it is not strictly enforced (ibid.). US influence over IMF lending policies
is driven by both political and economic motives, to gain or maintain political support from recipients
and to protect financial interests (ibid.). Vreeland further analyzes a number of aspects of the domestic
politics in IMF loan recipient countries with regard to IMF conditionality and the leveraging ability of the
IMF in these countries.
Analyzing US influence over the World Bank in the period 1986 to 2002, Fleck and Kilby (2006b)
find that US influence over the World Bank is characterized by evolving rather than stable relationships,
due to the changing interests and policies of different presidential administrations and varying economic
and political situations. They indentify two US interests that have a significant connection to World Bank
lending allocations when the period under study (1968-2202) is considered as a whole, namely trade
and geopolitical interests (Fleck & Kilby 2006b). Concerning trade Fleck and Kilby find that, all else being
equal, the greater a country’s share of US exports, the higher the levels of World Bank funds that
country receives (ibid.). With regard to geopolitical considerations, the authors find that countries
favored in US bilateral aid allocations were also allocated higher levels of World Bank funds (ibid.).
However, the authors emphasize exact relations varied with different presidential administrations.
In an investigation into the conditionality of World Bank loan disbursements, Kilby (2009) finds
that these are variably enforced. His findings reflect those of Vreeland (2004) regarding IMF
conditionality and US influence. As was the case with IMF conditionality, Kilby (2009) finds that for
countries friendly with the US, conditionality is not generally enforced. Whereas countries which are not
seen as friendly with the US (based on whether or not they make concessions on important UN votes)
conditionality is significantly enforced (ibid.). He notes that these correlations remain evident through
21
different periods of time and across different geographic regions using a number of different estimation
methods (ibid.).
Wade (2002) provides an in-depth analysis of the political workings of the World Bank, and the
influence exerted on it by the US government in part through the US Treasury. Wade does this through
the analysis of two cases where the US exerted pressure to influence the statements made by
incumbents in important ideas-controlling positions in the World Bank. Namely statements by the chief
economist Josephy Stiglitz, who was fired, and director of the World Development Report 2000 Ravi
Kanbur, who resigned. Wade demonstrates that the US is able to exert its influence through the
administrative machinations of the Bank in order achieve its objectives (i.e. to have Stiglitz fired, and the
WDR rebalanced) while appearing to act with procedural appropriateness (Wade 2002). However, he
does identify a certain degree of autonomy for the Bank and limits to the US’s influence upon the
organization (ibid.).
A similar investigation into the influence of donors on IFIs was conducted by Kilby (2006) which
focused on the regional Asian Development Bank. He concludes that there is significant donor influence
on the Asian Development Bank, most notably by the US and Japan. Kilby argues that even when the
cases of China and India are excluded, donor trade interests and geopolitical interests have a greater
influence than humanitarian interests (ibid.). He notes that selection and allocation of ADB funds
discriminates against China and India (ibid). Kilby argues that China was discriminated against for Cold
War US political reasons, where as India was discriminated against on the basis of Japanese concerns
(ibid.). Through comparison with his earlier study, and a number of other studies, Kilby comes to the
conclusion that donor interests exert even more influence in the ADB than they do in the World Bank
(ibid.).
Given the above findings on donor influence of International Financial Institutions and the fact
that China is also a contributor to the World Bank International Development Association9 and the
IMF,10 in addition to being a member of the Asian Development bank, similar investigations regarding
the influence of China and emerging donors on the IFIs are needed. Results of such studies should
highlight similarities and differences in the motivations and means of such influence concerning
traditional and emerging donors, identifying areas where mechanisms to mitigate such influence are
required.
Human Rights, Corruption & the Environment
A more recent development in foreign aid allocation policy, since the end of the Cold War, is its use (at
least in government rhetoric) to promote respect for human rights, reduce corruption, and, more
recently, to assist in matters relating to the environment. Not only is the priority of human rights in
foreign aid allocation part of the rhetoric of many donors, such as the US, in some nations, like the
aforementioned, it is legally required that human rights are given priority over economic and military
interests (Apodaca & Stohl 1999). However, US legislation allows for special circumstances in which
there can be some deviation from this law (ibid.). Apodaca and Stohl (1999), therefore, studied the
relative importance of human rights in US foreign aid allocations. Their findings suggest that human
9
See article on Radio86.com website: http://en.radio86.com/news/world-bank-welcomes-chinas-contribution-idazoellick
10
See article on caijing.com.cn: http://english.caijing.com.cn/2009-04-02/110132520.html. This article states that
China’s contributions to the IMF are said to exceed that of Japan and become second only to the US.
22
rights concern considerations do play an important role in whether or not a country receives US foreign
aid and in determining the levels of aid allocated, with poor human rights performers receiving less US
bilateral economic aid than nations with better human rights records (ibid.). Nevertheless, the authors
observed that national security considerations trumped human rights considerations in countries
perceived to be vital to US national security, these received aid regardless of human rights performance
(ibid.).
An earlier study focusing on the relation of human rights practices and US foreign aid allocation
to Latin American in fiscal year 1982 by Cingranelli and Pasquarello (1985) aimed to identify whether or
not there had been any progress towards human rights considerations in light of earlier studies which
found that human rights violators tended to be rewarded while human rights champions were punished.
Their findings suggest that there had been progress with regard to human rights considerations in US
foreign aid allocation (ibid.). In the two stage process of aid allocation decisions the authors find that
human rights considerations did not play a role in whether or not a country received economic
assistance, however, recipients with better human rights performances did receive higher levels of
economic assistance (ibid.). Cingranelli and Pasquarello find that human rights considerations did have a
significant influence on whether or not a country received military aid, as countries with poor human
rights records were not allocated military aid, however, levels of military aid were not determined by
human rights performances (ibid.).
Neumayer (2003b) similarly investigates the relationship between human rights considerations
and foreign aid allocations. His study on the foreign aid allocations of the 21 OECD-DAC members
differentiates between civil/political rights and personal integrity rights (ibid.). Neumayer finds that
respect for civil/political rights is an important determinant for most donor countries in decisions on
whether or not to provide aid to a recipient, however, personal integrity rights play a much less
significant role (ibid.). One significant finding, Neumayer suggests, is that when both aspects of human
rights are taken together, the like-minded countries’ foreign aid provision is, as far as concern for human
rights is concerned, not better than that of other donors (ibid.). In fact, Neumayer finds that only Japan
and the United Kingdom provide more aid to countries with greater respect for human rights, and these
two countries belong to the group of big donors (ibid.). However, he notes that there is inconsistency in
the influence of human rights considerations for most donors, concluding that not a single donor
consistently refuses aid allocations to countries with lesser respect for both civil/political rights and
personal integrity rights, while providing higher levels to countries with greater respect for both aspects
of human rights (ibid.).
The effects of UNCHR condemnation on aid flows to a country are analyzed by Lebovic and
Voeten (2009). Their findings show that bilateral aid flows are only mildly affected by UNHCR
condemnations, while multilateral aid flows, including flows from international organizations are
strongly affected (ibid.). The authors observe that poor human rights performances result in large
reductions in World Bank and multilateral aid commitments (ibid.). On a similar topic Alesina and Weder
(2002) investigated whether or not less corrupt governments received more foreign aid. They found no
evidence of negative impact of corruption on foreign aid in their broad country analysis (ibid.). However,
their findings do suggest differences among donors with Scandinavian donors rewarding less corrupt
recipients while the US is more concerned with form of governance (democracy) than with quality of
governance (ibid.).11
11
See also Neumayer 2002.
23
A more recent form of aid provision is environmental aid. Figaj (2010) investigates the
determinants of environmental aid allocation. Her conclusions, though not complete, indicate that 1)
poverty and environmental variables are determinants of whether a country received environmental aid
or not, 2) aid levels are determined by economic and environmental issues (ibid.). Figaj finds no evident
differences between bilateral and multilateral environmental aid (ibid.). She also finds no evidence that
political variables play a role in environmental aid allocation considerations, however, economic
considerations do indicate a concern for financial viability (ibid.). She attributes this to the fact most
environmental aid is in the form of loans which need to be paid back by recipients (ibid.).
Discussions concerning the relations between foreign aid allocations and human rights are
particularly pertinent in the case of China and other emerging donors who are often accused of ignoring
human rights performances in their foreign aid allocation considerations (see for example AFRODAD
2008; Asche & Schüller 2008; Cornellisen & Taylor 2000; Dahle Huse & Muyakwa 2008; Konings 2007).
As is evident from the findings presented above, the human rights concerns of traditional donors also
leave a lot to be desired and are also highly variable. A more in depth investigation into the relationship
between foreign aid allocation and human rights considerations by China and other emerging donors is
necessary in order to provide an adequate comparison with traditional donors.
The Moral Dimension of Foreign Aid
A number of publications deal with the humanitarian motivation for foreign aid provision (not to be
confused with humanitarian aid or disaster relief), or the motivation foreign aid provision which is based
on a perceived moral obligation for richer countries to assist poorer ones. Stokke (1989) and Lancaster
(2007a), for example, attribute this to certain nations’ particular values, norms and traditions. Moreover,
humanitarian and moral rhetoric can be employed to justify foreign aid to the general public, although,
in some instances it might be provided with less altruistic motivations.12 In Loescher and Nichols (1989)
a number of authors investigate the relationship between humanitarianism and US foreign policy. Their
analysis addresses the issue of morality and politics while also presenting legislative and legal aspects of
humanitarian assistance in US foreign policy. The authors do this with regard to US foreign assistance to
Central America and the Horn of Africa. Loescher and Nichols argue that humanitarianism is one of the
core principles of America’s dominant political ideologies and traditional morals (ibid.). They illustrate
some of the difficulties of reconciling these principles with politics in the US humanitarian policy,
focusing on humanitarian relief provided in the wake of both natural and political disasters. One of their
contributors, Smith (1989), proposes that certain moral principles are not just intimately related to US
national interests, but rather are at the core of these interests. These principles, he argues, are not
universal. For example, initially, the respect for human liberties was a domestically promoted principle,
however, it is now a moral good that the US has chosen to respect and advance throughout the world
(ibid.).
Lumsdaine (1993) provides a more in-depth investigation in to the role of morality as a
motivation for foreign aid, drawing comparisons among different donors in the period 1949-1989. He
further tracks the evolution of foreign aid in light of morality as a determinant. He concludes that
changes in domestic political orientations and the constantly changing ethical concerns of the publics
can change the character of the international politics, for example, through the institutionalization of
12
See Breuning (1995) for analysis of the correlation between foreign assistance rhetoric and actual policy
behavior.
24
various standards and best practices in the OECD-DAC (ibid.). Lumsdaine argues that any explanation of
foreign aid cannot be based solely on political and economic rationales, but must also provide a central
place to the humanitarian and egalitarian beliefs of the aid donors (ibid.).
Hattori (2003) similarly provides an investigation into the moral dimension of foreign aid. He
argues that donations given to multilateral grant-giving organizations form part of the ‘ethical core’ of a
broader process of the institutionalization of foreign aid (ibid.). He claims that this institutionalization
process is part of the collective effort of former colonizing countries in the postwar period, and that the
key organization in this endeavor the OECD-DAC (ibid.). He argues that DAC has taken the role of ‘moral
bookkeeper’ encouraging the use of foreign aid as virtuous practice (ibid.). Hattori concludes that this
increased ethical discourse and public scrutiny have created the incentive for donors to conform their
foreign aid practices to these beneficent standards, and further discusses the implications of this on the
international order (ibid.).
An earlier study on the relation between aid and ideology was conducted by Imbeau (1988). The
author develops a conceptualization of international aid-giving behavior based on the notion of a
bounded rationality that involves the interaction between objective and subjective factors (Imbeau 1988:
3). From this he deduces four hypotheses to explain different levels of aid expenditures: instrumental,
humanitarian, ideological and incremental (ibid.). He analyzes these hypotheses across 17 OECD donors
in the years 1966, 1971, 1976 and 1981 using a regression model (ibid.). Imbeau concludes that the best
predictors of aid as a percentage of GNP, during the periods of study, are the instrumental and
ideological hypotheses, the former with a lagged value dependent variable and the latter without (ibid.).
He finds that the humanitarian hypothesis’ explanatory value is insignificant (ibid.). Imbeau defines
ideology as “an organized set of values and goals about the development of a society” (Imbeau 1988:
24). These values and goals, he argues, influence policy, and due to their ingrained nature in a polity,
they are more or less constant when considered within 20 year periods (ibid.). The author argues that it
has been shown that in order to gain a reliable picture of foreign policy decision making, it is necessary
to simultaneously assess the relationship between objective and subjective factors (such attitudes and
values), and foreign policy behavior (ibid.).
Conclusion
As has become apparent from this brief introduction on a few of the aspects of the roles of foreign aid in
politics, foreign aid is a complex issue. Foreign aid is used to serve a multitude of purposes and any given
donor’s foreign aid policy composition changes periodically. Policies are formulated in consideration of
domestic determinants – such as socio-economic climate, dominant norms and values, constituent
pressures, government strategy – in view of the international context (e.g. national security concerns,
geo-political positioning). This bibliography makes certain recurring and emerging trends apparent, for
example, the increased use of aid for commercial reasons in times of economic downturns to promote
domestic economic development, and the trend towards more altruistic motivations in times where
there are fewer economic and political concerns.
The variable nature of aid should also put into perspective any investigation into the nature of
the relations of China and other emerging donors with less developed countries, begging the question
whether these relations are so different to those of Western industrialized nations with their less
developed counterparts, both past and present (Bräutigam 2009). It is important at this juncture to
repeat that China is not a new donor. Due to the changing domestic and political contexts following the
25
end of the Cold War, the economic reforms since 1978, the opening up to foreign investment during the
1990s, and the more recent “outward bound” policies which promote the foreign investment by Chinese
companies, its foreign policy and foreign aid strategies and composition has changed (Chaponnière 2009;
Cheng & Shi 2009; Li 2007). It no longer pursues the geo-strategic foreign aid policies intended to spread
Communism (ibid.). A comparative analysis of Chinese, Japanese, French, US, and Nordic foreign aid
policies would likely reveal that Chinese foreign aid policies hold a lot in common with the foreign aid
policies all of these traditional donors. There are elements of the commercial interests found in
Japanese aid (e.g. Bräutigam 2009; Broadman 2007; Chaponnière 2009; IOSCPRC 2005; MoFAPRC 2006).
There are elements of building regional influence, like that found in French and Japanese foreign aid
policies, although the terminology used by the Chinese government is that of building friendships,
partnerships and trust (IOSCPRC 2005; Li 2007; MoFAPRC 2006).13 There are, moreover, similarities with
the US national security concerns (IOSCPRC 2005).14 And finally, there are also aspects of the humane
internationalism of Nordic countries, such as the policy of nonintervention (MoFAPRC 2006), though it is
not clear whether or not the Chinese government believes it is morally responsible for assisting in the
development of less developed countries. Publics in both Japan and France have had little influence of
their governments’ foreign aid policy formulation (Lancaster 2007a), as is clearly the case in China too.
A greater understanding of the domestic political forces shaping Chinese foreign policy and
foreign aid policy is needed to understand its foreign relations and foreign policy strategies. Lancaster
(2007a) provides a useful framework for analysis through the categorization of these domestic political
forces into: ideas, interests, political institutions and the organization of aid. Goldstein and Keohane’s
(1993) analytic framework concerning the role of ideas in shaping policy could provide a useful
underpinning to such an analysis. Assumptions are easily made based on notions of Communism,
planned and controlled economies and authoritarian regimes, however, there are other elements of the
domestic political forces in China, such as worldviews, traditions, morals, principled and causal beliefs,
which need to be investigated and taken into consideration. The effects of Asian values and
Confucianism on foreign relations and foreign policy strategy would need to be studied, as well the
extent to which foreign policy and foreign aid policy are guided by Marxist/Socialist/Maoist/Communist
ideologies and the reformist concepts of Deng Xiaoping. Given the importance of Guanxi (relationships)
in Chinese society, and the fact that an overwhelming proportion of senior government officials have
relatives in senior business positions,15 the extent to which these relationships, as one of the domestic
political forces, drives or guides foreign policy formulation needs to be investigated and understood.
Additionally, analyses such as that conducted by Imbeau (1988) concerning the relationship between
objective and subjective political factors and foreign policy behavior will likely produce a better
understanding of China’s foreign policy decision making.
Additionally, the effect of Thérien and Noël’s (2000) findings that parties who remain in power
for extended periods of time have been able to make their own concepts of social justice central to
national political debates, thus shaping foreign aid policies and priorities, needs to be investigated with
regard to China.
It might also be fruitful take the lens of humane internationalism, as Stokke (1989) and Pratt
(1989) did, and consider to what extent Chinese relations with the less developed countries fits within
the different forms of this broad ideology, as socialist ideological elements play a large part in humane
13
Note, for example, China’s activities within the framework of the Shanghai Cooperation Organization.
See note 4 above, as well as Chinese participation in the Global War on Terror.
15
For further details see: Yu, O. (2008), “Corruption in China’s Economic Reform: A Review of Recent Observations
and Explanations,” in Crime, Law and Social Change, Vol. 50, No. 3, pp. 161-176, Springer Netherlands.
14
26
internationalism and Communism. Rather than being a humane internationalist or an international
realist could China be a humane international realist or a liberal internationalist? Furthermore, is China
more sensitive to recipient needs than traditional donors? If so, to what extent can this sensitivity be
explained by Pratt’s (1989) theory as to why certain countries are more sensitive to recipient needs than
others? It is clear that part of China’s sensitivity could be attributed to the pursuit of favorable
consideration by recipients concerning other international political issues (Li 2007), and due to the fact
that China itself is still a developing country (IOSCPRC 2005; MoFAPRC 2006).
Additionally, using Holsti’s typology as Hook (1996) did what role would China play? Would it
play the role of the “regional-subsytem collaborator” which does not want to play a global role, but,
instead wants to build wide cooperative communities? It is obvious that through China’s global reach
and increasingly intense economic and political activities, it has already outgrown this role. Further,
China’s aid provision and association with voting behavior in the UN could be investigated, especially
given the fact that China’s membership can be attributed to the result of their aid efforts in Africa in the
1950s and 1960s (Li 2007).
It is clear that a lot is known about the history and politics of foreign aid provided by Western
industrialized nations. Although there is a growing literature on China’s foreign aid policies, these need
to be put into the perspective provided by the aid practices, both past and present, of Western
industrialized nations, as well as the context of China’s own domestic political forces.
Note
This annotated bibliography is a compilation of the conclusions, executive summaries, and excerpts from
important contributions concerning the role of aid in foreign policy and politics. References contained in
the compilation below refer to references in the publications, for further information please refer to the
publication in question. The functions which aid serves varies over time and for different nations
depending on the configurations of circumstances (both domestically and abroad), therefore careful
attention should be paid to the date of publication of the articles and books below, in order to
understand both the context and the changes in the role of aid in foreign policy and politics.
CONTENTS
(Bibliography on Chinese engagement with the developing world on pg. 432)
ALESINA, ALBERTO AND DOLLAR, DAVID (2000), “WHO GIVES FOREIGN AID TO WHOM AND WHY?” IN JOURNAL OF
ECONOMIC GROWTH, VOL. 5, NO. 1, PP. 33-63. ________________________________________________ 44
ALESINA, ALBERTO AND WEDER, BEATRICE, (2002) “DO CORRUPT GOVERNMENTS RECEIVE LESS FOREIGN AID?”, IN
AMERICAN ECONOMIC REVIEW, VOL. 92, NO. 4, PP. 1126–1137. ___________________________________ 45
ALPERT, EUGENE J. AND BERNSTEIN, SAMUEL, J. (1974), “INTERNATIONAL BARGAINING AND POLITICAL COALITIONS: US
FOREIGN AID AND CHINA’S ADMISSION TO THE UN,” IN THE WESTERN POLITICAL QUARTERLY, VOL. 27, NO. 2, PP. 314327, UNIVERSITY OF UTAH. ______________________________________________________________ 45
APODACA, CLAIR AND STOHL, MICHAEL (1999), “UNITED STATES HUMAN RIGHTS POLICY AND FOREIGN ASSISTANCE,” IN
INTERNATIONAL STUDIES QUARTERLY, VOL. 43, NO. 1, PP. 185–98, BLACKWELL PUBLISHING. _________________ 47
27
ARVIN, MAK B. AND DREWES, TORBEN (1998), “BIASES IN THE ALLOCATION OF CANADIAN OFFICIAL DEVELOPMENT
ASSISTANCE,” IN APPLIED ECONOMICS LETTERS, VOL. 5, NO. 12, PP. 773-5, ROUTLEDGE TAYLOR & FRANCIS GROUP._ 47
ARVIN, MAK B. AND DREWES, TORBEN (2001), “ARE THERE BIASES IN GERMAN BILATERAL AID ALLOCATIONS?”, IN
APPLIED ECONOMICS LETTERS, VOL. 8, NO. 3, PP. 173–7. _________________________________________ 48
ARYEETEY, ERNEST AND DINELLO, NATALIA (EDS.) (2007), TESTING GLOBAL INTERDEPENDENCE: ISSUES ON TRADE, AID,
MIGRATION AND DEVELOPMENT, CHELTENHAM (UK) AND NORTHAMPTON (US): EDWARD ELGAR PUBLISHING. _____ 48
AUSTRALIAN GOVERNMENT, AUSAID, FEATURE STORIES OF AUSAID – TACKLING TERRORISM, RETRIEVED FROM
HTTP://WWW.INDO.AUSAID.GOV.AU/FEATURESTORIES/TACKLINGTERRORISM.HTML ON NOVEMBER 21ST, 2010. ____ 48
BALL, RICHARD AND JOHNSON, CHRISTOPHER (1996), “POLITICAL, ECONOMIC AND HUMANITARIAN MOTIVATIONS FOR PL
480 FOOD AID: EVIDENCE FROM AFRICA,” IN ECONOMIC DEVELOPMENT AND CULTURAL CHANGE, VOL. 44, NO. 3, PP.
515-537. __________________________________________________________________________ 48
BANDYOPADHYAY, SUBHAYU AND WALL, HOWARD (2007), “THE DETERMINANTS OF AID IN THE POST COLD-WAR ERA,”
IN FEDERAL RESERVE BANK OF ST. LOUIS REVIEW, VOL. 89, NO. 6, PP. 533–547. _________________________ 50
BARRO, ROBERT J. AND LEE, JONG-WHA (2005), “IMF PROGRAMS: WHO IS CHOSEN AND WHAT ARE THE EFFECTS?” IN
JOURNAL OF MONETARY ECONOMICS, VOL. 52, PP. 1245-1269._____________________________________ 50
BEARCE, DAVID H. AND TIRONE, DANIEL C. (2009), “FOREIGN AID EFFECTIVENESS AND THE STRATEGIC GOALS OF DONOR
GOVERNMENTS,” IN THE JOURNAL OF POLITICS, VOL. 72, NO. 3, PP. 837-851, CAMBRIDGE UNIVERSITY PRESS. ____ 51
BEENSTOCK, MICHAEL (1980), “POLITICAL ECONOMETRY OF OFFICIAL DEVELOPMENT ASSISTANCE,” IN WORLD
DEVELOPMENT, VOL. 8, NO. 2, PP. 137-44, ELSEVIER SCIENCE, LTD. __________________________________ 53
BERTHÉLEMY, J-C. (2005), “BILATERAL DONORS’ INTERESTS VS RECIPIENTS’ DEVELOPMENT MOTIVES IN AID ALLOCATION:
DO ALL DONORS BEHAVE THE SAME?”, IN REVIEW OF DEVELOPMENT ECONOMICS, VOL. 10, NO. 2, PP. 179-194.___ 53
BERTHÉLEMY, J-C. (2007), “RENT-SEEKING BEHAVIORS AND PERPETUATION OF AID DEPENDENCE: THE DONOR-SIDE
STORY,” IN ARYTEEY, E. AND DINELLO, N. (EDS.) TESTING GLOBAL INTERDEPENDENCE: ISSUES ON TRADE, AID, MIGRATION
AND DEVELOPMENT, CHELTENHAM (UK) AND NORTHAMPTON (US): EDWARD ELGAR PUBLISHING. _____________ 54
BERTHÉLEMY, J-C. AND TICHIT, A. (2004), “BILATERAL DONORS’ AID ALLOCATION DECISIONS: A THREE-DIMENSIONAL
PANEL ANALYSIS,” IN INTERNATIONAL REVIEW OF ECONOMICS AND FINANCE, VOL. 13, NO. 3, PP. 253-274. _______ 55
BLACK, LLOYD D. (1968), “CHAPTER 2: THE RATIONALE – WHY FOREIGN AID?,” IN BLACK, LLOYD D., THE STRATEGY OF
FOREIGN AID, PP. 13-21, PRINCETON: D. VAN NOSTRAND. _________________________________________ 56
BOBBA, MATTEO AND POWELL, ANDREW (2007), “AID EFFECTIVENESS: POLITICS MATTERS,” INTER-AMERICAN
DEVELOPMENT BANK RESEARCH DEPARTMENT WORKING PAPER NO. 601, WASHINGTON, DC: INTER-AMERICAN
DEVELOPMENT BANK. __________________________________________________________________ 61
BOONE, P. (1996), “POLITICS AND THE EFFECTIVENESS OF FOREIGN AID,” IN EUROPEAN ECONOMIC REVIEW, VOL. 40, NO.
2, PP. 289–329. _____________________________________________________________________ 62
28
BOSCHINI, ANNE AND OLOFSGÅRD, ANDERS (2007), “FOREIGN AID: AN INSTRUMENT FOR FIGHTING COMMUNISM?”, IN
JOURNAL OF DEVELOPMENT STUDIES, VOL. 43, NO. 4, PP. 622-648. __________________________________ 63
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________________________________________________________________________________ 372
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SVENDSEN, KNUD ERIK (1989), “DANISH AID: OLD BOTTLES,” IN STOKKE, OLAV (ED.), WESTERN MIDDLE POWERS AND
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42
THÉRIEN, JEAN-PHILIPPE AND NOËL, ALAIN (2000), “POLITICAL PARTIES AND FOREIGN AID,” IN AMERICAN POLITICAL
SCIENCE REVIEW, VOL. 94, NO. 1, PP. 151-162. _______________________________________________ 398
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NO. 3, PP. 449-66. ___________________________________________________________________ 399
THORBECKE, ERICK (2000), “THE EVOLUTION OF THE DEVELOPMENT DOCTRINE AND THE ROLE OF FOREIGN AID, 19502000,” IN TARP, FINN (ED.), FOREIGN AID AND DEVELOPMENT: LESSONS LEARNT AND DIRECTIONS FOR THE FUTURE, PP.
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WASHINGTON, DC: USAID. _____________________________________________________________ 405
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VOETEN, ERIK (2004), “RESISTING THE LONELY SUPERPOWER: RESPONSES OF STATES IN THE UNITED NATIONS TO U.S.
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NOVEMBER 18-19, 2004. ______________________________________________________________ 410
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________________________________________________________________________________ 431
Alesina, Alberto and Dollar, David (2000), “Who Gives Foreign Aid to Whom and Why?” in Journal of
Economic Growth, Vol. 5, No. 1, pp. 33-63.
Most observers agree that foreign aid has been, at best, only partially successful at promoting growth
and reducing poverty. One reason is the poor performance of the bureaucracies of the receiving
countries. The other reason (documented in this paper) is the pattern of the flows of foreign aid. The
allocation of bilateral aid across recipient countries provides evidence as to why it is not more effective
at promoting growth and poverty reduction. Factors such as colonial past and voting patterns in the
United Nations explain more of the distribution of aid than the political institutions or economic policy
of recipients. Most striking here is that a non-democratic former colony gets about twice as much aid as
a democratic non-colony. A similar result holds for former colonies that are closed to trade versus open
non-colonies.
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From the point of view of efficient aid, each of the “big three” donors—U.S., Japan, and France — has a
different distortion: the U.S. has targeted about one-third of its total assistance to Egypt and Israel;
France has given overwhelmingly to its former colonies; and Japan’s aid is highly correlated with UN
voting patterns (countries that vote in tandem with Japan receive more assistance). These countries’ aid
allocations may be very effective at promoting strategic interests, but the result is that bilateral aid has
only a weak association with poverty, democracy, and good policy.
When we estimate equations for individual donors, we find striking differences in their allocations. After
controlling for its special interest in Egypt and Israel, U.S. aid is targeted to poverty, democracy, and
openness. The Nordic countries have a similar pattern except that they do not have the same sharp
focus on the Middle East. French assistance, on the other hand, has little relationship to poverty or
democracy even after controlling for their strategic interests in former colonies and UN friends. The
same conclusion holds for Japan, with the caveat that its strategic alliance may be built around
investment and trade relationships, more than former colonial ties.
We also looked at the time series relationships between aid, on the one hand, and democracy and
openness, on the other. There is a very clear trend for democratizers to get a substantial increase in
assistance (50 percent on average), and but no strong tendency for economic liberalizers to be boosted.
In terms of the incentives implicit in aid allocations, this time series dimension is what is important: it
reveals what a particular country can expect as it reforms political institutions and economic policy.
Finally, we estimated an equation for the flow of direct foreign investment, which provides a useful
reference point for aid allocations. We found no mutual dependence of private flows and bilateral aid.
Private flows respond to the rule of law and good economic policy, and are largely indifferent to
democracy or the strategic considerations that play such an important role in aid allocations. Ceteris
paribus, private flows go to higher income developing countries, perhaps because they have larger
markets. This last finding is important, because it reveals that low-income countries cannot expect much
in the way of private flows even if they have good rule of law and sound economic policies.
Alesina, Alberto and Weder, Beatrice, (2002) “Do Corrupt Governments Receive Less Foreign Aid?”, in
American Economic Review, Vol. 92, No. 4, pp. 1126–1137.
The answer to the question posed in the title is “no.” There is no evidence that less corrupt governments
receive more foreign aid. Our vast exploration of the data never uncovered any even weak evidence of a
negative effect of corruption on received foreign aid. The same result applies to debt relief program, an
additional form of aid. We found significant differences across donors. Scandinavian donors (the most
generous in per capita terms) do reward less corrupt receivers. On the other hand, the United States
appears to favor democracies, but seems to pay no attention to quality of government of receiving
countries. Finally, we find indications of a “voracity effect” of foreign aid.
Alpert, Eugene J. and Bernstein, Samuel, J. (1974), “International Bargaining and Political Coalitions:
US Foreign Aid and China’s Admission to the UN,” in The Western Political Quarterly, Vol. 27, No. 2, pp.
314-327, University of Utah.
45
This model has provided a useful framework for examining the nature of coalition formation in the
United Nations on an important issue involving a conflict between the interests of the United States and
the Soviet Union. The selection of U.S. foreign aid as an independent variable in explaining the voting
patterns of U.N. members reveals some significant information about the dynamics of coalition building
from 1961 to 1968.
The major findings include support for a minimum winning coalition as a primary goal of the coalition
leaders. The nature of foreign aid and its limited supply prevents its distribution on a purely random
basis. Instead, nations such as the United States and the Soviet Union have used this resource to their
political advantage, and this model provides for an examination of its rational use.
It appears that the United States embarked on an aid program during the early sixties that was initially
quite inefficient. Aid was distributed in a capricious manner, with too much aid being distributed in
some cases and not enough in others. In subsequent years, aid was decreased and reallocated on a
more practical basis, especially as a result of increased information (though not at all perfect) and the
demands (or requests) of the newly independent countries that swelled the U.N. membership rolls
during this period.
The United States provided most of its coalition with a minimum level of aid, but when it miscalculated
the tolerance of a country for this level of aid, it usually had to pay increased side-payments to cajole
the country to return to the coalition. Many countries were “free,” since their particularly close ties to
either the U.S. or China already provided them with adequate incentives. Some were easily courted by
token levels of aid, while others had to be romanced by large doses of aid, and all because of the
uncertainty as to the voting intentions of each country for each voting year.
Occasionally the U.S. tried to seek out members of the opposing coalition, partly for information
purposes about the receptivity of possible favorable vote changes in response to U.S. aid and also for
the opening of communication channels in case extra votes might be needed in the future. Cases were
found where aid increases were associated with favorable changes of vote from YES to ABSTAIN or No,
but for the most part the United States was more successful in changing votes from ABSTAIN to No.
The United States was least successful in its aid appropriations to countries also receiving Soviet foreign
aid. After a series of probings, U.S. aid gradually receded, but it is interesting to try to understand that
despite its effectiveness against U.S. foreign aid, the Soviet Union did not overtly attempt to expand its
coalition beyond a certain limit. We can either surmise that U.S. aid was an adequate deter-rent to
Soviet advances, particularly in Latin America and selected African nations, or that Soviet aid was very
limited and could be used only conservatively. Horvath hypothesizes that while the efficiency of Soviet
foreign aid per monetary unit tends to be very high, the high leverage of Soviet economic aid seems to,
be more effective in the short run and that often the initial good will contacts quickly cool off to the
extent of an actual rebound of bad will.26 This notion along with the relative stability of the U.S. coalition
indicates that the representation of China and the expulsion of the Nationalists could probably have
been prevented for a number of years, except for the Summer 1971 announcement of Nixon's visit to
China, making the subsequent U.N. vote on admission essentially moot.
Although we do not provide any statistical evidence of a causal relationship between foreign aid and U.N.
voting, the associations revealed by the framework presented here tempt one to make the transition to
a cause and effect explanation. However, alternative explanations are still possible and the complexities
of the time lags and small numbers of cases in some instances are a few of the arguments against such
assertions. Nevertheless, the model does present an interesting way to observe, post hoc, the activities
46
of international bargaining, since there are usually so few opportunities that provide adequate data
resources.
The use of foreign aid as side-payments is by no means the only kind that can be traded in this type of
coalition formation. Our definition of U.S. foreign aid is a narrow one, not entailing military expenditures,
which may really be the decisive factor. Instead of pondering the real value and significance of these
expenditures, we chose simply a representative sub-sample of aid transfers. By explaining the
fluctuations and levels of aid within the framework of this model, we have been successfully able to
explain a significant amount of nations' behavior, indicating that perhaps our choice was a
representatively good one.
Theoretically, the approach used here can be used in other international bodies and for other uses, but
only after careful examination of the extent to which the conditions of the model can be satisfied.
Situations approaching zero-sum games are difficult to find and the growing detente between the
United States and Soviet Union signals an era of cooperation, compromise, and non-zero sum games.
Apodaca, Clair and Stohl, Michael (1999), “United States Human Rights Policy and Foreign Assistance,”
in International Studies Quarterly, Vol. 43, No. 1, pp. 185–98, Blackwell Publishing.
U.S. law requires that the government give human rights priority over other foreign policy
considerations, such as economic interest or military presence, in the allocation of foreign aid. But
human rights are not an absolute criterion for the dispersion of aid. The legislation allows for lawful
digression from the human rights requirement in cases of "extraordinary circumstances" or when the aid
will directly help needy people. Is there a relationship between the allocation of foreign economic and
military aid and human rights performance? Our study is the most comprehensive research to date on
the relationship between human rights and foreign aid. Not only did we include more country cases, but
we also expanded the time of study to include the Bush and Clinton administrations.
At the gatekeeping stage we established that human rights concerns did impact whether a country
received U.S. economic aid or not (with the exception of the Clinton administration). A country's human
rights performance significantly determined how much aid the country received. Those countries with
bad human rights records received less U.S. bilateral economic aid than those countries with better
records. U.S. military presence, measured by the number of military personnel stationed within the
country, also determined the sum of economic aid allocated. Rhetoric notwithstanding, we found that,
on a worldwide scale, the amount of economic aid allocated was remarkably consistent between
administrations. Using the Carter administration as our referent, we found no statistically significant
differences in the amount of aid allotted to each country among the administrations.
In sum, we find that human rights do play a role in the decision of who receives U.S. bilateral foreign
assistance, and how much aid they are allotted. But other national security interests play a more
prominent role. Countries perceived to be of vital importance to U.S. national security, as measured by
the presence of a large number of military personnel, along with Latin America, receive aid regardless of
their human rights records.
Arvin, Mak B. and Drewes, Torben (1998), “Biases in the Allocation of Canadian Official Development
Assistance,” in Applied Economics Letters, Vol. 5, No. 12, pp. 773-5, Routledge Taylor & Francis Group.
47
A strong inverse relationship between per capita assistance and population of aid-receiving countries is
found in an examination of Canadian bilateral foreign aid to 33 countries over the period 1982–92.
However, the middle-income bias present in aid allocation of some other countries is not found in the
case of Canada. Instead, there is a bias associated with the recipient’s membership to the
Commonwealth. [From abstract]
Arvin, Mak B. and Drewes, Torben (2001), “Are There Biases in German Bilateral Aid Allocations?”, in
Applied Economics Letters, Vol. 8, No. 3, pp. 173–7.
A strong inverse relationship between per capita assistance and population of aid-receiving countries is
found in an examination of German bilateral foreign aid to 85 countries over the period 1973-1995.
However, the middle-income bias present in aid allocation of some other countries is not found in the
case of Germany. Instead, there is a bias associated with a recipient’s coverage under the Lomé
Convention. Results generally appear to be consistent with both donor interest and recipient need
models of foreign aid.
Aryeetey, Ernest and Dinello, Natalia (eds.) (2007), Testing Global Interdependence: Issues on Trade,
Aid, Migration and Development, Cheltenham (UK) and Northampton (US): Edward Elgar Publishing.
Australian Government, AusAid, Feature Stories of AusAID – Tackling Terrorism, retrieved from
http://www.indo.ausaid.gov.au/featurestories/tacklingterrorism.html on November 21st, 2010.
Australia's aid program is involved in a number of longterm anti-terrorism projects in the Asia-Pacific
region. These projects are helping the region to understand and change the conditions that can foster
terrorism. The shocking events of 11 September 2001 and 12 October 2002 forced the issue of
international terrorism onto the front page of every newspaper in the Asia-Pacific region. The world is
now grappling with the issue of how to defeat global terrorism. The United Nations and other
international organisations, such as the Organisation for Economic Cooperation and Development
(OECD), are working with their members to develop the capabilities needed to combat terrorism.
Countries are now required by the United Nations and the OECD to strengthen areas such as customs
and the banking sector. The region's forums, like the ASEAN Regional Forum and APEC (Asia-Pacific
Economic Cooperation), have also agreed on anti-terrorism measures. Australia is working closely with
its neighbours to assist them in meeting the commitments they have agreed to implement.
Providing Australian aid in areas such as customs and finance will help the region to restore growth and
confidence and develop anti-terrorism measures.
Ball, Richard and Johnson, Christopher (1996), “Political, Economic and Humanitarian Motivations for
PL 480 Food Aid: Evidence from Africa,” in Economic Development and Cultural Change, Vol. 44, No. 3,
pp. 515-537.
48
When we consider all titles of PL 480 and all 20 years of our sample, geopolitical interests and surpluses
of American agricultural commodities appear to have been the most influential factors in the allocation
of U.S. food aid among African recipients. Humanitarian considerations also appear to play a role, but
the evidence on this issue is less compelling. The one hypothesized motivation for the PL 480 program
that does not appear statistically significant is the market development objective. As we have discussed,
however, it is not clear whether this result indicates that the goal of developing commercial markets has
in fact not influenced food aid allocations or whether it reflects measurement difficulties.
When we disaggregate the sample, we find that the these various [sic] objectives are given different
weights in the different titles. For Title I aid alone, political factors are more important than in the
sample as a whole, and there is no evidence that allocations were affected by humanitarian
considerations. In sharp contrast, in the regression for Title II the political variables are not statistically
significant, and the humanitarian variables have a much stronger influence than in the sample as a
whole. These results are broadly consistent with the different stated objectives of these two titles.
The results that we find most striking concern changes in the motivations shaping food aid policy that
occurred between the 1970s and 1980s. When we examine the data from the 1970s alone, political
factors and surplus disposal are strongly significant in explaining patterns of PL 480 distribution, but the
humanitarian indicators have little influence. Particularly notable in the 1970s is that even in the Title II
regression, which we expect to be most heavily influenced by humanitarian concerns, food aid receipts
are not significantly related to infant mortality. The data for the 1980s, on the other hand, show
precisely the opposite pattern: neither the political variables nor U.S. grain surpluses turn out to be
statistically significant, but the indicators of humanitarian needs are strongly significant. Remarkably,
none of the three political variables are significant in any of the three regressions for the 1980s.33
This evolution in the motivations behind PL 480 aid is consistent with larger trends in international
politics over the period we study, particularly the waning influence of the Cold War. Even before the fall
of the Berlin Wall in 1990 or Margaret Thatcher's 1988 declaration that “The Cold War is over,”34 the
strategic significance of Africa as an East-West battleground was declining. According to D. Rothchild
and J. Ravenhill, “the actions of the Soviet Union in Africa since the mid-1980s as well as the statements
of key policymakers have signaled a major Soviet withdrawal from the continent.”35 The view of Africa as
“merely another chessboard on which the superpowers were playing out their global struggle,” these
authors argue, “has become increasingly irrelevant.”36 The lack of significance of any of the political
variables in our regressions for the 1980s indicates that Africa's changing geopolitical significance has
been reflected in American food aid policy.
Looking ahead to the next 10 years, we expect that some of the patterns of food aid allocation that we
have observed will be maintained, but that others will continue to evolve. The greatest continuity that
we expect is in the differential motivations behind the different titles of PL 480. Legislation passed in
1990 puts administration of Title I entirely in the hands of the USDA, with the explicit mandate of
promoting U.S. agricultural interests, and puts Title II entirely in the hands of USAID, with the explicit
mandate of providing humanitarian relief and development assistance.37 The distinctions between the
objectives pursued with the different Titles of PL 480 should therefore be maintained or even sharpened.
In addition, we expect that the political uses to which food aid is put will continue to evolve. In particular,
the post-Cold War foreign policy of fostering free markets and democratic political systems is already
influencing the programming of American food aid. New legislation referred to as “Food for Progress,”
first introduced in the 1985 farm bill and amended in 1990, now provides food aid to countries engaged
in liberalization of agricultural markets, as well as to “newly emerging democracies.”38 It appears that
49
food aid will continue to serve multiple objectives and that these objectives will continue to evolve in
response to changes in the global political and economic environment.
Bandyopadhyay, Subhayu and Wall, Howard (2007), “The Determinants of Aid in the Post Cold-War
Era,” in Federal Reserve Bank of St. Louis Review, Vol. 89, No. 6, pp. 533–547.
In this paper, we have estimated the responsiveness of total aid in the post-Cold War era to the needs,
civil/political rights, and government effectiveness of recipient countries. To do so, we used the
approach espoused in Trumbull and Wall (1994): to use fixed effects to control for donor interests. We
have found that aid in this era generally responded negatively to per capita GDP and positively to infant
mortality, rights, and government effectiveness. This is in contrast with much of the existing literature,
which, while tending to find a negative link between aid and per capita income, has been decidedly
more mixed in terms of the other variables.
Barro, Robert J. and Lee, Jong-Wha (2005), “IMF Programs: Who is Chosen and What are the Effects?”
in Journal of Monetary Economics, Vol. 52, pp. 1245-1269.
We began with a political-economy approach to the IMF’s lending decisions. Holding fixed a set of
standard economic variables, the probability and size of IMF loans were larger when a country had a
bigger quota, more nationals working on the professional staff, and more political and economic
proximity to the United States and the major Western European countries. We measured political
proximity by voting patterns in the U.N. General Assembly and economic proximity by bilateral trading
volume. The set of political-economy variables was statistically significant overall for explaining the size
of IMF loans, the frequency of participation in IMF lending programs, and the probability of IMF loan
approval.
This political-economy analysis of IMF lending practices is of substantial interest for its own sake. More
importantly for present purposes, the results allow us to create instrumental variables to use to
estimate the effects of IMF loan programs on economic outcomes. If we do not instrument, we find that
the IMF loan–GDP ratio has a substantial inverse relation to economic growth in the contemporaneous
5-year period. However, the instrumental estimates indicate that the contemporaneous relation of the
IMF loan–GDP ratio to economic growth is statistically insignificant. Thus, the apparent inverse relation
likely reflects the endogenous response of IMF lending to weak economic conditions. In contrast, the
instrumental estimates still show that the IMF loan-participation rate has a statistically significant
negative influence on economic growth. Therefore, greater IMF program participation, rather than
larger loans, seems to retard growth. We also analyzed the effects of IMF loan programs on other
economic and political variables—investment, inflation, government consumption, international
openness, democracy, and the rule of law. The most important result was a negative effect of IMF loan
participation on the rule of law. This channel implies a further, negative indirect effect of IMF loan
participation on economic growth.
Our results do not explain what the direct negative effects of IMF loan participation on economic growth
represent. We know that these effects do not derive from channels involving the explanatory variables
that were held constant in the growth regressions shown in Table 7. However, the IMF may matter
through channels involving additional variables.
50
As an example, the moral hazard created by the potential for IMF loans may cause governments to
spend excessively on public investment or transfers, which were not included in our government
consumption variable. The IMF programs may also encourage inefficient behavior on the part of
government bureaucrats. IMF conditionality may harm economies in ways not captured by the inflation
rate and the other variables considered. For example, there may be effects on tax structure and
regulations.
Finally, IMF loan programs may influence the size and structure of private credit markets. These
possibilities constitute promising avenues for future research. Finally, we end with something of a puzzle.
Our results suggest that participation in IMF loan programs is bad for the economy, at least bad for
economic growth. Why then do host governments choose to participate in IMF loan programs?25 Or, to
put it more strongly, why do countries in politically favored positions—because of large quotas, large
IMF staffs, and political and economic proximity to the IMF’s main shareholding countries—use their
clout to obtain IMF loans when these loans apparently retard economic growth? We have several
possible answers. First, IMF lending may be bad for the economy but good for the governments and
individual politicians who arrange the lending. Second, the IMF lending may lower real GDP but raise a
country’s income, which is augmented by the subsidy element of an IMF program. Third, IMF lending
may lower growth in the short run but raise growth in the long run. However, our analysis fails to find
the higher long-run growth at least over a 5-year horizon. Finally, there may be a time-consistency issue.
A country may be better off if it can commit in advance not to participate in IMF programs (or, possibly,
in foreign aid, and so on). However, ex post, the country may be better off accepting the assistance. We
plan to address these issues in future research.
Bearce, David H. and Tirone, Daniel C. (2009), “Foreign Aid Effectiveness and the Strategic Goals of
Donor Governments,” in The Journal of Politics, Vol. 72, No. 3, pp. 837-851, Cambridge University
Press.
Having argued that foreign aid from Western donors can help promote economic growth in recipient
countries by incentivizing economic reform, but only when the strategic benefits associated with
providing aid are small, we have presented evidence consistent with both the cause and the effect of
this argument. First, we showed that Western aid has promoted economic reform after 1990 when the
strategic benefits of providing aid were relatively small, but not before 1991 when the strategic benefits
were comparatively large. Second, we have also shown that foreign aid has promoted economic growth
in recipient national economies, but only in the post-Cold War era as the strategic benefits associated
with aid provision declined for most Western donors. In response to this evidence, one might argue that
increased foreign aid effectiveness in the post-Cold War era can be explained by other factors, namely
increased economic globalization and/or the so-called “Washington consensus” that emerged around
1990. It is thus important to discuss why these alternative explanations fail to explain the empirical
evidence presented in this paper.
Regarding the possibility that our empirical results stem more from increased economic globalization
post-1990 than from the reduced strategic content of Western aid in the post-Cold War era, we offer
two responses. First, our statistical model made a strong effort to control for economic globalization in
terms of international monetary and trade flows through the Exchange Rate, Exports, and Imports
variables. To the extent that these three control variables are insufficient, our model also included a set
of year fixed effects, which should have picked up any additional economic shocks and globalization
pressures that were common to all units in any given year. Thus, we would argue that our Aid
51
coefficients captured the marginal effect of Western aid when holding constant the effect of economic
globalization.
Second, to the extent that there remain unmeasured economic globalization effects that might have
been picked up by our Aid coefficients, we would argue that globalization tends to work against finding
a statistically significant positive result in the post-1990 period. This argument is based on the
understanding that economic globalization has opened up new channels (e.g., commercial bank lending,
foreign direct investment) through which capital can move from where it is abundant in rich countries to
where it is scarce in poorer ones. And if economic globalization has created more substitutes for the
scarce capital once provided primarily by foreign aid, then Western donors should have become less,
not more, able to enforce the reform conditions associated with their foreign aid. Indeed, this
understanding would suggest that we may have underestimated foreign aid effectiveness in the postCold War era given the greater opportunities for developing countries to obtain external capital with
expanding globalization.
Readers have also suggested that our empirical results could be explained by the so-called “Washington
consensus” that emerged circa 1990 (Williamson 1990). The Washington consensus constitutes a set of
beliefs held by policy elites in the United States and in certain other Western governments about what
constitutes good economic policy (e.g., trade liberalization, reduced government intervention, and more
secure property rights) along with the expectation that policy change in this direction (or what we
defined as “economic reform”) would produce economic growth and stability. Thus, foreign aid might
have been growth ineffective before 1990 because Western policy elites did not believe in economic
reform, but it became growth effective after 1990 due to this new belief.
It is thus important to evaluate this alternative explanation in terms of its causal power. Regarding the
relationship between reform and growth, it is hard to see how a new belief in economic reform could
directly cause a positive relationship between reform and growth. Reform may lead to economic growth,
as argued here, but this would have been true even when Western policy elites (and recipient
government elites) believed otherwise. But it is certainly possible that a new belief in the importance of
economic reform could cause Western policymakers to insist that aid recipient governments engage in
market-oriented economic reform, thus leading to greater economic growth.
But even if it is true that policy beliefs among donor elites have this indirect causal effect on economic
growth in recipient national economies, one still needs to ask why Washington policy elites began to
believe in reform around 1990, but not earlier. The argument presented in this paper provides at least a
partial answer to this question. It would have been hard to believe—at least during the Cold War—that
Western aid could leverage economic reform leading to greater economic growth because Western
policy elites understood that they could not credibly enforce their conditions for economic reform given
their strategic motivations for providing foreign aid. But as these strategic motivations got smaller with
the end of the Cold War, Western policy elites came to believe that their aid conditions would become
enforceable, thus leading to a new consensus about the value of economic reform. Indeed, based on
this logic, one could even argue that the Washington consensus was endogenous to the strategic
character of Western aid: when aid was highly strategic as it was during the Cold War, such a consensus
was unlikely.
We now conclude with a brief discussion about what our argument about the strategic content of
Western aid implies for foreign aid effectiveness post-2001. As our empirical analysis focused on
recipient country-years 1965–2001, the geopolitical era sometimes identified as the ‘”war on terror” is
out-of sample. However, our model does make a prediction about foreign aid effectiveness after 2001,
52
and it is not a particularly optimistic one, at least not in terms of economic growth and development. As
should be obvious, our model predicts declining foreign aid effectiveness after 2001 since certain
Western governments may again be in a situation where they can no longer credibly enforce their
conditions for economic reform.
To the extent that the U.S. government now finds its foreign aid to be an indispensable policy
instrument in its war on terror, then the strategic benefits of providing financial assistance to developing
national economies have effectively increased, making less credible its threats to curtail aid when
recipient governments do not engage in economic reform. Consequently, donor governments—
including, but not limited to, the United States—face a major foreign policy tradeoff: as foreign aid once
again becomes more useful for military-strategic purposes, it becomes less effective at promoting
economic growth and development. Similarly, if foreign aid is to be effective at promoting growth and
development in poorer regions of the globe, Western governments cannot also use it as an instrument
to recruit and retain allies in the war on terror.
Beenstock, Michael (1980), “Political Econometry of Official Development Assistance,” in World
Development, Vol. 8, No. 2, pp. 137-44, Elsevier Science, Ltd.
The main objective of this paper has been to explore the possibility of modelling the aid-giving process.
It is inevitable that a study of this nature will be highly speculative, since this requires the specification
of government objectives and constraints which may be unstable over time, unstable between countries
or both. Nevertheless, as a first attempt at such an exercise, the results reported in Section 3 are
encouraging enough, especially when the decision variable is hypothesized to be net ODA
disbursements measured in nominal terms.
Having said this, it is difficult to be more precise in identifying how the constraint variables influence
ODA, since a variety of competing specifications proved to be satisfactory from a statistical point of view.
Moreover, the incidence of serial correlation among disturbances indicates that it should be possible to
improve upon the specifications in future work. One possibility is that the correlation reflects dynamic
misspecification, in which case the lag between disbursements and commitments may be relevant.
Another is that it is necessary to add further constraint variables and that, while a start has been made
in this paper, the political decision-making process is more complicated than has been assumed here. At
the very least, the present investigation indicates that factors additional to GNP have an important
bearing upon aid performance.
Berthélemy, J-C. (2005), “Bilateral Donors’ Interests vs Recipients’ Development Motives in Aid
Allocation: Do All Donors Behave the Same?”, in Review of Development Economics, Vol. 10, No. 2, pp.
179-194.
My results show that most donors behave in a rather egoistic way: all but one partially target their
assistance to their most significant trading partners. Nevertheless, most donors take some care of the
neediest recipient countries. Moreover, on average, donors target recipients with better governance
indicators, such as democracy or absence of violent conflicts. Finally, they act as complement of
multilateral financial institutions. All these results suggest that, in spite of the egoism of their policies,
bilateral donors also implement some sort of selectivity rules based on recipient needs and merits.
53
Such average results are very robust and do not change qualitatively from one decade to the other, in
spite of the end of the cold war. These results are also very consistent with those found previously by
Berthélemy and Tichit (2004), using a random effect Tobit model. In particular, I confirm the negative
influence of recipient income per capita and population, and the positive influence of democracy and of
trade linkages. But I have also obtained here a host of complementary results, for new explanatory
variables (conflicts, indebtedness, multilateral aid, aid of other bilateral donors, and regional dummy
variables), which could not be included in the random effect Tobit model for computational reasons.
In this paper, I have also uncovered some striking differences among donors. Switzerland, Austria,
Ireland, and the Nordic donors (with the relative exception of Finland, and possibly Sweden) have been
so far much more altruistic than other donors. Conversely, Australia, France, Italy, and to a significant
extent Japan and the United States, are more egoistic than the other donors. This clustering of donors
differs significantly from results obtained by Berthélemy and Tichit (2004), who found that France,
Germany, United Kingdom, and United States were relatively altruistic, and that Australia, Austria, and
New Zealand were relatively egoistic.
In fact, my list of relatively altruistic countries is consistent with other information available on their
development assistance policies. On average, Denmark, the Netherlands, and Norway have over the
1980s and 1990s the highest aid performances, with total aid to GDP ratio close to 0.9%. Ireland, who
was initially a much poorer country that [sic] the others, had in the 1980s and the 1990s a relatively
small aid budget, but channeled more that 50% of its assistance through multilateral aid, instead of
through bilateral aid. Switzerland is yet a different case, with also relatively modest levels of aid budget
(0.33% of GDP), and not much assistance channeled through multilaterals. However, in the case of
Switzerland, such data should be interpreted cautiously, given that this country became member of the
World Bank only in 1992, and of the United Nations only in 2002. Moreover, Switzerland has
consistently offered untied aid to developing countries, unlike most other donors. Conversely, Australia,
France, Italy, and the United States, are known for frequently tying their assistance.
Berthélemy, J-C. (2007), “Rent-Seeking Behaviors and Perpetuation of Aid Dependence: The DonorSide Story,” in Aryteey, E. and Dinello, N. (eds.) Testing Global Interdependence: Issues on Trade, Aid,
Migration and Development, Cheltenham (UK) and Northampton (US): Edward Elgar Publishing.
A successful transition from aid dependence may be impeded by political factors – that is, by the fact
that some rent-seeking economic agents with vested interests in perpetuating aid dependence have a
say in aid allocation decisions. I considered here the donor side of the story. I provided empirical
evidence consistent with the rent-seeking hypothesis by showing that aid allocation policies
implemented by donors, or at least by a vast majority of them, are significantly correlated with their
business interests, as measured by trade linkages.
In order to do so, I examined in detail the motives of bilateral aid allocation decisions, as they are
revealed by data on bilateral aid commitments. I identified both self-interest motives and recipient
needs and merit motives of aid allocation. Bilateral variables which describe self-interest motives are
related to economic and political ties between donors and recipients. I then used such variables to
define what I call the bilateralism effect in aid allocation decisions, development assistance in favor of
relatively good performers. This is, of course, only a second best, because bilateralism in aid allocation is
unavoidably blended by motives which have nothing to do with economic development. In any case,
such self-interested motives cannot be prevented if one relies on a bilateral aid system, because they
54
are part and parcel of the reasons why most bilateral donors provide assistance to developing countries
when they are not the main motive itself.
In such a system, the multilaterals should concentrate their efforts on assistance to the neediest
recipients, instead of targeting good performers, to correct the bias of bilateral aid in favor of their
major trading partners and their geopolitical allies. If the multilateral agencies focus too much on aid
efficiency, the need countries which are not significant political allies of the bilateral donors will be
inevitably almost excluded from all aid sources, because almost by definition their poor economic
performances reduce their attractiveness as business partners.
This sharing of responsibilities between bilateral and multilateral donors would also avoid a too heavy
concentration of aid on a few good performers, that would be inevitable if all donors adopted the same
pattern of aid allocation as the multilateral agencies. According to my econometric estimates, this
diversification of overall aid allocation would also be reinforced by the fact that there is a negative
correlation between the bilateral aid commitments of a donor and aid provided by other donors.
In this framework, one difficult aspect would be the refinancing of the grant element of multilateral
agency operations. Their actions are clearly of a global public good nature, with all the classical
difficulties arising in global public-good financing. But this problem already exists in the current setting,
and the framework that I propose would merely make it more explicit. In fact, making it explicit that the
role of multilateral institutions is fully to take care of pure global-public goods might possibly facilitate
discussions on their financing. The recent success encountered by global public good schemes such as
the Global Fund to Fight AIDS, Tuberculosis and Malaria, and the Global Alliance for Vaccines and
Immunization, suggests that this approach has some value.
Berthélemy, J-C. and Tichit, A. (2004), “Bilateral Donors’ Aid Allocation Decisions: A ThreeDimensional Panel Analysis,” in International Review of Economics and Finance, Vol. 13, No. 3, pp.
253-274.
The database that we have assembled provides a wealth of information and analysis on aid allocation
policies implemented by bilateral donors over the 1980s and 1990s decades. Our analysis identifies a
number of variables, describing both recipients’ needs and performances, as well as the donors’ selfinterests, which have influenced assistance policies. Given the amount of information available, we have
also been able to compare aid policies before and after the end of the cold war, and among donors. Our
conclusions are as follows:
– Aid budgets have faced an autonomous declining trend at a rate of more than 6% a year, in real terms,
since the end of the cold war;
– Overall, aid is progressive, although with a declining intensity over time;
– Although with a declining intensity, the best way to attract bilateral assistance is to go democratic.
This is particularly true with regard to the American and Australian assistance;
– Postcolonial traditional links still have a strong, but declining over time, influence on aid allocation
policies of the former colonial ruling countries;
– Trade linkages have conversely a growing impact, although still with a small magnitude;
55
– Small donors, who need to specialize because of the small size of their aid budgets, tend to target their
trading partners more than big donors, with the exception of Japan;
– On average, donors condition their assistance on positive social performances of the recipients,
particularly after the end of the cold war, but some donors prefer to provide aid to countries with the
biggest social needs;
– Good economic performances have on average been rewarded by donors in the 1990s.
Black, Lloyd D. (1968), “Chapter 2: The Rationale – Why Foreign Aid?,” in Black, Lloyd D., The Strategy
of Foreign Aid, pp. 13-21, Princeton: D. Van Nostrand.
Five presidents, twelve congresses, hundreds of public groups, and a substantial proportion of the
American people, expressing their views in national public opinion polls, have endorsed and supported
foreign aid as a vital element of U.S. foreign policy. Yet, thousands of articulate spokesmen have
condemned U.S. foreign aid as a “give-away,” as a waste of resources, as a boondoggle, as support for
Communism, as a bulwark of corruption, etc., etc.
Random scanning of the Congressional Record reveals opinions such as these:
It is the road to bankruptcy, and not a very long road at that.
We have no basic international policy, having definitely ignored the 125-year-old Monroe
Doctrine. .. In its place has been substituted a hodge-podge of executive orders and gifts of large
sums of money to foreign nations, founded upon no principle at all. …
If I believed the expenditure of this amount of money would stop the spread of Communism, I
would support it. .. But in the light of history, in the light of facts, how can any Senator rise on this
floor and say it will stop Communism. …?
They are deliberating selling America short. … Our Uncle [Sam] in his flirtations has become an
easy prey of foreign and domestic grafters, vampires, and gold diggers.
In place of governing ourselves, in place of looking after our own people, we are now trying to
bribe and govern the world.
Congress is lost in the dismal swamps of foreign intrigue.1
The above quotes were not made in 1968. The first three were made in 1948 during the Senate debate
on the Marshall Plan. The last three were made in 1950 during the House debate on Point Four.
Why, then, have the American people made available more than $100 billion in military and economic
aid during the past generation?
The reasons have been stated thousands of times by thousands of people and in as many different ways.
They all stem from the abiding objective of our foreign policy, which is to attain the kind of world
projected in the Preamble and Articles 1 and 2 of the United Nations Charter. In the words of the
Secretary of State Dean Rusk, this means:
56
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A world free of aggression – aggression by whatever means
A world of independent nations, each with the institutions of its own choice by cooperating with
one another to their mutual advantage
A world of economic and social advance for all peoples
A world which provides sure and equitable means for the peaceful settlement of disputes and
which moves steadily toward a rule of law
A world in which the powers of state over the individual are limited by law and custom, in which
the personal freedoms essential to the dignity of man are secure
A world free of hate and discrimination based on race, or nationality or color, or economic or
social status, or religious beliefs
And a world of equal rights and equal opportunities for the entire human race
The Foreign Assistance Act of 1961, as amended, provides a clear exposition of the reasons for foreign
aid. The preamble states the overall purpose of foreign assistance: “To promote the foreign policy,
security, and general welfare of the United States by assisting peoples of the world in their efforts
toward economic development and internal and external security, and for other purposes.”
The Statement of Policy (Section 102) reads, in part, as follows:
It is the sense of the Congress that peace depends on wider recognition of the dignity and
interdependence of men, and survival of free institutions in the United States can best be assured
in a worldwide atmosphere of freedom.
To this end, the United States has in the past provided assistance to help strengthen the forces of
freedom by aiding peoples of less developed friendly countries of the world to develop their
resources and improve their living standards, to realize their aspirations for justice, education,
dignity, and respect as individual human beings, and to establish responsible governments.
The Congress declares it to be a primacy necessity, opportunity, and responsibility of the United
States, and consistent with its traditions and ideals, to renew the spirit which lay behind these
past efforts, and to help make a historic demonstration that economic growth and political
democracy can go hand in hand to the end that an enlarged community of free, stable, and selfreliant countries can reduce world tensions and insecurity.
It is the policy of the United States to strengthen friendly foreign countries by encouraging the
development of their free economic institutions and productive capabilities, and by minimizing or
eliminating barriers to the flow of private investment capital.
Also, the Congress reaffirms its conviction that the peace of the world and the security of the
United States are endangered as long as international Communism continues to attempt to bring
under Communist domination peoples now free and independent and to keep under domination
peoples once free but not subject to such domination. It is, therefore, the policy of the United
States to continue to make available to other free countries and peoples, upon request, assistance
of such nature and in such amounts as the United States deems advisable and as may be
effectively used to free countries and peoples to help them maintain their freedom. Assistance
shall be based upon sound plans and programs; be directed toward the social as well as economic
aspects of economic development; be responsive to the efforts of the recipient countries to
mobilize their own resources and help themselves; be cognizant of the external and internal
pressures which hamper their growth; and shall emphasize long-range development assistance as
the primary instrument of such growth.
57
The Statement of Policy also makes reference to “… increased economic cooperation and trade among
countries. …” Further, it reaffirms the belief of Congress in the importance of “regional organizations of
free peoples for mutual assistance.”
What does all this boil down to in explaining the real reasons for foreign aid? There is a defense
rationale, there is an economic rationale, there is a political rationale, and there is a humanitarian
rationale.
The Defense Rationale
Between 1945 and 1950 Communist aggression in Europe and Asia subjugated some 14 nations,
covering over 5 million square miles and including more than 700 million people. The Free World is still
threatened by the most dangerous aggregation of aggressive power in history. The Soviet Union and
Communist China maintain the largest collection of men under arms ever assembled in peacetime. They
possess nuclear weapons and are striving steadily to increase their nuclear capabilities. They posses or
control great quantities of raw materials. Uninhibited by moral or humanitarian considerations, their
leaders have imposed a massive system of domination under which all human and material resources
are marshaled in pursuit of the extension of Communist power. Their leaders have vowed that their
system will eventually dominate the entire world.
The Communist menace lies not so much in its theory as in its practice of using force or threats of force
or propaganda or internal subversion to attain its frequently stated goal of world domination and
control. Many examples readily come to mind, such as the Berlin Blockade in 1948, the conquest of
Mainland China in 1949, the Korean invasion in 1950, the fall of Tibet in 1951, control over North
Vietnam in 1954, the invasion of Laos in 1960-61, the Cuban crisis in 1962, and the intensified attempt
to take over South Vietnam in 1965-67. These are only a few examples of Communist aggression. A
complete list would include other events such as insurrection in the Philippines, Malaya, Burma, and
Indonesia following World War II, Communist involvement in the Congo in 1964, Communist take-over
in Zanzibar in 1964, and many others.
Beginning in 1947, under the provisions of Articles 51 and 52 of the United Nations Charter, the U.S.
began to establish, with other nations, a worldwide network of mutual defense alliances and undertook
to assist its partners to increase their strength by providing weapons, equipment, and training, plus
essential economic support. The U.S. also sought rights to construct and maintain additional air bases
and other military facilities at strategic locations. The U.S. and its partners agreed on a series of trade
controls to keep strategic goods from moving to Communist areas.
While the need for military bases has lessened in the missile age, some are still considered vital to the
security of the U.S. The need for collective security arrangements and the military and economic
strength to support them continues to be in the U.S. national interest. Military and economic aid are
necessary to maintain this strength, for they create a shield behind which economic and social
development can continue.
The Economic Rationale
The long-range economic well-being of the U.S. requires a continuing and expanding world commerce as
well as an increasing supply of imported raw materials. This dual requirement depends in large part
upon the peaceful and sustained economic development of other countries. The foreign aid programs of
the U.S. and other donor nations help to maintain the security of and promote the economic
development of the less developed nations. The recent UNCTAD Conference in Geneva made it
58
abundantly clear that the assistance of the industrial donor nations should not only be maintained but
greatly increased. The 77 countries describing themselves as the “developing” nations forcefully went
on record that their rates of growth in recent years have been generally unsatisfactory, that sustained
development is not possible on the basis of their own resources alone, and that the accelerated growth
so urgently needed requires increased efforts by themselves and by the developed countries.
Despite the reliance of the industrial nations upon raw material imports from the underdeveloped areas
and the reliance of the underdeveloped areas upon capital good and other manufactures from the
developed areas, it is nevertheless true that as a general proposition the greatest trade takes place
between the most developed countries. Therefore, if sustained economic growth of the developing
nations can be continued, trade will increase, to the mutual benefit of all.
For some years U.S. exports have been expanding, partly, to be sure, as a result of foreign aid shipments
(including PL 480 commodities). For many years before foreign aid began, U.S. agriculture exported
roughly 10% of its production. This has generally been the margin between a prosperous economy and a
recession. With greatly increased agricultural and industrial exports in recent years, not to mention even
better prospects for the future, the U.S. economy has a tremendous stake in foreign aid.
An aspect of trade that is often overlooked, or is given inadequate emphasis, concerns our imports. Our
dependence upon other areas of the world in this respect is staggering. For some years, the Automobile
Manufacturers Association has issued a chart showing the 85 or so imported items that enter into the
manufacture of an automobile and their principal sources of origin.
In 1951 the Foreign Commerce Weekly (now International Commerce) published a list of U.S. imports
divided into three major categories: (1) articles for which the U.S. is wholly or largely dependent in
imports and for which substitutes are nonexistent or not satisfactory (e.g., chrome, manganese, nickel,
tin, graphite, industrial diamonds, jute, sisal, quinine, shellac, coffee, tea, cocoa, palm oil); (2) articles
which are wholly or mainly imported, but for which, in most or all of their uses, a domestic product can
be satisfactorily substituted (e.g., crude natural rubber, cryolite); (3) articles which are largely supplied
by domestic production, but for which considerable imports are necessary to supplement domestic
production (e.g., cane sugar, wood, wood pulp, copper, lead, zinc).
Commodities in each of the three categories were subdivided into “necessities” (e.g., manganese) and
“semi-necessities” (e.g., coffee). A similar listing in 1967 would not be much different from the 1951 list.
The important point is that we are vitally dependent upon many areas of the world for a large number
of essential imports. Numerous studies, ranging from the landmark report of the Paley Commission2 in
1952 to more current ones, indicate that the U.S. is becoming increasingly dependent on external
sources for essential raw materials.
The Political Rationale
The basic, long-range goal of foreign aid is political. It is not economic development per se. The primary
purpose of foreign aid is to supplement and complement the efforts of the developing nations to
enhance their strength and stability and to defend their freedom. Success in these efforts is necessary to
counter the spread of Communism. Further, the growth of strong independent nations which are
successfully meeting the economic, social, and political needs and demands of their people contributes
in many other ways to U.S. interests. A few of many aspects of the political rationale for foreign aid are
discussed below.
59
In the parlance of aid appropriations there are two major categories of economic aid – “development
assistance” and “supporting assistance.” The latter term refers to aid which has a strategic or political
rationale and usually cannot be justified on economic grounds alone. It is used to protect and advance
immediate U.S. foreign policy interests. As stated in AID’s FY 1966 Summary Presentation to the
Congress:
It is provided primarily to enable larger defense exports to be undertaken in less-developed
nations threatened by Communist expansion and to avert situations of dangerous instability in
sensitive areas. In a few instances it is also provided to encourage independence of action in
nations susceptible to Russian or Chinese Communist domination, to assure access to U.S. military
bases and in other ways to support or promote economic or political stability.
Over 80% of the supporting assistance requested by FY 1966 was intended for Vietnam, Laos, Thailand,
and Korea. Jordan and the Congo accounted for some 14% and the small remainder was for small
programs in a few other countries. In the event of unforeseen political crises requiring rapid aid
infusions, the President’s contingency fund could be drawn upon, although its most frequent use is for
emergency relief to victims of national disasters such as floods and earthquakes.
The distinctions between appropriations categories are really artificial and bureaucratic, for
“development” aid also serves many political purposes. Regardless of what AID officials say publicly, the
political rationale is frequently preponderant in decisions to provide aid. This is a continuing source of
friction and disagreement between AID officials and State Department officers. One “good” Communist
scare in the past has quickly led to a stepped-up tempo of aid activity. This is so widely recognized, in
fact, that government officials in more than a few countries where Communism has not been a problem
have asserted that they should “import” 1,000 Communists as a means of getting a larger share of U.S.
aid. The Communists are also aware of this political reality. In fact, they have even gone so far as to use
it as an argument for a recipient country to accept Soviet aid – that in so doing the country could expect
more U.S. aid!
The State Department also places high value on the employment of foreign aid to bolster the
incumbency of political leaders believed best for U.S. interests or to tip the balance against recognition
of the Chinese Communists or to swing critical votes in international bodies. While it is often stated by
high U.S. officials that the purpose of foreign aid is not to buy votes or popularity, it nevertheless must
be borne in mind that the UN membership (currently 119) has more than doubled in the past decade or
so. In 1950, there were only four UN members from Africa; now there are 39! Each of the newly
independent nations has one vote – just the same as the big powers. In the recent past, the “Afro-Asian”
bloc and the “77” countries of UNCTAD renown have concerted their efforts to swing votes contrary to
the desires of the major industrial countries. While UN votes may not, and should not, be a primary
determinant of aid decisions, it is reasonable to assert that they cannot be ignored – nor are they.
From this brief introduction it can be readily seen that there are many aspects to the political rationale
for foreign aid. One illustration of the magnitude of this way was the widespread belief, at least by
Europeans in the late forties and early fifties, that the Marshall Plan country directors exerted more
power than the U.S. Ambassador.
The Humanitarian Motive
From the onset, U.S. aid programs have always had an underlying humanitarian and ideological basis. In
helping others, however, we are acting in our own self-interest. In the words of President Johnson “…
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the pages of history can be searched in vain for another power whose pursuit of that self-interest was so
infused with grandeur of spirit and morality of purpose.”
The humanitarian basis of U.S. government foreign aid stems from the ideals and actions of the
American people as they have evolved ever since the landing of the Pilgrim fathers. These ideals and
actions were nurtured and developed by the religious, political, and personal freedoms guaranteed
under the Constitution and made possible by our heritage of resources and their development, which
has resulted in the highest per capita wealth of any nation in the world. The actions of the U.S.
government in rapidly meeting emergencies arising from natural disasters, war, and internal
insurrection have been inspired by the continuing examples set by the churches and other nongovernmental groups over the past century or so. Thus, it has been in the American tradition to help the
poor and the needy.
Summary
In summary, then, there are valid reasons for the continuance of foreign aid. If clearly conceived and
properly administered, such aid may be expected to serve the interests of the United States by
promoting its defense and the security of the Free World, by contributing to its economic growth and
spiritual strength, and by helping to develop a world environment of freedom in which the American
people may prosper and live in peace.
The rationale of other donor nations of the Free World may be considered not unlike that of the United
States, though somewhat narrower in scope. Among significant differences, perhaps, may be mentioned
the more limited scope of their aid programs, the greater emphasis on trade in the case of some, and
the general absence or subordination of the humanitarian motive. As for Communist aid, the rationale is
quite different. Their aid has become an increasingly important element in the Communist geo-strategy
of world domination as well as a trade outlet not otherwise capable of achievement.
Bobba, Matteo and Powell, Andrew (2007), “Aid Effectiveness: Politics Matters,” Inter-American
Development Bank Research Department Working Paper No. 601, Washington, DC: Inter-American
Development Bank.
In this paper we have revisited the debate on whether foreign aid is effective in enhancing economic
performance in recipient countries and in particular in spurring growth. Our main hypothesis is that the
way aid is allocated is important in determining aid effectiveness. A consistent result of the aid
allocation literature is that politics matters and hence it seems natural to question whether politics also
matters for aid effectiveness.
Our main finding is that aid extended to non-allies has a strong positive impact on recipient countries’
economic growth, whereas aid to political allies has a negative impact. These results are robust across
different samples, model specifications, time horizons, estimators and instrumentation strategies. While
there are always caveats that must accompany any empirical analysis of this nature, our results do
appear to be striking in terms of both quantitative impact and robustness. In particular, we feel our
instruments more adequately explain the pattern of aid than standard donor-recipient time-invariant
factors that may explain the pattern of aid between allies but not between non-allies. We remain
agnostic regarding the precise mechanism behind our results but consider two likely possibilities
supported by additional evidence: i) aid is used to buy political allegiance and hence its effectiveness for
61
growth may be at best a secondary consideration, and ii) aid between allies may be more tied in other
dimensions than aid between non-allies.
These results carry strong policy conclusions. They show that foreign aid can be very beneficial to
economic development around the world independent of recipient policies. Indeed, the results stress
the role played by donors rather than by recipients. This emphasis stands in contrast to much of the
recent debate regarding aid effectiveness, which has focused on recipient policies. We suggest here that
donors’ allocation policies should be seen as a leading determinant of aid effectiveness.
Boone, P. (1996), “Politics and the Effectiveness of Foreign Aid,” in European Economic Review, Vol. 40,
No. 2, pp. 289–329.
The aim of this paper was to relate the effectiveness of foreign aid programs to the political regime of
recipient countries. I presented a simple analytical framework where poverty is caused or enhanced by
distortionary policies introduced by politicians. In my framework, aid does not promote economic
development for two reasons: Poverty is not caused by capital shortage, and it is not optimal for
politicians to adjust distortionary policies when they receive aid flows. Between 1971 and 1990 most
long-term aid was provided on a regular basis with little or no effective conditionality. I found this aid
increased consumption but higher consumption did not benefit the poor. The point estimates in my
regressions show there was an insignificant impact on investment in countries that received less than
15% of GNP in aid, though standard errors on these estimates were large. I also found that aid had an
insignificant impact on improvements in basic measures of human development such as infant mortality
and primary schooling ratios. These results suggest that even while particular programs such as
immunization and research can be effective, the bulk of long-term aid programs have had little impact
on human development and investment between 1971 and 1990.
My empirical results are consistent with a model where politicians maximize welfare of a wealthy elite,
and consistent with the pessimistic predictions of Bauer (1971) and Friedman (1958). Past experience
has proven it is possible to dramatically improve human development indicators at low cost over a ten
to twenty year period. Dreze and Sen (1982) argue that the failure of governments to reduce infant
mortality and improve basic human development indicators reflects public choice. The findings in this
paper suggest that aid programs have not substantially changed government’s incentives to carry out
these programs, nor have aid programs engendered or correlated with the basic ingredients that cause
investment and growth.
These findings emphasize the need to better understand the potential role of aid as a tool in changing
political incentives. Casella and Eichengreen (1994) examine the potential efficacy of aid in ending
harmful wars of attrition between political actors, and Sachs (1994) concludes that short-term aid has in
the past played a key role in promoting stabilization and maintaining political stability. In my model aid
can be effective when it is conditional on policy and/or political reforms, and it can be effective in
narrow cases where aid is non-fungible.
I presented some evidence that political reforms alone can play an important role. In my empirical work
I concluded that while at the margin all political systems allocate aid to the elite, liberal political regimes,
ceteris paribus, have approximately 30% lower infant mortality than the least free regimes. This may
reflect a willingness of liberal regimes to provide more of the basic, though inexpensive services that are
needed to prevent famine and improve human development indicators. But it may also reflect other
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cultural factors or economic conditions that I was unable to control for in these regressions. My
coefficient estimates imply that in order to achieve the same reduction in infant mortality through
existing long-term aid programs, donors would have to provide annual aid equal to 150% of GNP for ten
years to the recipient country.
One plausible implication is that short-term aid programs targeted to support new liberal political
regimes, and to encourage greater political and social liberties, may be a more effective means of
promoting sustainable development and reducing poverty than current aid programs. If these new
regimes stay in power long enough to improve literacy, health care, and education then they may
sufficiently empower the poor in the political system so that poverty reduction becomes self sustaining.
But alternatively, it may be that the underlying factors that support liberal regimes and poverty
reduction are rooted in historical, cultural and institutional factors that are not affected by new
governments. In this case, new liberal regimes will not survive, or they may not implement the basic
policies needed to reduce poverty and promote development.
Boschini, Anne and Olofsgård, Anders (2007), “Foreign Aid: An Instrument for Fighting Communism?”,
in Journal of Development Studies, Vol. 43, No. 4, pp. 622-648.
We have analysed why the aggregate supply of development aid decreased so much in the 1990s,
focusing in particular on the impact of the end of the Cold War. In a dynamic panel analysis of 17 donor
countries, we found that total aid disbursements were positively correlated with the military
expenditures of the former Warsaw Pact countries in the 1970s and 1980s, but not in the 1990s. Hence,
the end of the Cold War led to cuts in the aid budgets because one important motivation for aid
disbursements altogether disappeared. In an analysis of aid allocation among recipient countries, on the
other hand, we found that strategically important countries in the 1970s and 1980s – defined as those
receiving US military aid during the period – obtained more development aid than comparable countries
not only in the 1970s and 1980s, but also in the 1990s. However, disaggregating the data into donor
specific allocation patterns revealed a much more scattered outcome, which probably reflects a
combination of different donor patterns and the difficulty of coming up with an appropriate measure of
strategic motives for the allocation analysis.
As always, a few words of caution are needed when interpreting econometric results. We have
throughout the study done our best to control for other potential explanatory variables (in particular
those that can be argued to be correlated with military expenditures in the former Eastern Bloc), but, of
course, some of the nuances of the decision making process are impossible to capture. In particular, the
influence that different donors have on each other, and the influence on political decisions from shifts in
public opinion, are likely to be important factors that we can only partially account for. However, there
is no strong reason to believe that these factors are particularly highly correlated with our primary
variable of interest, so even if our picture is incomplete, there is no reason to believe that the effect of
the military threat is seriously biased. The intuitive sense, and robustness of our results throughout
different specifications, at least convinces us that we are measuring something real.
The findings from this paper should be put in the context of the current debate about the future of
development aid. The conclusions from this study are that the end of the Cold War triggered a
substantial reduction in aggregate aid levels, whereas no clear impact on aid allocation could be
established. If the ‘war on terrorism’ has a similar effect as the Cold War, then we should expect an
increase in aggregate aid flows whereas the effect on aid allocation should be small. A thorough analysis
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of whether this has happened is beyond the reach of this paper, but some recent evolutions can put this
in perspective. Looking at aggregate aid disbursements, US terrorism-related assistance increased on the
order of $3.3 billion in fiscal year 2002 (Weiner, 2002). Also after that, pledged aid commitments have
increased in several countries. For instance, 15 members of the European Union agreed to substantially
increase their aid budgets up to year 2010 at a meeting in Brussels in May 2005 (despite the continents
current economic and political problems), and the world’s richest countries pledged another significant
increase in aid commitments at the G8 summit in Gleneagles, Scotland, in July of 2005.
On the allocation of aid, the picture is less clear. The Millennium Challenge Account (MCA) announced
by President George W. Bush in March 2002 will allocate funding based on objective selection criteria
emphasising good governance and sound economic policies, which seems to preclude the option to
target strategically important countries. Furthermore, much of the recent focus has been on increasing
aid to Africa, and on debt forgiveness and fighting diseases that are not concentrated in what should be
expected to be countries of particular importance in the ‘war on terrorism’. But, on the other hand,
there are currently substantial aid flows being directed to Iraq and Afghanistan. Furthermore, the Bush
administration’s sudden decision in November 2002 to expand the pool of eligible MCA countries to
middle income countries (including now strategically important countries such as Jordan, Egypt and
Russia), have been seen as a move to reward countries taking sides with the US in the conflict (Brainard,
2003). Finally, as pointed out in Radelet (2002), countries like Egypt and China qualify for MCA
assistance under current conditions, despite their histories of wasted aid inflows and human rights
deficiencies.
To conclude, the recent history, from the end of the Cold War to the ‘war on terrorism’, has had a
fundamental impact on the determinants of foreign aid. Learning from past experiences can thus be
important to better understand what the likely effects of current events are going to be. The finding that
the drop in aid levels can be attributed to a large extent to the end of the Cold War, should be
contrasted with the more positive findings that total aid budgets have become less strategically
motivated in the 1990s.
Bose, Anurdha (1991), “Aid and the Business Lobby,” in Bose, Anurdha and Burnell, Peter (eds.) (1991),
Britain’s Overseas Aid Since 1979: Between Idealism and Self-Interest, pp. 125-145, Manchester:
Manchester University Press.
In spite of the Conservatives’ declared impatience with organized interests, the business lobby continues
to operate within the ODA [Overseas Development Agency]. The consultation process, an integral part
of the political culture, is still very much alive within the ODA, since ingrained habits and conventions die
hard in Whitehall. However, the scope of the discussions has been narrowed considerably owing to the
designation of ‘no go’ areas in aid policy. The business lobby has to function within the parameters of
limits on public spending and the absence of any significant increases in the aid programme. Therefore
the business lobby as a whole and its constituent parts have had to develop a modus vivendi within the
ODA.
This has not proved too difficult since the inherent tendency in British government has always been to
factorize thorny policy issues into manageable units.31 The business lobby has continued to cooperate
with the government on certain issues and not on others. Nevertheless, since 1979 the interactions of
the business lobby with the government has become more fraught with problems than the former
would care to admit. One basic problem of the business community is how to criticize the government
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that they all support without seeming to undermine it. In theory the commercial interests are in full
agreement with it about the need for free trade and unfettered competition in the world market. Yet in
practice it continues to look for generous subsidies and other concessions in order to penetrate or
retrain a share of developing country markets.
The business lobby has been able to capitalize upon the government’s 1980 aim of reorienting aid policy
by giving more weight in the allocation process to commercial and industrial considerations. However,
this has not granted the business lobby unfettered access to the aid budget, for several reasons.
Incrementalism in government, which allows competing viewpoints to be accommodated, persists.
Pledges and forward commitments inherited by the Conservatives have also acted as a brake on the
plans of the business lobby. In their first term the Conservatives tried to involve the private sector more
fully in the overseas aid programme through joint ODA-CBI [Confederation of British Industry] seminars,
but these efforts were gently deflected by the business lobby. British business interests have always
considered overseas aid as primarily a governmental activity, preferring to concentrate on lobby specific
issues such as an increase in the ATP [Aid and Trade Provision] and better gearing costs for firms.
It is the author’s contention that the relative success enjoyed by business interests in winning
concessions from the government owes as much to the reorientation of aid policy since 1980 as to the
skill and influence of the lobby itself. The fact that commercial and industrial considerations were made
explicit criteria for aid giving allowed the DTI [Department of Trade and Industry] – a powerful backer of
the business lobby – more of a voice in the allocation process. In fact the ODA’s departmental ethos,
which has always shown a strong bias towards money-moving through large capital-intensive projects,
has been legitimized even further under the Conservatives.
This rare convergence of interests between politicians, the civil service and the business lobby has
allowed business interests to make gains where they can, but still within the limits imposed by
government policy.
Bressand, Albert (1982), “Rich Country Interests and Third World Development: France,” in Cassen,
Robert, Jolly, Richard, Sewell, John, and Wood, Robert (eds.) Rich Country Interests and Third World
Development, pp. 307-332, London: Croom Helm.
An analysis of French objectives and performance in relations with the Third World can therefore
contribute, at least in the view of the author, to explaining the paradox of France’s actual or would-be
distinctiveness.
It is clear that, when analyzed in World Bank English, French policies are only marginally different, in
either their strengths or their weaknesses, from those of other countries. As the point is made below
even when it comes to geographical emphasis, French trade policy is no longer characterized by the
‘chasses gardées’ mentality of the colonial period. The French Franc zone is no longer a special and
major trading partner. Whatever yardstick is chosen to measure it (i.e. including or excluding some or all
overseas provinces), the French aid effort is at most slightly above OECD averages and at best ten per
cent short of the internationally agreed target of 0.7 per cent of GNP, neither disreputable nor an
exceptional achievement. French positions on the standard NIEO [New International Economic Order]
issues, as expressed in UN Resolutions, have been on the whole marginally more forthcoming than those
of other major Western countries, even if on some particular issues, other countries take a more
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‘progressive’ position when they have the will and the financial means to do so, as was the case for
Germany on the debt cancellations.
French distinctiveness lies elsewhere, and can only be understood if one broadens the analytical
framework. It is to be found in the deeper emotional reactions, which Third World causes have evoked,
under varying forms, among the French intelligentsia and political class. It is to be found in the more
explicit recognition of the political and security dimensions of North-South relations. And it is to be
found also in the way in which the ‘standard’ development co-operation and economic relations are
managed (notably in terms of bilateral/multilateral and geographic emphasis) to take into account this
broader context as well as the increasingly crucial issues related to the dialogue on energy.
Is this overall policy posture likely to be adapted to the needs of the 1980s? Contrary to the reluctance
with which many specialists in the pure science of economics tend to view political factors, the present
author believes that this association is likely to be more and more called for by the international
environment. To view countries such as Saudi Arabia, Brazil, Mexico, Algeria, not to mention China or
Cuba, only as economic actors or even more narrowly, only as outlets for manufactured goods, is to
ignore the nature of international relations. The special circumstances which prevailed after the Second
World War and the fact that some of the most successful ‘developing nations’ of the time (Japan and,
later, Korea) had little political room for maneuver have made it possible for economists to take the
political and security framework for granted and therefore to think in terms of what appeared as
‘depoliticized’ economic relations. But in an increasingly multipolar world, a country like France needs to
perceive developing countries as political actors as well and to accept the consequences of that
perception. Mexican or Brazilian trade barriers, the new role of investment as a precondition or even
substitute for direct exports, are political as well as economic facts understandable only as the
expression of global national development objectives.
It so happens that the French attitude towards the developing world, although it evolved in part as a
way to cope with the decolonization problem and in the context of East-West rather than North-South
diplomacy is able to encompass a global approach more easily than purely economic approaches.
This is certainly not to say that, in its concrete expression, this approach is necessarily well adapted to
the present context. On the contrary, French policies have tended to display rigidities which suggest that
a regular process of reassessment will be needed.
Among the numerous issues which would have to be addressed, three seem to be of paramount
importance:
(1) the human aspects of relations, both in terms of the presence of French expatriates in the Third
World and of the presence of migrant workers in France;
(2) the geographical emphasis of the various aspects of French policy; and
(3) the concrete translation into practical policies of the slogans of industrial restructuring
(‘redéploiement industriel’) and ‘organized trade expansion’ which so far have provided little more than
a conceptual framework for the French search for a new role in the world economic order.
(Not addressed here because it would deserve a separate essay in a global European perspective,
European co-operation must have a major impact on French policy formulation, notably on the last two
of these issues.)
66
(a)The human aspects of French relations with the Third World should be seen as a two-way relationship.
Whereas in the 1960s several million migrant workers had been needed to fill the gap between French
growth and French human resources, it is now French expatriates working in developing countries, on
short and medium term assignments, who are likely to be the new expression of economic
interdependence. The massive presence of French ‘coopérants’ in African countries will, at the same
time, have to continue its evolution from direct involvement in the economic and cultural life of these
countries towards a contribution to training local managers to do the job and set up self-sustaining
technical progress.
Although there are about 1.5 million French people living in foreign countries, including 400,000 whom
French consulates are aware of as living permanently or temporarily in the Third World, French
companies find it extremely difficult to recruit enough personnel to develop their presence overseas.
The reluctance to expatriate oneself seems decidedly greater in France than in other Western countries.
Hence the very high (and even, in the light of growing Indian and Korean competition, extravagant) price
tag of French expertise. The creation, within the Foreign Ministry of a ‘Direction de Français de
l’Etranger’ illustrated the growing realization of the importance of this problem. But much more would
be needed as part of a global employment policy. One should note in particular that while there are
more than 40,000 French people living in Ivory Coast, there are only 24,000 in the whole of Asia and
47,000 in Latin America.
At the same time the presence in France of 1.8 million migrant workers (two-thirds of whom come from
the Third World) and of a total migrant population of 4 million has become a domestic political issue.
The new socialist government will have to find a war to remain faithful to its commitment to put an end
to the policies of the previous government (which combined financial incentives for departing migrants
with a heavy-handed policy on illegal immigration) while pursuing its goal of reducing domestic
unemployment.
(b) The geographical emphasis of relations with the Third World will also present French decisionmakers with difficult choices. Many foreign observers have described these relations as organized
around three circles:
(1) the inner circle of black African countries which participate in the annual ‘Conference FrancoAfricaine’, recently set up as a small-scale replica of Commonwealth meeting, and which receive the bulk
of the development co-operation efforts;
(2) a second circle consisting of the other African countries as well as Caribbean, Pacific and
Mediterranean countries to which the EEC Lomé Convention and ‘global Mediterranean policy’ address
themselves; and
(3) a third circle defined negatively as the ‘non-associate’ LDCs which have no preferential agreement
links to France either directly or through the EEC.
This view is of course not deprived of factual bases and can even be considered as a rough
approximation of the institutional setting for the French development cooperation policy. Similarly after
more than one century of colonial involvement, French political relations with the Third World cannot
be but influenced by historical factors. Yet it would be a mistake to extrapolate to the economic level
this political fact-of-life and to conclude hastily that French economic relations with the Third World are
organized around the preservation of protected markets (‘chasses gardées’). This would ignore a major
reorientation which has brought the share of the French Franc Zone in total French exports from about
one-third per cent in the early 1960s to five per cent in 1978. Similarly the importance of the Zone in
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terms of French currency holdings has almost vanished although the Zone continues to represent an
element of stability and solvency for the African member countries. An economic explanation of French
security concerns in Africa would likewise overlook the relative independence of political and economic
factors in French policy. France had indeed very little economic interest to protect in Shaba where its
investments are 40 times smaller than those of Belgium and ten times smaller than those of America.
Even its imports of cobalt come from Morocco and not Zaire.
Nevertheless, a clear weakness is the insufficiency of the French presence in the more advanced
countries. Steps have been taken to correct this situation such as the funding of 300 fellowships a year
for students of a dozen rapidly industrializing countries, the signing of a significant oil deal with Mexico
and numerous presidential and ministerial official trips to such countries. Yet American financial flows
towards the seven most advanced LDCs were 35 times higher in 1975 than similar flows of French origin
while they were 12 times lower in the case of French-speaking Africa. Germany, with financial flows to
the seven most advanced LDCs six times higher than France, has also clearly taken a lead of major
economic significance. Obviously, France cannot allow, without risk, its ‘portfolio’ of interests in the
Third World to remain so much out of balance with the intrinsic importance of the countries considered.
(c) The third major issue which France has to address in her relations with the Third World is that of the
economic consequences on French industry of the emerging new international division of labor. Not that
trade with developing countries is the most important source of difficulties for French industry:
technological change and competition from OECD countries are on the contrary considered by French
experts as having a much stronger impact. But competition from low wage countries does represent a
highly visible threat for certain industrial branches and, more importantly for a number of poorer
regions (ten departments out of 92 according to a recent study) in which these branches had been the
keystone of regional development policies during the 1960s. Moreover, in spite of findings to the
contrary by the group of experts which worked (under the Chairmanship of Yves Berthelot) on the
subject, 44 per cent of French public opinion does consider (according to a September 1979 poll) this
competition to be one of the major reasons for present unemployment levels.
Objective and subjective reasons therefore explain why the French government, even at the time when
the emphasis was put on adjusting to free market forces, has been more sensitive to the need to keep
the pace of the adjustment process within socially and politically acceptable limits. Hence its emphasis
on the need to ‘organize’ the expansion of trade, a concern to which the new government will probably
give a more systematic expression.
Understandable as it can be in the French context, this policy does however raise considerable
implementation problems. The translation into German and English of the slogan ‘libéralisme ogranisé’
under which it has (imprudently) first been presented has an Orwellian ‘double-think’ flavor which has
aroused little sympathy. Aside from the Multi-fibre Agreement, few concrete expression of this policy
have justified so far the political cost of a conceptual attitude which other Western countries have often
quietly put in practice while reasserting very loudly their commitment to liberalism.
On this issue as on many other ones, France is therefore confronted with the difficult search for a
synthesis between the distinctiveness that results from the French way of looking at the world and the
need to take increasingly into account the common constraints of interdependence.
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Breuning, Marijke (1995), “Words and Deeds: Foreign Assistance Rhetoric and Policy Behavior in the
Netherlands, Belgium, and the United Kingdom,” in International Studies Quarterly, Vol. 39, No. 2, pp.
235-54, Blackwell Publishing, Ltd.
The foreign assistance rhetoric and policy behavior of the Netherlands, Belgium, and the United
Kingdom are different. On balance, the rhetoric of the Dutch and British decision makers shows greater
evidence for the hypothesized role conceptions than that of the Belgians. The policy behavior measures
distinguish the three states quite well and are mostly in the hypothesized directions. Table 10
summarizes the results for each of the three states. A comparison with Table 1 shows that the
Netherlands and the United Kingdom fit the rhetoric and behavior measures for, respectively, the
activist and power broker role conceptions quite well. The Belgian case combines policy behavior
associated with the merchant role conception with rhetoric that emphasizes activist and merchant
themes about equally.
This incongruence between rhetoric and behavior is perhaps explained by the structure of Belgian
debate: foreign assistance, foreign trade, and foreign affairs are debated jointly during many
parliamentary years. For purposes of comparison, only those portions of these joint debates were coded
in which the Belgian decision makers themselves indicated they were addressing foreign assistance. This
was done to preserve cross-national equivalence in the debates used for coding. This strategy may have
skewed the results in favor of the activist role conception. However, including the combined debates in
their entirety would most likely have skewed the results in favor of a greater volume of merchant
themes. This implies that foreign assistance may not be perceived as a wholly separate and distinct issue
area by the Belgian decision makers. It is possible that securing Belgium's economic interests is so
important that it permeates all of its foreign relations, including foreign assistance.
The assumption that decision makers perceive foreign assistance as a distinct issue area is based in the
widespread usage of the issue area concept (see Zimmerman, 1973; Potter, 1980; Evangelista, 1989). It
is an almost self-evident device to investigate some aspect of foreign policy rather than all of it. While
for both the Dutch and British cases the concept poses no problem, the Belgian case indicates that
decision makers may not necessarily slice up the whole of foreign policy in the same manner as the
analyst. If so, then the Belgian case violates an assumption of the framework and thereby points out a
limiting condition for the framework's applicability.
Belgium's distinct language communities provide another potential explanation for the inconclusive
findings: to the extent that the two groups perceive themselves as separate communities, another
assumption of the role conception framework is violated, namely, that a common societal-cultural
background results in common cognitive biases. There are indeed slight differences in the relative
emphasis Flemish and Walloon members of Parliament place on the various role conceptions (Breuning,
1994b). The significance of these differences is unclear. They intersect with differences in party
affiliation. The minister's party affiliation does not have a significant impact on the variability of relative
emphasis on the various role conceptions. Likewise, the slight difference between Flemish and Walloon
members of Parliament may not be significant.
On the basis of the results presented here, it is indeed legitimate to speak of national role conceptions.
The observed shifts in the relative emphasis in the rhetoric cannot be attributed to ministerial agendasetting. Yet, the members of Parliament react differently to ministers with different party affiliations. It
appears, then, that there is a consensus about the state's role in the foreign assistance issue area.
Parliament appears to act to preserve the consensus. Whether this is unique to the foreign assistance
69
issue area or might be found in other policy domains is an empirical question that only further research
can answer.
As indicated, most policy behavior measures are in the hypothesized direction for all three cases. The
exception is the greater than expected emphasis on bilateral aid of both the Netherlands and Belgium,
which is more in line with the behavior hypothesized for the power broker role. This runs counter to
East’s (1973) finding that small states rely more on multilateral foreign policy because of their lesser
capacity to administer and implement programs on their own. Of course, East's research concerned the
foreign policies of small states more generally, and it is possible that foreign assistance provides a payoff
that makes it worth the effort for small states. Bilateral assistance gives the donor state greater control
over the destination of such aid, which may enhance the potential usefulness of foreign assistance in the
service of trade relations. This explanation fits well with the merchant, but less well with the activist role
conception.
The focus of multilateral aid was hypothesized to be on the World Bank and associated institutions for
both the power broker and merchant role conceptions, and on UN agencies for the activist. Although
the relative emphasis on UN agencies does not stand out if compared to other Dutch multilateral
allocations, it is consistently higher than the comparable emphasis of Belgium and the United Kingdom.
Both of the latter favor the World Bank over UN agencies.
The tying status of bilateral aid clearly distinguishes the Netherlands from both Belgium and the United
Kingdom. The latter two make extensive use of tied aid. The Netherlands consistently provide a
substantial proportion of its aid untied. Most of the remainder is partially rather than wholly tied.
In sum, the empirical evidence shows a congruence between the rhetoric and policy behavior of the
foreign assistance decision makers of the Netherlands and the United Kingdom that conforms to the
hypothesized role conceptions. The rhetoric and policy behavior of the Belgian decision makers does not
exhibit a similar congruence. The lack of distinction between foreign assistance and foreign economic
relations partially explains the failure of the Belgian case to fit the framework. Rhetoric and policy
behavior co-vary in two of the three cases. This suggests that there is some relation between the two.
The congruence between rhetoric and behavior found in this study shows that this approach promises
to enhance the understanding of cross-national differences in policy behavior. Parliamentary debates,
like other rhetorical data, are not a “clean” measure of motivation. However, the themes emphasized in
parliamentary debates are not randomly distributed across time and states. Assessments of foreign
assistance policy motivation are therefore strengthened when separate measures of rhetoric and
behavior point in the same direction. Words and deeds will enlighten us more about foreign assistance
policy motivation than deeds alone.
Brown, Keith and Tirnauer, Jill (2009), Trends in US Foreign Assistance Over the Past Decade: Report
Produced for Review by USAID, Washington, DC: Management Systems International.
Major events and changes during the past decade have had dramatic impact on the means by which the
U.S. Government and its citizens engage the world. Terrorism, substantial and sustained war efforts, the
spread of HIV/AIDS, the financial crisis—though far from a complete list—are some of the more
significant happenings that have shaped the international context for the United States. With these
changes have come associated shifts in the organization and delivery of U.S. foreign assistance. The
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United States Agency for International Development (USAID) has commissioned Management Systems
International to write a series of papers to help the Agency better understand the trends in U.S. foreign
assistance and international evaluation theory and practice, and its implications for evaluation of
development programs. This paper focuses on the trends in foreign assistance programming and the
changes in how foreign aid has been delivered over the past decade. It does not attempt to provide
recommendations for how foreign assistance should be structured under the new Administration.
Global official development assistance (ODA) doubled over the past decade, increasing from $52.1
billion in 1999 to $119.8 billion in 2008, with the United States accounting for 22 percent of all ODA. U.S.
ODA grew at a faster rate, almost tripling from $9.1 billion to $26 billion. Even with this growth, USAID’s
share of bilateral and multilateral ODA fell from 64.3 percent in 1998 to 38.8 percent in 2005 according
to the Development Assistance Committee (DAC). According to the Department of State, it rebounded
to 47 percent in 2007 as USAID took on greater responsibility for stabilization activities in Iraq and
Afghanistan and for implementing programs under the President’s Emergency Plan for AIDS Relief
(PEPFAR).
Although it seemed as though decision-making was becoming more centralized with foreign assistance
reforms, foreign aid continued to fragment with the creation of new entities such as the Millennium
Challenge Corporation (MCC) and the Office of the U.S. Global AIDS Coordinator (OGAC) in the State
Department. Furthermore, both the Department of Defense (DOD) and Treasury expanded their
authority and their total share of foreign assistance. Between its inception in FY 2003 and the end of FY
2008, the MCC has entered into compact agreements worth $6.3 billion. During the same period,
threshold programs administered by USAID reached $440 million. OGAC is responsible for administering
the PEPFAR, the single largest foreign assistance program. Funding for PEPFAR through the Global
HIV/AIDS Initiative (GHAI) account is expected to reach almost $4.8 billion in FY 2009. Other new
programs and entities at the State Department include the Democracy and Human Rights Fund, the
Middle East Partnership Initiative (MEPI), and the Office of the Coordinator for Reconstruction and
Stabilization (S/CRS).
Whereas foreign assistance has always been aimed at reconstruction efforts in the aftermath of conflict,
U.S. aid gained greater prominence during the decade with the elevation of development to an equal
footing with defense and diplomacy. The National Security Strategy in 2002 and again in 2006 extolled
its importance. With the advent of the conflicts in Afghanistan and Iraq, foreign assistance is becoming
increasingly militarized as the Department of Defense plays a bigger role in stabilization efforts. DOD
increased its share of total foreign assistance from 5.2 percent in 2001 to 15 percent in 2007 (USAID
2008e). Under a number of expanded and new accounts and authorities, DOD is providing developmenttype assistance (e.g., infrastructure, democracy promotion, and economic development), which, along
with the creation of the Office of the Coordinator for Reconstruction and Stabilization further blurs the
line between the different agencies.
Health became the predominate sector for foreign assistance during the past decade, with explosive
growth due to the HIV/AIDS epidemic. Funding for health programs rose from $250.7 million in Child
Survival and Health (CSH) funds in 1999 to $3.9 billion in CSH and GHAI funds in 2009. PEPFAR began in
2004 with a legislative commitment of $15 billion over five years. The majority of this funding went to
fifteen focus countries, almost all of which are located in Africa. In 2008, the reauthorization act
increased funding for PEPFAR for $48 billion over the next five years, including $5 billion for malaria and
$4 billion for tuberculosis.
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Another trend in development assistance was the shift of funding toward Africa. Global ODA for Africa
increased from $10.3 billion in 1999 to $24.5 billion in 2009. Moreover U.S. foreign assistance to the
continent grew at a faster rate, quadrupling to $5 billion for FY 2009. In addition to PEPFAR funding, the
reasons for this growth included the signing of eight MCC compacts, new presidential initiatives in areas
including trade, education and food security, and counter-terrorism initiatives. Development Assistance
to Africa increased 51.5 percent and Economic Support Funds increased 90.3 percent over the same
time period.
The theme of “aid effectiveness” has emerged over the past decade. To address criticism regarding the
effectiveness and utility of donor assistance, the Development Assistance Committee (DAC) is working
to promote, support and monitor progress on harmonization and alignment of aid. The Paris Declaration,
signed in 2005, set forth concrete actions for donors and recipient countries around five principles: local
ownership, donor alignment, harmonization of aid, managing for results, and mutual accountability. The
United States has lagged behind other donors in the implementation of the Paris Declaration; however,
actions have been taken to continue and expand managing for results and improved coordination with
partner countries and other donors pool funding, move towards general budgetary support and shift
away from projects.
There are also more private actors in foreign assistance. Private sources now account for over 80
percent of total U.S. based financial flows to developing countries. Remittances from the United States,
the largest contributor, reached $45.6 billion in 2007, up from $27.4 billion in 1999. Low-income
countries received some $305.3 billion dollars. Foundation giving increased from $3.2 billion in 2000 to
$5.4 billion in 2007, mostly due to the establishment of the Bill and Melinda Gates Foundation.
Corporate giving was estimated at $5.5 billion in 2006.
Structurally, the delivery of foreign assistance also changed. In 1998 USAID became a statutory agency,
reporting directly to the Secretary of State. To coordinate foreign assistance more effectively, the
Secretary created the Office of the Director of Foreign Assistance (State/F). The Foreign Assistance
Framework, created in 2006, became the organizing framework for the delivery of aid, and is supposed
to tie programming to budgeting and performance. Lastly, operational planning, which moved USAID
from long-term strategies to short-term planning, became the basis for coordinating programming.
In 2000, in response to growing private flows to the developing world and the desire to leverage this
growth, USAID created the Office of Global Development Alliance (GDA), a fourth pillar in the Agency at
that time. Although it has been moved to the Office of Development Partners, it and the public-private
alliances it promotes remain an important mechanism for implementing development programs. By
mid-2008, GDA claimed that 680 alliances had been formed, and more than $9 billion dollars of private
funding had been leveraged.
The expansion of presidential initiatives also occurred during the decade. Some 22 initiatives were
announced. Some of these were funded with new monies, and others were programs cobbled together
to meet these executive directives. These initiatives were important, but typically created without a
strategy on how to integrate it with existing programs on the ground. Initiatives also added to the heavy
reporting burden placed on USAID staff.
USAID capacity for implementing foreign assistance had been diminishing since the mid 1980s. Hiring
freezes have placed a heavier burden on staff as funding and program requirements increased over the
past decade. The increased need for coordination among programs and initiatives has also added to this
burden. Compounding the problem of overburdened staff is the growing number of employees
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becoming eligible for retirement in the near future. The agency expects that 31 percent of all civil
servants and 44 percent of all Foreign Service Officers will be eligible to retire in 2012. To increase staff
capacity, both in numbers and skill levels, USAID instituted the Development Leadership Initiative in FY
2008, which is aimed at hiring up to 900 new staff and increasing training in technical and “soft-skill”
topics.
The global financial crisis will have a profound impact on developing countries through reduced growth.
The World Bank estimates that global GDP will contract by 1.7 percent in 2009. In the developing
regions, the Bank estimates that GDP will fall by 2 percent in Europe and Central Asia, by 1.9 percent in
South Asia, 2.5 percent in Sub-Saharan Africa (World Bank 2009d). The Bank estimates that when there
is a 1 percent decline in development countries’ growth rates, an additional 20 million people fall into
poverty. Hard hit will be countries with large numbers of people whose incomes hover around the
poverty rate. The view on ODA is mixed. The UN predicts a cut in 20 percent, whereas the World Bank is
expecting to triple lending to $35 billion in 2009, and the United States Administration has promised a
doubling of aid for FY 2010. Private capital flows will decrease but some of the largest foundations,
including the Bill and Melinda Gates Foundation, vow to maintain or increase funding despite shrinking
endowments. Predictions for growth in 2010 remain positive, although a continued contraction will have
major repercussions for U.S. foreign assistance and developing countries.
Brown, William (2009), “Reconsidering the Aid Relationship: International Relations and Social
Development,” in The Round Table, Vol. 98, No. 428, pp. 285-299.
The foregoing discussion now allows at least a preliminary answer to the two questions I posed. Taking
them in reverse order we can see that any donor policy based on an expectation of African political and
institutional conformity to a simplistic liberal ideal is likely to face considerable obstacles. The
framework presented above would also suggest that those donors or analysts who describe us a world
consisting of unproblematic uniform processes, whether they be the spread of liberal governance, the
dominance of neoliberalism or the spread of capitalist social relations, are somewhat wide of the mark.
Instead we have a much more complex agenda for future research, not least of which is the issue of
unevenness of change within Africa. Harrison, for one, has pointed to the variability with which different
African states have adhered to the World Bank’s governance agenda (2004; see also Whitfield, 2009). He
is also surely right to point out that the long histories of interaction between African societies and the
wider world have produced differing configurations of liberal and illiberal social forces within Africa
(Harrison, 2004, pp. 44–49).10 Yet, by specifying political variation and combined development as
general, rather than specifically African, features of the world, it also allows us to bring into question the
self-image of donors themselves. Policy rhetoric might well portray an easy adherence to liberal ideals of
law bound states existing in a world of liberalised markets but the inability of donors to carry out their
side of the liberal bargain itself demonstrates the absence of any simple homogeneity among even the
developed states.
While the liberal consensus continues to have political force within and outside of Africa there is also
clearly a significant gap between rhetoric and reality. As a consequence we can expect continuing
tension in the aid relationship as a mechanism by which donors and recipients struggle over the content
of this particular international relationship. Such tension turns ultimately on the differences between
the character of state-society relationships in Africa on the one hand and the kind of liberal capitalist
social development donors—and some African leaders—say they want to see created on the other. Even
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if high-level politics presents us with a new consensus on aid, deep issues of social development need to
be addressed for us to produce a rounded account of this aspect of international relations.
The disciplinary and theoretical context outlined at the start of this article was a twin challenge to
analysts of Africa’s international relations: to situate understandings of the geopolitics of Africa’s
international relations in a broader conception of processes of social development; and to incorporate
within theoretical frameworks the variation in social and state forms and, indeed, historical experience.
Although in many ways only a preliminary investigation, the analysis presented above suggests that
these challenges can be met, and moreover, that serious attention to these aspects of international
relations opens up useful ways to reframe research into other aspects of Africa’s international relations.
Bueno de Mesquita, Bruce and Smith, Alastair (2007), “Foreign Aid and Policy Concessions,” in Journal
of Conflict Resolution, Vol. 51, No. 2, pp. 251-284.
We propose a theory of aid-for-policy deals. While we believe this is a major determinant of aid giving,
we do not deny that aid might be given for other purposes. Aid is just one weapon in the foreign policy
arsenal of leaders (Baldwin 1985). In this article, our approach has been to embed our explanation of aid
giving within the context of the selectorate theory of political survival. As Bueno de Mesquita et al.
(2003) show, the selectorate model explains many other features of domestic and international politics.
On the international side, for instance, it explains immigration and emigration, the democratic peace,
and patterns in nation building. That a single theoretical framework can explain results in many
disparate political arenas provides reassurance relative to a tailor-made application to account for one
aspect of the larger political puzzle.
Our model offers important policy advice for those who wish to help the needy around the world.
Receiving aid is most likely to improve the welfare of citizens in large coalition systems. In such systems,
the majority of the additional resources are allocated to public goods, and the leader can retain only
limited resources for her own discretionary projects. Aid given to such systems is likely to promote
economic growth and enhance social welfare. U.S. reconstruction aid to Western Europe under the
Marshall Plan is an example of such a success story. In small coalition systems, aid resources
disproportionately end up in the hands of the leader and her cronies in the form of private goods. Aid
does little to promote growth and development (Burnside and Dollar 2000).
In terms of promoting development, the theory’s implications are clear: political reform needs to
precede economic development. The democratic institutions of Western Europe ensured that the U.S.
Marshall Plan’s dollars promoted vigorous growth and produced a counterbalance to Soviet incursions
into Europe. Aid to poor democracies around the world would likewise generate effective development.
An emphasis on enlarging winning coalition size around the world is the most effective way to alleviate
poverty.
Unfortunately, such goals are generally inconsistent with the survival incentives of leaders in large
coalition donor countries. The survival of leaders in large W systems depends on providing for the
welfare of their supporters and not on the welfare of people abroad. It is far easier for leaders to buy
the public goods their citizens value from a small coalition state than from a large coalition democratic
system. Unless it is the case that the policy goals in the donor state are furthered by enhancing growth
in the recipient states (as we might argue was the case under the Marshall Plan) or the citizens in the
donor state really care about promoting growth abroad (as, for example, Lumsdaine [1993] and Noel
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and Therien [1995] have argued is the case for Scandinavian nations), then leaders in donor states
promote their political survival better by buying policy from autocrats than they do by pushing for the
institutional reforms necessary for effective development. As van de Walle (2001) observes, aid often
undermines the attempts at democratic reforms. The selectorate theory paints a depressing picture
about the likely effectiveness of foreign aid for alleviating poverty around the world.
Burnell, Peter (1991), “Introduction to Britain's Overseas Aid: Between Idealism and Self-Interest,” in
Bose, Anurdha and Burnell, Peter (eds.), Britain’s Overseas Aid Since 1979: Between Idealism and SelfInterest, pp. 1-31, Manchester: Manchester University Press.
Burnell, Peter (1993), “Good Government and Democratization: A Sideways Look at Aid and
Conditionality,” in Democratization, Vol. 1, No. 2, pp. 485-503.
Some aspects of the aid donors' current interest in political conditionality are examined in the light of
perspectives from the aid receiving world. The chances of implementing policies for good government
successfully through the attachment of political conditions to aid will be served by: clarity of aims and
objectives on the part of the donors; transparency of purpose and consistency in application; a strategic
grasp of the political complexities of each aid receiving country, in order that the application of
conditionality does not weaken the friends of good government and arm its opponents. Ideally,
the modus operandi of political conditionality should exhibit the very same characteristics that are held
to provide the reasons for attaching the conditions, such as transparency and greater openness,
accountability and the rule of law. In practice this ideal may be unattainable, especially with regard to
reconciling the moral of political accountability in the aid-receiving countries with the realities of power
and influence in international relations.
Burnell, Peter (1997), “The Changing Politics of Foreign Aid – Where to Next?” in Politics, Vol. 17, No. 2,
pp. 117-125, Political Studies Association.
Aid cannot be proven to have become more, or less political with the passage of time. In the 1990s there
is a new politics of aid whose intention is to promote systemic political change in recipient countries. But
the old politics, incorporated in exchange conditions, have not gone away. Indeed, aid's tie with what
donors understand as their national interests is ‘virtually axiomatic’ (Hook, 1995: xi). Thus, some familiar
goals continue to motivate the what, who, why and wherefores of foreign aid, with consequences that
often conflict with pure models of aid for good governance, democracy and human rights. The nature of
aid relationships continue to be coloured by the respective bargaining strengths of the participants.
Furthermore, there is a belief that the conditionalities of structural economic adjustment, which
continue to be attached to aid, threaten to undermine the democratic prospects, in two ways. In so far
as they are responsible for social discontents which produce divisions in society, the consolidation of
stable democratic government is made more difficult. And to the extent that these economic measures
are believed to be imposed by non-accountable external bodies and in far from transparent ways,
national self-determination becomes a chimera. That means societies have some cause to become more
apathetic about the electoral process and indifferent to whether elections reshuffle government.
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Moreover, democratisation that is accepted primarily as an unproven passport to sustained economic
progress could prove a shallow rooted phenomenon, rendered vulnerable to disappointed material
expectations. In any case, democracy understood as a condition of political equality, achievable only in
the absence of great socio-economic inequalities, seems not to be an aim. Also excluded is the
democratic reform of international and multilateral development and other organisations where big
powers, wealthier OECD countries in particular, tend to dominate, especially the International Monetary
Fund, World Bank and United Nations Security Council.
Some observers are deeply sceptical about aid’s ability to survive much longer on anything like its
former scale. They see it being overtaken by the benefits of vastly increased international private capital
flows and globalisation more generally. But for many countries, aid that buys-back or forgives
accumulated foreign debt is essential to improved development prospects. In any case some poor
countries are being increasingly marginalised in the world economy. For others, the value of aid as a
compensatory device will increase, if globalisation brings disadvantages due to profound asymmetries in
the structure of international economic relations (Raffer and Singer, 1996, chapter 2). Elsewhere, where
gains are undoubtedly being achieved from greater integration, increases in social deprivation are not
uncommon.
The growth in the poor, to well over one billion people (around 30 per cent of the world's population
live on less than a dollar equivalent a day) remains the most common justification for aid among its
supporters in the West. However, the argument that social objectives of poverty reduction should be
introduced more forcefully onto aid's agenda, including forming a third generation conditionality, is not
without difficulties. There is little hard evidence to demonstrate the likely effectiveness. And among
economists who argue the superior merits of unsubsidized economic and financial markets, and counsel
a reducing role for concessionary flows, some believe grant aid especially encourages pauperisation
(Ryrie 1995, p. 114). Thus, even if confidence in today's politics of aid soon starts to erode, the
connections between aid and poverty will remain relevant to research agendas studying the
relationships between development, democratisation and international influences, probably for quite
some time to come.
Burnett, Stanton (1992), Investing in Security: Economic Aid for Non-Economic Purposes, Washington,
DC: Center for Strategic and International Studies.
Starting at the End: What the Study Means for Policymakers
Although the analyses done for this study have sparked controversies of interpretation among the
groups steering the work (composed principally of social scientists from CSIS, congressional staffers
expert in U.S. foreign assistance, and government officials bearing program responsibility), some
findings are so clear and agreed that they constitute lessons of history that the future cannot possibly
ignore.
The overall record of U.S. economic assistance during the cold war period, of which this study analyses a
slice, is clearly a record studded with successes; the difficulties examined here do not detract from the
fact that both globally and in many single countries the many programs that transferred U.S. resources
to other nations in order to achieve U.S. foreign policy objectives did just that. Sometimes the paths
taken were surprising; some of the successes were almost accidental, others were buried under failures,
problems and unintended consequences; some desired outcomes even came about in spite of
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conceptual failures on Washington’s part. But U.S. economic and military assistance played a key role in
winning the cold war and therefore deserve unblinking analysis in order to increase the odds for success
in the new era.
The evidence provided by four full-scale country case studies was broadened by comparison with a CSIS
study of similar issues in five sub-Saharan African countries and then by an informal search by the
Center’s regional study programs for significant cases that would contradict or complicate the main
general themes. Painful though they may be, the conclusions that must be drawn from some of the
failures of U.S. wishful thinking, and from some successes and unintended consequences, are too
powerful and consistent to go away as foreign economic assistance is considered at a time of sharply
limited resources.
The successes in this history have a common thread: what was best achieved lay at ground zero relative
to the overt purpose of the aid. That is, whether the aim was economic or noneconomic, programs that
were soundly designed and effectively administered were able to achieve their most immediate goals. It
proved possible to give aid to build a dam and have the dam built. It proved possible to “pay rent” on a
military base and then use the base.1
But distance from these overt, primary objectives reduced the likelihood of success and opened the door
for increased unintended consequences. If the building of the dam is designed to provide power for a
group of towns, that too can probably be accomplished. If the reason for doing that is to trigger an
overall economic improvement in the region, the odds go down and the unpredictability is increased. If
the reason for that (improving the entire economy of the region) is to make the governments of that
region pro-U.S. liberal democracies, the connections get much less reliable. And if the ultimate goal is to
make the citizens pro-U.S. liberal democrats, no one who reads this record can invest any serious hope
in such a proposition.
Although important complexities must be introduced in the body of this report, they will not reduce the
force of the call that history makes on U.S. policymakers, in both the administration and the Congress, to
recognize that they should only decide to invest to build the dam if they are satisfied with the
immediate result: getting the dam built. Achieving the immediate ends of such overseas assistance is
difficult enough: this study demonstrates the risks of putting forward anything beyond the immediate
goal as the reason for making the investment. But it recognizes that programs with multiple and
noneconomic goals are still going to be manufactured and so charts a path with the bet odds for success,
noting the avoidable traps.
As Ernest Preeg’s Philippine case study demonstrates, the failure to devise sound and achievable overt
objectives and then maintain these objectives as the entire content of our serious aspirations for what
we intend the aid to accomplish can lead to the result that more harm than good is accomplished for
overall U.S. objectives. And, corollary to this, all the case studies demonstrate that extended political
and security objectives can be expected to undermine the achievement of the overt economic objectives.
The aid community in the United States has long argued for greater purity of purpose (i.e., sound
economic goals only) in U.S. foreign assistance, and the study dramatizes why it feels this way. But the
study also recognizes that objectives just as compelling as the “old” cold war objectives are already
thrusting themselves upon policymakers and so examines the question of how best (and worst) to
achieve noneconomic goals with these economic tools; there is little likelihood that policymakers will
desist from trying. Indeed, the study recognizes that there have been important noneconomic successes
in the past and, with proper strategy and execution, there can be in the future.
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The case studies and additional cases informally surveyed confirm a consistent pattern of potential
effectiveness for economic assistance when the expectations, planning, execution, and overt goals of the
aid are mutually consistent, along with a record of failed wishful thinking in cases not adhering to this
discipline.
The case studies and additional research touch frequently on the relationship between the donor’s
objectives and the recipient’s objectives and predispositions. Where the U.S. goal conflicted with
interests of the recipient regime, or with its perception of those interests, or would have a significant
impact on the political struggle between factions in the politics of the receiving country, chances of
accomplishing the aid’s purposes were steeply diminished. The perceptions of ruling groups abroad may
currently be undergoing some change as a result of the recently observed effects of prosperity on
stability
The findings also permit the formulation of important guidelines on whether aid can be anything more
than a catalyst for political change, on economic objectives as façade for political intentions, on longterm versus short-term objectives for aid, on the phenomena created by having multiple goals for the
same program, on “backlash,” and on U.S. legislation.
And the guidelines below also indicate the advantages and disadvantages that can be expected from
cooperation with allies in foreign assistance and how political impact and leverage can be maximized.
Although the scholars carrying out the case studies have focused on the effectiveness of economic aid
for achieving selected noneconomic objectives, they were consistently struck by the damage these
objectives inflicted on effective use, in economic terms, of the aid for its over primary objectives. This is a
proper part of their analysis, because it is part of the cost of this use of aid and other kinds of economic
assistance. The reader will find with consistency in the impression that the cost was very high.
There is a discussion in chapter III of a pattern found in the case studies that is suggestive but for which
the case studies offer insufficient evidence to label it a “finding.” I points out that recipients of large
amounts of aid, such as the Philippines and Pakistan, have poor economic growth and development
records, while Mexico, a recipient only of assistance other than official aid, is currently doing remarkably
well economically. This is suggestive and significant because of the likely search, under budget pressure,
for modes of assistance in the future more similar to the help given Mexico than to official aid for the
goal of economic development (as distinguished from humanitarian relief).
The political reality is that political and security purposes were often advanced as the reasons for
economic assistance packages, especially if a credible link to the cold war offered itself. The fact that
nothing as compelling as the cold war is likely to replace it raises legitimate concerns about the future
appropriations for economic assistance coming from legislatures wit the twin dogs of constituency
politics and budget deficits snarling at their heels.
The question may come down to whether there is significant political support in the United States for
some forms of humanitarian assistance, for international altruism. Even though the purposes of aid are
more likely to be achieved if they are not hidden behind other, more “marketable” goals, the political
difficulty of coping with suffering abroad when there is suffering at home may cause leaders to continue
to base aid requests on whatever rationale has the most domestic appeal.
A second possibility, of course, is that environmental concerns will take on the same urgency, with the
same level of national consensus developing behind action and investment, that prevailed during the
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cold war. Nothing, however, in the action surrounding either the Rio Earth Summit or the early stages of
the 1992 U.S. election suggests that Americans are near to this level of national accord and fervor.
But should saving the planet become a new absolutely central national crusade, the United States will
face the same challenges defined by this study: avoiding unfounded hopes that generalized economic
aid, or even good capital projects that are, nonetheless, unrelated to environmental action, can lead to
desired behavior in a different sector. Will a generalized bribe to country X really induce it to protect its
rain forest over the long run? Aid for the development and marketing of forest products might have a
direct impact in the desired direction, but what response should be made to the country that claims
simply that the level of economic desperation is too great to permit fancy environmental policies, that
says “Cure the desperation and then we’ll talk about the forests”?
This study suggest pessimism about cutting such a deal.
The Frozen Spigot
Another hard lesson for policymakers that emerges from this study is that the effectiveness of U.S.
influence over recipient-country action is in inverse proportion to the perceived importance that
Washington attaches to the relationship. If the receiving country believes that the spigot is frozen in the
open position, that for reasons of strategic necessity or domestic politics it is not feasible for
Washington to close the spigot, the influence the United States derives from the aid sinks close to zero.
This piece of common sense is verified throughout the study, as is the Washington habit of acting as
though the world did not operate that way.
No policymaker reading this evidence can avoid the necessity of have a credible hand on a turntable
spigot in order to influence recipient-country action. If the aim is economic reform and sustained
development, Washington must be prepared to suspend aid if the receiving country falters in its
commitment to the economic program that the aid is designed to support. The U.S. government must be
legally and politically capable of turning down or turning off the flow of assistance. One does not like to
think of an unreliable flow while, at the same time, suggesting carefully conceived capital projects have
the best chances of success: they need reliability of expectations, the ability to plan without mercurial
political meddling. The only way to avoid the tension between these factors is to limit one’s
expectations about broad influence in the first place. The study clearly indicates the wisdom of this
course.
The spigot-leverage relationship is explored below in the more detailed look at the findings. But the
most general implication of these findings is that the probability of success for U.S. economic aid
programs will vary enormously from country to country. Whether, however, the economic objective is
easy or difficult to attain, achievement of the political or security ends that are supposed to flow from
the economic changes. It is nonetheless possible to enhance the chances for success of the latter. Of
central importance in doings so is the factor of leverage, which means that the aid should be conditioned
on the performance of the receiving country, with the flow of aid credibly linked to realistic and wellunderstood performance criteria. A question about whether U.S. policymakers really believed that they
could work the changes on Philippine or Pakistani economic performance that were announced as the
aid’s aim. Whatever the case, politics, not economics, clearly drove the process in the United States and
economic aid was perceived as useful for political purposes. So it is striking that this general rule of what
can be accomplished and what probably cannot be accomplished holds up even in these cases.
“Performance criteria” in the above formulations is a factor usually attached to economic performance,
but the rules of leverage are just as much at work in noneconomic spheres.
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The Guidelines
The headlines for policymakers announced above are among a number of broad normative guidelines
that the findings permit. Behind them lies a set of conclusions that are likewise supported by (1) the four
case studies carried out in this period, 1 (2) five studies of sub-Saharan African countries carried out in
another CSIS project,2 (3) a series of meetings with experts to grapple with the issues of what was
general and what was particular in those studies, and (4) a review of the findings and an informal search
for counterevidence, that is, for instances that appeared to cut across the tentative findings, carried out
with the assistance of the all the regional [sic] study programs at the Center for Strategic and
International Studies.
These findings go to the questions of why the strategy being examined – U.S. use of economic means for
noneconomic (i.e., security and political) purposes in the Third World – worked sometimes and
sometimes did not. Specifically, the study looked at the relationship of the strategy and instruments of
economic assistance to the pursuit of the noneconomic policy objectives of the United States (and some
of its allies), especially national security, democratization, and international stability. What are the
conditions, the goals, and the tactics most likely to lead to success or failure?
Despite the warning contained in the headlines, the participants in the study, scholars and officials alike,
believed that there will instances in the future when U.S. policymakers are attracted to the use of
economic aid for noneconomic purposes.
But if Washington decides anew to taste this dangerous fruit, the study suggests that the U.S.
government should pursue this strategy in a way radically different from that which has become
traditional. Even taking all this good guidance about conditions, goals, and tactics into account, the
achieving of the intended consequences is not certain, and the arrival on the doorstep of serious
unintended consequences almost inevitable.
The fundamental message is, to use the instance above: only invest in the building of a dam if you will be
satisfied with the existence of the dam, that and nothing more, as a payoff on the investment. But if the
warning is not heeded, and Washington decides to build the dam in order to accomplish some further
political and security objectives, the cases studied provide critical lessons for those making and
implementing the program. The one case where a long-term objective was stated early and then
apparently achieved was the goal of Korean self-sufficiency as it related to the subsequent “economic
miracle” and the approach to (but not full achievement of) security self-sufficiency.
The question of cause-and-effect is treated in the Korea case study itself. But even in this case, the first
lesson advanced by the author of the study is that “economic aid is a blunt, not subtle, too.” Further, in
Korea certain slices of aid were targeted toward the goal of economic self-sufficiency with enough
directness to make this the immediate goal (thereby also demonstrating that the immediacy of the goal
and whether it is long-term or short-term are two different issues). Another key long-term goal in Korea
was the fostering of democracy. But it was never the direct, immediate objective of any slice of the aid.
The result was that, despite the size of the aid program, authoritarian government continued in Korea.
The findings also lead to the following conclusions:
 Even on a purely economic level, we should not expect economic aid to be more than a catalyst.
This is even more true where the goal is political change. The real energy and commitment to improve
economic performance must come from the host-country leadership, local constituencies, and private
investment. The role of aid, at best, can be to induce the receiving government to put its economic
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house in order and to foster an environment in which private enterprise can flourish. Even in the five
sub-Saharan African countries studied, where aid donors succeeded in providing some impetus for
economic reform, the driving force for political change came from inside the countries. (This lesson is all
the more important in view of the modest size of the U.S. aid program in relation to the total resources
needed by Third World economies.) The relationship here between the economic and noneconomic is
fairly crude: the unleashing of market forces leads to the creation of a liberal cosmopolitan middle class,
which has proved to be dynamite for authoritarianism.
 The case studies do not indicate the impossibility of achieving some limited political or security
objectives with aid from Washington. But where the desired political result is something more precise
than that of the blunt relationship just described, the studies show that if the main purpose is political, it
is a mistake to devise elaborate economic objectives, pretending that these are the main purpose of the
aid.
 Many of the “new” noneconomic goals that may become part of the objectives of foreign
assistance programs are, by nature, long-term. Although this is not the same as having goals that are
secondary or part of a complex package of objectives, the long-term character of these goals will create
problems of (1) measurement of effectiveness and (2) maintenance of the pressure for recipient-country
performance. Nevertheless, aid will usually be long-term (Korean model), with occasional short-term
instances (some Philippine examples). The critical finding of the study is that where long- and short-term
objectives occur together, the overall problem of multiple goals (below) is much exacerbated. The
tension between long-term goals (economic self-sufficiency, democracy, social reform) and short-term
cold war goals in Pakistan become a serious drawback. (In the case of Pakistan, the case study author
came to the conclusion that smaller amounts of economic assistance over a longer-period, with a
predictable disbursement pattern, would do more good than sudden infusions of larger sums.)
 On the question of cooperation with other donor countries, the study finds advantages in the
effectiveness of the political statement the aid makes and advantages in leverage if the aid flow is
regulated by an international agency with a reputation for toughness in relating recipient-country
performance to spigot-control. An informal consortium or mere parallel individual-country giving tend to
diminish leverage, for reasons discussed in the last chapter. The United States is capable of improving
the probability of effectiveness of any multiple-donor initiative by taking the lead in organizing for the
policy objectives among all the aid donors and urging each to make its own aid conditional upon
appropriate behavior by the recipient.
 Although the cases studies focused on the attempt to accomplish noneconomic ends through all
the means of economic assistance, the backlash of the initiatives studied became an important part of
the story in all cases. There is a consistent pattern of jeopardizing the achievement of the principal
stated economic goals by the presence of other, non economic goals. The Philippine case study finds that
the priority given to noneconomic objectives distorted and damaged the economic program and prevent
support for some sectors of the program. (The author predicts that if aid to the Philippines continues to
be linked, or even to be perceived to be linked, to noneconomic objectives, U.S. trade and investment
will lose ground to donors not making the same mistake.) The history of the U.S.-Pakistan aid
relationship is also one of the economic value of aid being limited because of noneconomic objectives.
This consistent finding explains the antagonism of much of the aid community toward program
objectives that damage “their” priorities. But the point is crucial because of the importance that
economic performance is likely to have among aid objectives of the future.
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So a striking conclusion of the research is not just the difficulty and unlikelihood of achieving secondary
and tertiary objectives, objectives not immediate to the exact aid given, but the strongly deleterious
effect of these “other” objectives on the accomplishing of the economic objectives (including those of
commercial consequence). Powerfully dramatized by Ernest Preeg’s study, this factor is present in all the
cases.
An interesting phenomenon found in the studies is that of reverse damage, the instances in which
economic reform and progress work counter to such political objectives as stability. The Mexican case
suggests that this is mainly a short-term phenomenon.
 The factors of damage to the accomplishment of economic objectives, and short-term reverse
damage, are really just sub-sets of a larger, very consistent, finding in the case studies, the additional
African cases, and the review by CSIS regional study programs: the presence of multiple objectives of any
kind for the same program of economic assistance sharply reduces the chances of achieving all but the
most immediate primary goal, and will inflict at least some damage on that primary effort also. The
Mexican study suggests that Washington had not thought out systematically the relationship between
its economic strategy and the achievement of its noneconomic objective. In Korea, U.S. officials are
found expressing confusion about which group of goals had priority. In the Philippines, the multiple
objectives that got in each other’s way were even on the same side of “the line” (between the economic
and the noneconomic): the linkage to base rights adversely affected political objectives. At times when
Washington’s strategic interest in Pakistan has been at one of its high points, the United States has
failed to use economic assistance effectively to achieve other goals. Gen. Grave’s judgment on the basis
of the five African studies is that “donors intent on supporting both a transition to democratic
government and economic policy reform will face the dilemma of whether to give priority to the political
survival of the fledgling government or to economic change. In aid programs political and economic
objectives have often been … in conflict.”3
 The leverage-spigot relationship is summarized in a special section above. Put simply, leverage
to affect the reforms, policies, and other behavior of the receiving country is directly tied to the credibility
of the donor’s ability and willingness (legal, administrative, and political) to regulate the flow of aid in
response to recipient performance. This factor operates with special intensity and complexity in the case
of an economic assistance program with multiple goals, and phenomenon treated in the next point.
In Korea, the leverage over recipient policies was minimized during the Syngman Rhee period because
withholding aid would have jeopardized objectives that were perceived (correctly) by Koreans as having
an extremely high priority in Washington. Specifically, Seoul knew that the primary U.S. goal was to
advance its own position in the cold war in the short run, and so Korean leaders reasoned that the goal
of democratization was postponable without any (believable) risk that Washington would react at the
spigot. Over the course of about 40 years of U.S. grant assistance there was no enduring progress
toward a real democracy, despite all the U.S. efforts. If U.S. assistance helped promote some of the
economic conditions that in turn produced the social conditions that in turn produced the political
conditions for the recent movement toward democratization, that outcome is very different from any
serious Korean response to the paper tiger of U.S. pressure during the earlier period. Democratization is
occurring now, when Korea’s dependence on U.S. aid has ended. (The point on the predispositions of
the recipient country’s ruling factions, also explored in this section of the report, was also in play in our
inability to force or induce political reforms.)
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The credibility of the hand on the spigot can also be weakened by confusion over the level of aid or the
factors that will affect it, as is seen in the Philippine case. And in this case, so long as Manila thought
that the Americans simply had to retain the military bases, they could ignore any threats about delay or
suspension of assistance on this or other topics. The aid could be disbursed as political patronage,
ignoring the objective of democratic reform. These relationships were so clear that Communists could
portray the United States as being under the thumb of Marcos’s leverage. The intention of Washington
policymakers and legislators that U.S. support would lead to both economic and political reform was
frustrated because the leverage was missing. The single noneconomic objective (the bases) damaged
everything else. Even with the change of regime, the aid given to show political support for Corazon
Aquino had so little perceived relation to either Philippine needs or performance that it carried no
leverage for economic reform and functioned only as a crude one-time statement of political support,
unrelated to genuine leverage to influence future events.
In Pakistan, everything that enhanced the perceived importance of Pakistan in Washington’s regional
security strategy reduced spigot-credibility and leverage. The Soviet invasion of Afghanistan destroyed
the remaining shreds of credibility for the idea that Washington would actually suspend or delay the aid
flow in response to Pakistani performance on other aid objectives. Note that the Soviet withdrawal from
Afghanistan was followed by a freeze on aid; the Pakistani calculation had been correct. The period
when all goals other than Pakistan’s cooperation on Afghanistan was secondary had ended.
 The factor of multiple goals is, in some of the cases, linked to that of spigot-control to create the
worst possible situation for exerting leverage on the recipient. If one or some of the goals of a multiplegoal program are seen as vitally important to the United States, leverage is destroyed relative to all
other goals; if it is not credible that the United States will turn off the spigot because it attaches so much
importance to X, the recipient has no reason to heed Washington’s demands on any other objectives.
 All cases and associated research underscore the importance of the relationship between the
donor’s objectives and those of the recipient country. This rather obvious point is given its proper
complications by the cases: when speaking of “the recipient country” what really counts is the ruling
group’s perception of those interests. Within this, the cases point to the ruling group’s perceptions of its
own, not the country’s, interests, and other the development of counter-constituencies for the aid if it, or
the conditions it would promote, are seen as a threat to any of the significant competitors in the internal
struggle for power. Although taking these predispositions into account would seem to be a prudent
calculation that all policymakers would undertake, the cases reveal that Washington has frequently
missed this step, or had the political ground shift under its feet (in ways that should not, however, have
caused surprise). What should not be ignored in the future is the need to design aid programs to provide
results that will be advantageous (and be perceived to be advantageous) to both Washington and the
recipient, recognizing that “the recipient” might mean several factions powerful enough to control the
success or failure of the aid.
Account must be taken of other donors of economic assistance. This means more than the logical
relationships among the programs, their ends, and their procedures. It means also understanding and
planning strategy around the constituencies that are affected by, even developed by, the aid programs
of other donors. The tangled history of the interplay of multiple donors in the same recipient country
would afford interesting analysis but probably few generalizations to guide policy-makers on subsequent
occasions, beyond the admonition that, in most cases, the United States is not alone.
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In general the case the studies illustrate that where the interests of the recipient country and the
noneconomic goals of the United States coincided, such use of U.S. economic aid successfully
accomplished its purpose. Both the donor and recipient benefited. When, however, the U.S. goal
conflicted with the interests of the administration of the recipient country or threatened the existence
of that group, U.S. economic aid failed to accomplish its foreign policy purpose. Especially was this true
if the national security objective of the United States in the recipient country was known to be of high
priority to the United States. In the case of Korea, U.S. economic aid was a source of patronage that
helped to keep Syngman Rhee in power; it was therefore important to him. The same was true of
Ferdinand Marcos in the Philippines. In each country the granting of human rights and ending
oppression would have threatened the existence of the strongman; no progress was made by the United
States toward the goal of democracy and in fact the United States did not rigorously. In each country,
moreover, U.S. threats to withdraw aid were not credible; the recipient knew that the prime U.S. goal
was advancing its own position in the cold war in the short run and that democratization as a goal was
postponable.4 In fact, bargaining power lay with the recipient, not with the aid donor. In contrast to
Syngman Rhee, who had no real interest in the economy of his country or in development aid per se,
Park Chung Hee decided early in his tenure that “long-term U.S. sponsorship was no longer
guaranteed.”5 He rejected the “calculated dependence of the Rhee years,” and sought greater economic
and military independence from the United States. In other words, U.S. and Korean goals as donor and
recipient coincided. The consequence was an improvement in bilateral relations and, within a decade,
the end of U.S. economic aid and the start of the Korean economic miracle. The long-term U.S. goals of
putting Korea into a position of being able to maintain a strong defense force and operate and an
acceptable level of living without U.S. aid were accomplished; democratization, however, was still a
hope for the future.
The case studies are replete with instance where the predisposition of politically powerful factions,
including the country’s ruling group, were pivotal and, when push came to shove, were not shoved out
of the way by the will of the donor. Moving to a market economy in Mexico interfered with the subsidies
received by favored constituencies. Many of the new governments in sub-Saharan Africa owe their rise
to power to constituencies that benefit from the status quo and would be damaged by economic reform.
Failure to achieve human rights goals in Korea stemmed from the threat this constituted to Syngman
Rhee, as did any moves toward democracy, another goal imposed on the aid program. In Mexico, the
overall threat affecting Mexican predispositions came from the idea that an economy based on
individual initiative might undermine the authoritarian civic culture. The Philippine government went all
the way in defending the difference between its and Washington’s goals when it demanded rentlabeled-as-rent for the military bases, freeing it to use the money for its own purposes.
On occasion, mixing into internal politics has been an important (though seldom advertised) part of U.S.
objectives, well beyond such simple formulations as the promotion of democratization. One reason for
Washington’s interest in the establishment of a functioning market economy in Mexico is the hope that
this would discredit the policy descriptions of the Mexican Left. In fact, the Mexican case study shows
that the measure of consensus achieved on economic policy has moderated the extreme Left and also
undermined the scare tactics of the far Right. In such cases, the relationship between the aid and
internal political factions was deliberate.
 The study does not provide decisive support for the idea of rewriting the Foreign Assistance Act.
One could undertake to write new legislation in order to limit strictly the purposes for which aid may be
provided – and do so reading the lessons of this study – but the legislative chances for a major revision
are unclear, and once started down that road in the Congress, the finishing point is unpredictable.
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Among participants in the study were admirers of the Hamilton-Gilman report but also those with
strong questions about the wisdom of trying to dictate all the purposes of aid in a piece of general
legislation.
 Because of the slices of history studied, the noneconomic objectives were mostly cold warrelated security and political goals. But neither the case studies nor the experts involved in the study
suggest that the lessons learned are confined to those particular noneconomic objectives. The same
mistakes could be made in efforts with other noneconomic ends in view, from narcotics control to
environmental protection.
 The Korean case study makes an interesting case for striving for public, rather than government,
support for aid objectives. Because this was the only study to focus on public diplomacy as a factor in
the strategic thinking relative to economic assistance, the discussion in that case study cannot properly
be called a finding or recommendation of the project as a whole. But it is suggestive of paths to follow in
subsequent work.
In the final section an attempt is made to put together the principal characteristic of a foreign assistance
program with the best odds for success, according to the study’s findings. The central conclusion is that
the best odds obtain when the objective is economic; closely related to (or exactly the same as) the
specific work to be carried out by the aid project; short-term; genuinely supported by the political
leadership of the recipient country; not burdened with secondary objectives; and disbursed, delayed or
suspended according to a credible and tight connection to the donor’s insistence on clear performance
standards, whether the donor is the United States alone, the United States and its allies, or an
international agency. […]
The Historical Moment
It was decisively important for the political significance of this study that it was launched as the Berlin
Wall fell and the Soviet Empire unraveled. The end of the cold war means a necessary rethinking of the
political engine behind much of U.S. foreign economic assistance over the last 40 years. The study, even
if the timing was more fortuitous than calculated, offers itself as the logical starting place for that
rethinking.
With the shadow of the superpower rivalry removed, we can see more clearly those other dangers and
opportunities for which aid might be an effective instrument – if the lessons of recent history are
understood and heeded. Global and regional stability are now threatened by poverty, the
maldistribution of resources, disease, the narcotics trade, ethnic strife, the abuse of human rights, mass
migration, nuclear proliferation and the spread of other weapons of mass destruction and, long range,
environmental degradation. This array of threats will constitute a drain on, perhaps the exhaustion of,
the resources and vitality of the international system. The resources that were thrown, often on the
basis of guesswork and wishful thinking, at cold war objectives will not be available to the United States
and its allies in the future.
And there are also the unrealized opportunities. Despite the political earthquake of the last three years,
neither market-based free enterprise nor Western-style pluralistic government has been installed as the
worldwide pattern.
The historical context is one that demands a far more stringent relationship between reality and goals,
and then between goals and investment, than that to which cold war policy makers were accustomed.
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During the cold war, the United States used economic and security assistance as major policy
instruments in its rivalry with the Soviet Union. Three of the four case studies reported on below
describe situations dominated by cold war concerns; and the citation above from Dr. Baer’s study of
Mexico dramatizes the high importance of cold war factors even in that case. The cases show, as does
the history we all know, that various combinations of such assistance made a major contribution to the
success of the Western alliance and the maintenance of the U.S. position in several corners of the earth.
In many cases economic assistance was used in pursuit of noneconomic objectives, bolstered either by
apparently tight reasoning or by obvious wishful thinking in the connection asserted between the aid
and its goals. It has been, and remains, a controversial concept.
But it is one that will continue to offer itself to policymakers. Wherever we have relative wealth and no
easy direct path to achieving desired political and security goals, the idea that maybe an investment of
this kind will pay off is going to spring to mind. If it does not, the potential recipient countries will find
ways to suggest it. The response, if it is to be more than guesswork (and a fresh supply of wishful
thinking), must be based on analysis of what works, what does not, and under what conditions.
The case studies and their context in history show how often Washington turned to economic aid as a
cold war weapon. Foreign aid is still considered to be a useful foreign policy tool by official Washington,
even with the end of the cold war. But in all the ferment of new ideas being offered for revising the
goals of the aid programs, few in either the executive or legislative branches have suggested using
economic aid solely for purposes of improving the economic conditions and performance in receiving
countries. That is the stark context of this study.
Burnside, Craig and Dollar, David (2000), “Aid, policies and growth,” in American Economic Review,
Vol. 90, No. 4, pp. 847–868.
In this paper we have investigated several questions regarding the interactions among foreign aid,
economic policies, and growth. Our primary question concerned the effect of aid on growth. Consistent
with other authors, we found that on average aid has had little impact on growth, although a robust
finding was that aid has had a more positive impact on growth in good policy environments. This effect
goes beyond the direct impact that the policies themselves have on growth.
A second question concerned the allocation of aid: do donors favor good policy? We found no significant
tendency for total aid or bilateral aid to favor good policy. On the other hand, aid that is managed
multilaterally (about one-third of the total) is allocated in favor of good policy. These findings, combined
with a separate finding that bilateral aid is strongly positively correlated with government consumption,
may help to explain why the impact of foreign aid on growth is not more broadly positive. Our results
indicate that making aid more systematically conditional on the quality of policies would likely increase
its impact on developing country growth. This would be true as long as conditional aid of this type had
plausible incentive effects.
A final point is that there is a marked trend toward better policy among poor countries, which means
that the climate for effective aid is improving. In our sample the mean of the policy index reached a
nadir of 1.0 in the 1982-1985 period, and then climbed to a peak of 1.8 in the most recent period, 19901993. Our OLS results suggest that the effect of aid was significantly positive for a policy level of 2.4: by
1990-1993, 15 of our 40 poor countries had attained that level. Ironically, the past few years have seen
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cutbacks in the financing of foreign aid: in 1997 OECD countries gave less, as a share of their GNP, than
they have in decades. Thus, the climate for effective aid is improving, while the amount of aid
diminishes.
Burnside, Craig and Dollar, David (2004), “Aid, Policies, and Growth: Revisiting the Evidence,” World
Bank Policy Research Working Paper No. 2834.
In conclusion, our original finding that aid spurs growth conditional on the quality of institutions and
policies is quite robust. We find the relationship in a new data set focusing on the 1990s and using an
overall measure of institutional quality. Our strongest conclusion from the cross-country work is that
there is far more evidence that aid spurs growth conditional on institutions, than for the competing
hypothesis that aid has the same positive effect in all institutional environments. On the other hand,
because all cross-country statistical results are fragile, we cannot completely reject the hypothesis that
aid never works anywhere. Like most economists we believe that institutions and policies matter for
growth, but it is possible to find specifications in which the institutional quality variable is not significant,
so a limitation of the cross-country approach is that it cannot definitively settle some debates.
Fortunately, policy makers do not form judgments based simply on cross-country regressions. There are
other types of information that are useful for those trying to establish effective aid policies. First, one
should not underestimate the importance of theory. Given that institutions and policies affect growth, it
is difficult to write down a coherent growth model—unless one assumes international capital markets
are perfect—in which the impact of aid would not be conditional on the same institutions and policies.6
For aid to have no impact in a low-income country, regardless of the quality of institutions, would
require a degree of perfection in international capital markets that we find implausible. So, based on
theory, it is quite plausible that aid would promote growth in poor countries that manage to put good
institutions into place.
A second type of information that is relevant comes from case studies. There is fairly broad agreement
that the Marshall Plan accelerated European growth after World War II: this is the ideal example of the
model we have in mind, with a significant volume of finance pumped into an environment of solid
institutions and social infrastructure. We would argue that this one case disproves hypothesis #3, that
aid is always money down the rat hole. There are quite a few case studies of aid to developing countries.
Many of these support the view that money channeled to a highly corrupt government with distorted
economic policies provides no lasting benefit. On the other hand, studies of successful aid typically
emphasize that the recipient government had a good set of policies to enhance growth and directed
assistance to useful investments in roads, schools, and the like.
A third type of evidence that is relevant comes from data on individual projects financed by aid. In a
variety of sectors, projects are more likely to be successful in countries with growth-enhancing
institutions and policies [Isham and Kaufmann (1999)]. When South Korea was a low-income country
with a large amount of aid in the 1960s, most projects, of many different types, were successful. In
Kenya and Zimbabwe in recent decades, on the other hand, many projects, of all types, have failed, in
the sense that they have not provided the services or benefits anticipated from the investment. If aid
were not fungible, this project level evidence would settle the debate. However, it is possible that all of
the good projects in Korea would have been financed by private capital in the absence of aid, so that
project-level evidence alone cannot settle the debate about aid effectiveness. Once we combine the
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evidence from case studies and projects with the cross-country correlations, however, we feel more
confident that aid effectiveness depends on institutions and policies.
We were also interested to see the results of a global poll commissioned by the World Bank from a
private survey company [PSRA (2003)]. The poll focused on “opinion makers” in a wide range of
developing and developed countries (that is, government officials, academics, the media, trade union
leaders, NGOs, etc.). In Sub-Saharan Africa, 84% of opinion makers agreed with the statement that,
“Because of corruption, foreign assistance to developing countries is mostly wasted.” In other regions of
the developing world, similarly large majorities agreed with the statement. Opinion makers in the rich
countries were the least skeptical (only 58% agreed with the statement). So, while first-world academics
may find some specifications in which aid works in all institutional environments, that argument is going
to be a tough sell in the developing world.
A final important point in this debate concerns incentive effects. We and others have found that in the
past aid has not systematically led to improvements in institutions and policies. But the phrase “in the
past” is quite important. In the past aid has been allocated indiscriminately with regard to the
institutions that are critical for growth. If the allocation rule changes, then the past evidence tells us
little about what may happen in the future. We would not expect aid—even well managed—to to be a
main determinant of reform. But if aid is systematically allocated to low-income countries with relatively
good institutions, then we would expect that this would increase the probability that reforms are
successful and politically sustainable. Thus, aid could be a useful support to reform even if it is not its
main determinant. Our line of reasoning is speculative, but it is not unreasonable to think that allocating
aid to relatively good governments would have a positive incentive effect.
Based on all the evidence, we think that it is good news that aid is now more systematically allocated to
countries with sound institutions and policies. If anything, we would encourage aid-givers to strengthen
this trend even more.
Byrd, Peter (1991), “Foreign Policy and Overseas Aid,” in Bose, Anuradha and Burnell, Peter (eds.)
Britain's Overseas Aid Since 1979: Between Idealism and Self-Interest, pp. 49-73, Manchester:
Manchester University Press.
The Conservative government found that it was extremely difficult to fulfill its aspiration of 1979 in
reordering aid on a clear foreign-policy framework of assisting friends and promoting exports. 16 By the
mid-1980s, under Raison, a clear development priority had reasserted itself (alongside the commericial
pressures on the aid budget), although the ODA (Overseas Development Agency) and its Ministers
lacked the political clout to recover the major cuts in the budget imposed in the immediate post-1979
period. As a tool of foreign policy aid has shown itself to be too inflexible and too strongly shaped by
forces of inertia. Moreover, it has been too small in size to be an effective instrument, except in isolated
cases. Those exceptional cases are not insignificant – the use of aid as part of a policy of securing
regional influence, as in the case of Mozambique; the exclusion and then prospective re-accommodation
into the aid programme of such states as Vietnam; the use of the aid programme as an instrument of
trade promotion and industrial policy, as in the case of India; the use of aid as part of a prime ministerial
foreign policy coup to mend a broken relationship, as in the case of Malaysia. But as an instrument of
foreign policy in the 1980s overseas aid has remained of only marginal significance.
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Cable, Vince (1982), “British Interests and Third World Development,” in Cassen, Robert, Jolly, Richard,
Sewell, John, and Wood, Robert (eds.) Rich Country Interests and Third World Development, pp. 182214, London: Croom Helm.
To the extent that it is possible to pull together the various strands into an overall assessment of how
the British government views its interests in developing countries, the conclusion is not too encouraging
from a mutual-interests standpoint. The current British government simply does not relate to the
Keynesian framework of economics which underlies much of the Brandt analysis. There is little interest,
either, in proposals for intergovernmental regulation of commodity markets, or the transfer of
technology, or restructuring, on other than a commercial basis, of contractual debt. Liberalization of
markets is closer to its ideological heart but where this might help developing countries (lifting
restrictions on imports of competing manufactures and agricultural goods and, above all, people) there
are major political obstacles and some genuine, if exaggerated, frictional costs. The virtual ending of any
British need for imported energy, the increasing self-sufficiency (albeit at great cost) of European and
British agriculture, and disengagement of British and other Western mining companies from developing
countries, have substantially weakened formerly strong sources of economic interdependence. Political
interests have waned with winding up of Empire and the ending of all but nominal military involvement.
What is known of public opinion also indicates some hostility or, at least, indifference. The present
government has signalled its attitude towards North-South relations in general by representation at
conferences which is low in level and negative in tone and by even sharper cuts in the aid budget than in
public expenditure in general. Although its tone was more conciliatory and its policies, on aid notably,
more generous, the last Labour government showed no evidence of being persuaded that an
accommodating approach to the demands of LDCs was in Britain’s interest. This background helps to
explain, in large part, the cool government response to the Brandt report. Foreign Office ministers have
since made more positive noises, but not due to any real reappraisal of ‘interests’; rather because of a
greater sensitivity to the country’s image overseas and in deference to the strength of ‘moral’ feeling –
in the Church, Parliament and in some sectors of public opinion.
However, there is evidence, which this survey has tried to bring together, that there are some British
interests in developing countries which are of growing and perhaps underestimated importance. The
share of LDCs as a market for British exports of goods and services is increasing again after decades of
decline. Private foreign investment in developing countries is now of growing relative importance and is
given high priority by the present government. There is strong interest in stabilizing the international
monetary system not least because of the heavy involvement in LDCs by UK-based banks and the role of
sterling as petrocurrency. There are signs that austere monetarism is giving way to greater concern for
economic expansion at home and abroad. It might be said that all of these aspects of interdependence
are well known and understood and are best dealt with problem by problem and country by country,
corresponding to the reality that developing countries differ greatly in outlook, economic potential and
political importance. It is at this, modest, level that the Brandt report may prove to have been useful;
not in persuading this, or other, British governments that a radical new international economic order is
in their interests – of which there is little prospect – but in promoting an outlook towards LDCs which is
somewhat more positive, longsighted and generous in spirit than before.
Carleton, David and Stohl, M. (1985), “The Foreign Policy of Human Rights: Rhetoric and Reality from
Jimmy Carter to Ronald Reagan,” in Human Rights Quarterly, Vol. 7, No. 2, pp. 205-229.
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In sum, United States foreign policy under both Presidents Carter and Reagan has been characterized by
a sharp distinction between the rhetoric and the reality of human rights policy. Moreover, there is a
sharp difference in the rhetoric of the two administrations. We have seen that the rhetorical aspects of
the Reagan critique and reformulation of human rights policy have demonstrated empirical and logical
flaws. In contrast, the practice of the Carter and Reagan Administrations on foreign aid distribution has
been remarkably similar. Neither administration has acted in accordance with the established human
rights legislative package. Thus, while the Reagan administration has produced a rhetoric on human
rights policy that is radically different from that of the Carter administration, the policy outputs in the
area of foreign assistance are not any more coherent. Decisions on the distribution of United States
foreign assistance continue to be made with interests other than human rights in mind. While Carter's
policy may have failed while raising expectations, Reagan's policy offers no hope whatsoever.
Cassen, Robert, Jolly, Richard, Mathieson, John and Sewell, John (1982), “Overview,” in Cassen,
Robert, Jolly, Richard, Sewell, John, and Wood, Robert (eds.) Rich Country Interests and Third World
Development, pp. 1-40, London: Croom Helm.
What can be concluded from the studies for the future? It would be dishonest to pretend that a clear
and simple set of conclusions emerges. Interests there are and strong they may be – but there is a
complexity in the way they arise from the differing concerns of different groups within and across the
developed countries which makes it difficult to compile a summary.
This is hardly surprising. Clear and strong interdependence exists between companies and unions within
any of the countries of the North, or between, say, the economies of the European Economic
Community. But the mere existence of this interdependence does not permit a simple summary of
mutual interests, let alone a logical economic deduction that all forms of progress of one group or
country necessarily will benefit all the others. Mutual progress can be mutually beneficial and cooperation to pursue this may be in the strong economic interests of the various parties in pursuing it. If
all this is true within and among the developed countries, why should it not also be true of the
interdependence between the developed and developing countries?
Thus the critical question is not ‘does interdependence between North and South exist?’ but ‘on what
terms is it in the interests of the North and South to pursue and fashion interdependence between them
in the 1980s?’ The acceptance of interdependence then becomes less a deduction from economic facts
than a declaration of economic and political will. The essence of the Marshall Plan was not an
econometric calculation of multipliers and linkages but the statesman-like vision that a reasonable postwar world required a reconstructed Europe and Japan and that it was in the broad interests of the
United States to provide major economic support for its achievement. The terms on which
interdependence was reconstructed included financial transfers, five year plans and the OEEC, an
organization for co-ordinating economic advance and interaction.
The starting point with the Third World today is quite different. Parts of the Third World are growing
rapidly and strongly, while many of the poorer parts are stagnating. The world economy is stagnating – if
not in recession and crisis. The question posed is: does anyone have the vision for a purposeful
reconstruction of a more dynamic world system – and how do the different groups of Third World
countries fit into such a system? The answers to this are even more difficult than to earlier questions.
Some will probably say that such a question is totally incongruous at the present time, politically and
philosophically, because of widespread disillusion with the commitments to and capacity of
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international institutions and organizations. Such commentators may be ‘realistic’ in their
disillusionment. The vision may be beyond our grasp.
But what the country-studies depict is the absence of any striving for a reconstruction of a new
interdependence, a widespread failure to grasp the importance of what is at stake. In country after
country of the North, economic interactions within the North are treated as serious economic issues,
economic interactions with the South are treated as political diplomacy. Yet as the studies also show,
the economic facts are otherwise: the Third World matters economically, the structural adjustments
already facing the North in energy, food production, trade and finance, give it even greater incentives to
establish new economic relationships with the South; and finally, in the context of continuing recession,
there is a special area of mutual interest in any measures which would stimulate a greater level of
economic activity through the growth of world trade.
While all the countries of the North have a variety of ties of interdependence with the large number of
middle-income countries of the South, it is hard to see from the case studies what they have to gain
economically from the prosperity, or even the continued existence, or the poorest among developing
countries, even if security is considered an important factor. A Nepal, a Bangladesh, a Lesotho, a Haiti,
could go the way of Cambodia in more or less disappearing from the West’s international community,
with hardly a ripple of effect on the immediate well-being of the North’s inhabitants, and even in the
longest of long runs, with only a rather marginal loss of some opportunities for trade or the chance to
import cheap immigrant labour at some distant time when the migration-potential of sources closer to
hand is exhausted.
The satisfaction of humanitarian wishes that we should seek to aid the Nepalese and the Haitians can
hardly, therefore, call arguments from self-interest in support. The case must rest mainly on support for
measures of common humanity and poverty eradication, of shared membership in a ‘world society’
which have been mentioned throughout the case studies.
The papers discuss the factors which tend to strengthen support for this sort of action, in particular on
the marginal incremental effects of binding arrangements involving partial renunciation of national
autonomy for some collective interest. It is worth, finally, addressing one particular sort of international
development – the entrenchment of ‘class stratification’ among the nations of the world. Most of the
case studies examine the effects of ‘class consciousness’ in inhibiting the rich nations from ‘defecting’
into alliance with groups of Third World countries in confrontational situations. Similarly, there have
been occasions, at the CIEC meetings, for example, when OPEC countries have seemed about to use
their oil power while consciously in the interests of poor countries as whole, and not just in their own
national interest or in the interests of an Arab or Islamic grouping. To be sure, such solidarity remains
weak in practice, and it is not clear that it will ever become a decisive force.
On the other hand, there are other possibilities. The effect of widening gaps in living standards is
difficult to calculate. If the oil countries’ industrialization and modernization plans turn sour and they
remain the world’s nouveaux riches, when will they feel they are entitled to be viewed as something
better? Perhaps increased density of communications will have an effect: what Marx said the railways
did for working-class consciousness in Germany, the jumbo jet and international conference might do
for Third World consciousness. If there were such a development, the effects would be uncertain just as
the rise of class consciousness was for the Western democracies in the nineteenth century – on the one
hand raising the level of dissension, on the other hand leading, eventually, to the ‘incorporation’ of
dissenters because the cost of the dissension to the ruling groups proved too great. That process of
incorporation enabled the very poorest who had no bargaining power to have their claims to citizenship
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recognized by riding on the coat-tails of those whose bargaining power was stronger. This may be true
of such countries as Nepal and Haiti. The Third World countries as a whole have a considerable role in
determining the nature of the objective situation in which the rich countries find themselves and base
their interest on.
While coalitions of specific interests could lead to progress on some limited issues, they do not seem
adequate to forge a new order of a kind which would promise more solid opportunities of development
for the Third World. For that, the question is whether the real interests in the areas of energy and
economic security can bring the North to a greater understanding of the relevance to their own peace
and prosperity of other economic and political issues in the Third World – or whether they feel they can
do sufficiently well with the past strategy of maintaining the status quo, making a concession here and
an advance there, and hoping they can get by without anything that seems to have major costs for
themselves.
It is not the conclusion of this analysis that all issues have to be negotiated simultaneously. The
negotiating process in the United Nations has suffered rather than gained from making attempts in that
direction. But there evidently must be enough items on the agenda to make the potential outcome
satisfactory for all parties. That there are mutual gains to be achieved seems clear; but they may only
emerge in a situation where some bargaining of positive and negative elements is possible. It also seems
clear from this analysis that progress in this endeavor is worth striving for, for the North’s sake as well as
the South’s. The choice is between a world of growing poverty, instability, rapid population growth
resource depletion, conflict and insecurity – and a more manageable future. The idea that business can
indefinitely continue as usual may prove to be an expensive illusion.
Cassen, Robert (1991), “Afterword,” in Bose, Anuradha and Burnell, Peter (eds.) Britain's Overseas Aid
Since 1979: Between Idealism and Self-Interest, pp. 204-209, Manchester: Manchester University Press.
Aid is often described as beginning with Truman’s Point Four programme; in fact its origins in both the
US and Europe go back before the Second World War. The present volume is mainly concerned with the
Overseas Development Administration and its work, which began effectively in 1964. But it is as well to
remember that governments recognized some claim on their resources from developing countries long
before that.
Worldwide aid grew fairly steadily up to 1986, when the effects of the steady diminution of Arab aid
since 1980, which had reached US $14 billion at its height, began to outweigh increases elsewhere.
CMEA assistance rose from US $2.8 billion in 1980 to US $5 billion in 1987 but has fallen slightly over
recent years. The aid of members of the OECD Development Assistance Committee has been growing
consistently since 1970, apart from downturns in 1973, 1981 and 1987. Different countries have taken
the lead in adding to volume: as US volume stagnated or fell, Italy became a significant donor in the
1980s, and in 1990 Japan became the biggest of all.
Britain is still a major donor, but with a low percentage of GNP: at 0.32 per cent in 1988 (having reached
0.44 per cent in the 1970s) it was below the DAC average of 0.36 per cent; only four countries in the
OECD league table (including the US, at 0.21 per cent) had a lower score. Successive British governments
have fairly cynically reiterated their commitment to the 0.7 per cent of GNP UN target for aid, but
without a date. The Labor Party’s 1990 policy documents, however, promise to achieve the goal within
five years.
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The British aid programme in 1990 almost defies assessment. It has achievements of high technical
quality to its credit; its projects in Africa have had more success than those of many other donors. It has
given expression, if in many cases only belatedly and thinly, to concern about poverty, gender and
environment. It has shown both compassion and toughness.
At the same time it has been subject to – and has often yielded to – commercial pressures. It has
declined in real value terms over most of the 1980s, until 1988, when it rose (and there is now a
government commitment for it to rise in real terms over the next three years). It is spread over an
excessive number of recipient countries. It has contributed growing amounts to EC aid programmes,
about which it is not happy, though it has had little ability to improve them.
All in all, it is a create of the cross-currents of political, foreign-policy, economic and social interests of
the national life, with a genuine mix of altruism sustained by outside pressure which meets a ready
response in many parts of Whitehall. It is a thoroughly British compromise.
Commercial Aspects
The UK’s aid programme is among the most affected by commercial influences. At 17 per cent of
bilateral aid untied, it has one of the lowest scores of donors for whom such information is given –
though these do not include France, Japan or the United States.1 While it can be argued that, without
efforts to satisfy commercial interests, governments might find support for aid less easy to come by,
some of the actual forms of commercialization are peculiarly damaging to the purposes of aid.
That is especially true of the Aid and Trade Provision, which this book correctly describes as a ‘wretched
abuse of taxpayers’ money’ (p. 124). It is sometimes argued that Britain has been forced to take such
action to compete with other donors who do similar things – the French were the first, with their crédits
mixtes. Certainly where other governments help their companies compete by improving credit terms,
those which do not do so may lose out. But it would be better to attempt to improve the international
machinery which is supposed to govern credit competition.
The ATP cannot strictly be described as matching others’ credit behavior in competitive situations. It is
often applied in particular deals where big contracts are at stake between UK firms and foreign
governments, and aid acts as a ‘sweetener’. The ATP takes scarce concessional resources away from
poor countries and poor people; it has created, as Toye observes, a vested interest which lobbies for the
scheme’s expansion. It benefits a small number of (often large) firms, but conveys no obvious good to
the country as a whole. It has been ad discredit to the Labor government of 1977 which introduced it,
and to the succeeding Conservative government, which nailed its flag to the mast of Competition, but
enlarged and preserved it. Anurdha Bose’s account of business lobbying in Chapter 7 only supports this
afterword’s view of the complexities of the ODA. The lobbies studied support the ATP, with varying
intensity. They seek other forms of access to aid contracts. They recognize, some of them, to some
extent, the developmental aims of British aid. And many parts of the aid programme are not accessible
to them. Other Whitehall departments are often instrumental in assisting them in their objectives. The
forces contend for the ODA’s virtue, within and outside it, and the battle is neither won nor lost.
NGOs
A further case in point is the channeling of aid through NGOs, now quite a major programme (Chapter 9).
This reflects in part a genuine attempt to meet the anti-poverty objectives of British aid, in part an
attempt to deflect criticism about failure to do so by other means, and in part a means of saving on
administrative costs. An incidental effect, as Mark Robinson points out , in Chapter 9, has been some
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muting of criticism of official aid by NGOs – though it would be too Machiavellian to suggest that this
was an aim of the policy.
At the same time, actual practice has borne out many of the ODA’s virtues: a concern for performance
evaluation by NGOs, which has not been pushed to the point of excessive obtrusiveness; using NGOs to
give humanitarian aid in countries where governments are not to be relied on; even some sensitivity to
the dangers for the NGOs in getting too close to officialdom. But, as Robinson’s account of the selective
availability of the block grant shows, even on administrative matters principle is not taken too far; if it is
awkward to follow precedent consistently it can be pragmatically accepted that like cases need not be
treated alike.
The Environment
British aid has become virtuous on the environment. It began the 1980s without an environmental
policy and with some considerable destruction of its scientific capacity. But after the Prime Minister’s
conversion to the environmental cause its own (modest) programmes and, perhaps more important, its
role on the international scene have become creditable. As described by Brian Walker in Chapter 10, the
UK has played a significant part in influencing policy in the World Bank and the United Nations
Environment Programme, and in promoting arguments and recommendations of the Brundtland report.
Foreign Policy and the Distribution of Aid
It is hardly surprising that in Chapter 3 Peter Byrd characterizes the foreign policy of British aid as
‘pragmatic’. No consistent thread can be found in the various uses of aid. Instead, aid is used sometimes
for highly specific foreign-policy purposes, such as assisting the resumption of relations with Malaysia in
1986, or attempting to improve the UK ‘presence’ in southern Africa by providing assistance to
Mozambique. More often, aid simply lubricates the conduct of foreign relations – this is why UK aid is
spread over 120 countries in rather small packets.
The geographical pattern of British aid has changed over the years. Many commentators particularly
regret the decline of Indo-British relations.2 India received 20.5 per cent of British bilateral aid in 197071; by 1987-88 this was down to 6 per cent.3 The UK compares reasonably well with other donors in the
proportion of aid it gives to the poorest fifty countries (68 per cent in 1987) and to Africa (49 per cent) –
it is Africa which has gained at Asia’s expense.4 It is interesting to speculate on the reasons for this shift,
common to most donors: it at least runs counter to the ‘economic interests’ view of aid, since these are
arguably greater in Asia than in Africa for virtually all donors. It is indeed true that what has attracted aid
to that continent has been the darkening economic prospects there, leading to an international
response to Africa’s plight, standard theories of international relations have something to explain.
Britain’s contribution to multilateral aid institutions is also fairly ‘virtuous’: 46 per cent of its aid,
including EC aid, or 27.2 per cent (compared to the DAC average of 24.6 per cent) excluding EC
contributions. The ODA has found the steady increase in this proportion somewhat frustrating,
particularly the amounts going to EC programmes, much of which it would rather see going through its
own bilateral channels. Adrian Hewitt has detailed some of the UK’s dissatisfaction with EC aid
programmes and policies in Chapter 5, though the present author gives more credence than Hewitt to
British efforts to reform EC aid; it is perhaps not so much that the UK has never tried as that, when it has
tried, it has not been supported by other EC members. Also the secretiveness of EC functionaries makes
it difficult for outside bodies to document the failings of EC aid and support attempts at reform – though
from time to time the EC’s own Court of Audit produces some fairly damning commentary.
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Effectiveness
British aid has a reputation for technical quality. The World Bank’s study of aid to African agriculture, for
example, found the UK among the more accomplished of the donors it covered – a fact which it
attributed in part to Britain’s long experience on the continent.5 The present volume pays tribute at
various points to the ability and dedication of ODA professionals – tributes which are for the most part
thoroughly well deserved.
As with much bilateral aid, however, objective knowledge about effectiveness is limited. James
Winpenny makes it clear in Chapter 2 that the ODA takes evaluation seriously and puts lots of effort
both into the techniques of evaluation and into implementing its findings. But by no means all aid
activity is subjected to formal evaluation, and only recently have evaluation reports been made available
to outsiders.6 In this respect the most ‘virtuous’ agency is the United States’ USAID, which is unique
among bilateral donors in evaluating almost all its aid (the World Bank is the only other agency to do so)
and publishing almost all its evaluations. It would be gratifying if the ODA were to move in this direction.
There is enough sophistication in the aid community for the publication of evaluations, both positive
and negative, to be possible without harm – indeed, with much value – to the aid programme as a whole
and public interest in it.
Chauvin, Nicholas Depetris and Kraay, Aart (2007), “Who Gets Debt Relief?” in Journal of European
Economic Association, Vol. 5, No. 2-3, pp. 333-342.
In this short paper we have presented new results on the cross-country and overtime allocation of debt
relief in low-income countries. Although debt relief has become a highly visible form of assistance to
low-income countries over the past 10 years, we as yet know little about how it is allocated across
countries, or what its impact has been. This is in part due to weaknesses with existing published data on
debt relief that we are trying to remedy in a ongoingwork [sic]. Using preliminary results from this
project we document that debt relief is much less responsive to cross-country differences in per capita
income, and somewhat more responsive to cross-country differences in policy and institutional
performance, than are other forms of aid. We also find, somewhat surprisingly, that debt relief is in
most cases not significantly associated with higher debt burdens, suggesting that reducing debt
overhang per se is not a major motivation for debt relief. We also find some evidence that large debtor
countries are more likely to receive debt relief, particularly from multilateral creditors. Finally, we have
seen that the strong observed persistence in debt relief is primarily due to relatively persistent country
characteristics. This in turn suggests that, unless debt relief changes these characteristics, it may be
difficult for debtor countries—as well as creditors—to escape from repeated cycles of debt relief.
Chong, Alberto and Gradstein, Mark (2008) “What Determines Foreign Aid? The Donor’s Perspective,”
in Journal of Development Economics, Vol. 87, No. 1, pp. 1–13.
Recently industrial countries have been hard pressed to reconsider their foreign aid policies by focusing
on good policies and good institutions in the recipient countries and some influential research has
studied the efficiency of aid disbursement in this regard. Interestingly, no attention has been given to
the possible determinants of aid giving in donor countries despite the commonplace policymakers’
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rhetoric to enhance it. This paper purports to fill this gap by examining the factors affecting the support
for foreign aid among voters in donor countries.
The stylized theoretical model, which considers an endogenous determination of official and private aid
flows, suggests that own government efficiency is an important factor in this regard, and also relates
individual income to aid support, which has the implication that income inequality is detrimental for a
political support for foreign aid. The empirical analysis of individual attitudes, based on the World Values
Surveys, reveals that satisfaction with the own government performance and the individual income are
positively related to the willingness to provide foreign aid. Furthermore, consistent with these results,
when using donor country data we find that aid is linked with inequality, corruption, political leaning,
and taxes in donor countries, but has little relationship with the economic conditions in the receiving
country. It is worth emphasizing that aid generosity is found to be mainly affected by own government's
efficiency and less by the recipient one.
Christian Aid (2004), The Politics of Poverty: Aid in the New Cold War, http://www.unngls.org/politics%20of%20poverty.pdf, accessed 19/11/2010.
Britain, the US and much of the industrialised world enter the summer of 2004 confronting the cold
reality of a clear and present terrorist threat. For those countries with forces embroiled in Iraq, the
menace is most keenly felt. In London, it is no longer ‘if’ a major terrorist attack will come – but ‘when’.
A chill wind, however, is also starting to blow across the developing world. It is being whistled up by the
very people – rich aid-donor countries – who claim to do the most to alleviate strife and suffering in the
poorest parts of the globe. For moves currently being made among members of the biggest and most
influential ‘rich-country clubs’ betray a worrying shift in how they see aid commitments. Aid is viewed
increasingly as a means of promoting and safeguarding the donors’ own interests, particularly their
security, rather than addressing the real needs of poor people. Aid, in other words, is being co-opted to
serve in the global ‘War on Terror’.
Aid has always, to some extent, been given with at least one eye on the self-interest of the giver – be it
to secure influence, trade or strategic resources. But the past 15 years have seen a marked change,
advocated for and applauded by Christian Aid, towards vital aid funds being far better targeted at
alleviating poverty. Now, however, we seem poised to return to some of the worst excesses of the
recent past, when whole nations and regions were blighted by the subsuming of their interests to a
global crusade. Aid was then allotted on the basis of where a country stood in the great Cold War
confrontation. Whether, indeed, a government was ‘with us or against us’.
Some nations did very well out of this. Europe was the recipient of the first great aid distribution – the
Marshall Plan – which allowed the continent to work its way out of the devastation wreaked by the
second world war. Even some countries given blatantly politicised aid used the opportunity to prosper,
particularly in Southeast Asia.
Others, however, saw the irreducible logic of the Cold War blight their nascent futures. Proxy wars were
funded and fought; corrupt and repressive regimes were installed and backed purely on the basis of
whether the people involved were ‘ours’ or ‘theirs’. Particularly in Africa, the legacy of that period is
with us still.
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The language of ‘you’re either with us or against us’ used by President Bush in the aftermath of the
September 11, 2001 terrorist attacks on New York and Washington, has an eerie, retro ring. Yet, as this
report demonstrates, it is not just the language of the Cold War that is starting to return.
Following the collapse of the Berlin Wall in 1989, and with it the great divide that had dominated world
politics for more than half a century, there was an opportunity to take stock and think again about the
relationship between North and South, rich and poor. There was even a blueprint from the Cold War
years to show the way ahead – the reports produced by the Brandt Commission in the 1970s and 1980s
– and during the 1990s the language gradually swung away from rich nations pursuing purely selfish
ends towards addressing the developing world’s pressing needs.
These changes were shadowed, and sometimes led, by an increasing public pressure to ‘do the right
thing’. Mass movements, such as Live Aid in the mid-1980s and Jubilee 2000 in the late-1990s, moreover,
demonstrated that there was political advantage to be gained in democratic countries from taking the
issues of world poverty seriously. Or, from a more politically jaundiced point of view, the cynical use of
aid budgets became less and less of an option. Media exposure of some of the worst abuses of
politicised aid – for instance, that given in exchange for defence contracts – meant that they were
progressively addressed.
In Britain, the new Labour government in 1997 went as far as changing legislation to ensure that
government aid money was expressly and exclusively targeted at poverty. As the end of the century
approached, the then 189 member countries of the United Nations signed up to the Millennium
Development Goals – which aim to half world poverty levels by 2015.
This was by no means a golden age. Self-interest continued to play a significant part in aid provision. But
the tide was definitely moving in the right direction. In the aftermath of 9/11, many of these gains seem
at risk. This report argues that the tide is on the turn, and looks set to start running in the opposite
direction.
The past couple of years have seen the US, the EU and a number of individual governments starting to
use the rhetoric of ‘opposing terrorism’ as a basis on which to allocate aid. There have also been
worrying developments at the Organisation for Economic Cooperation and Development (OECD), where
the rules governing how member states give aid are being changed to include terrorism prevention and
a range of military activities. Equally, ‘humanitarian’ language has been increasingly recruited to justify
military operations linked to the War on Terror – particularly in Afghanistan and Iraq.
The British government is also starting to make unwelcome connections. Aid to projects for poor
communities in ‘middle income’ countries, particularly in Latin America, was last year overtly diverted to
Iraq, despite previous assurances from none other than Prime Minister Tony Blair that this would not
happen. In April, Gordon Brown, the Chancellor of the Exchequer, was in Paris to garner support for his
International Finance Facility – the only way, he said, that the Millennium Development Goals could still
be met. He issued a ‘call to action’ to other international finance ministers, which Christian Aid can only
support. In a deviation from his published speech, however, he also showed himself capable of singing
from the War on Terror hymn sheet.
He said: ‘We understand that it is not just morally and ethically right that developing countries move
from poverty to prosperity, but that it is a political imperative – central to our long-term national
security and peace – to tackle the poverty that leads to civil wars, failed states and safe havens for
terrorists.’
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Of course there is a genuine threat from terrorism and a duty on governments to do all they can to
protect their citizens. But this should not and cannot be done by annexing the language and budgets of
aid. This will not only fail to address the real issues of poverty. The risk is that if narrow security
concerns are used to shape aid allocation, it could well lead to an intensification of terrorism. We have
been here before.
We examine the case of Uganda, which illustrates how the Ugandan government’s manipulation of the
War of Terror has led to an intensification of the conflict in the north of the country and so to the
displacement of hundreds of thousands of people. Hopes of a peace deal have dimmed, while succor
has been given to an increasingly repressive regime. Sound familiar?
We also look at Afghanistan – the last battlefield of the Cold War and first in the War on Terror – to
show how the hopes for stability and reconstruction that followed the fall of the Taliban have stalled.
Security is the key to rebuilding post-war Afghanistan. But the emphasis placed on the US-led coalition’s
goals – the hunting down of al-Qaeda and Taliban forces – has abandoned most of the country to
lawlessness.
Here, the confusion between the roles of combat troops and peace-keepers, often under the same
command, has also led to a shrinking ‘humanitarian space’ in which aid organisations can operate. For
those, like Christian Aid and its partners, who are trying to build a better life for Afghanistan’s people,
the situation has now become more dangerous than under the Taliban. A rising toll of murdered aid
workers in the country is a tragic testament to this situation. The result is that whole areas of the
country have been placed off-limits and aid programmes abandoned.
The growing politicisation of aid, then, threatens to obscure the goal of poverty reduction. The
allocation of military aid to those perceived to be fighting the War on Terror also has the potential to
encourage human rights abuses and to sow the seeds of future conflicts.
In this report, Christian Aid is calling for a strong and robust reaffirmation of the principle that poverty
reduction should be aid’s primary driving force. The fortunes of the world’s poorest people must not be
held hostage to the fortunes of the War on Terror.
Among the recommendations of this report are that:

the British government must use its leadership, weight and influence to halt and then reverse
the trend towards linking aid to the War on Terror – starting by reinstating the funds it has
already diverted from poor people in middle-income countries

British ministers should actively lobby members of the OECD to ensure that the definition of aid
is not extended to include military or security-related assistance

the EU must stop the drift towards politicising its aid budget; the neutrality and impartiality of
EU humanitarian aid must be maintained

donor governments, belligerents and military forces in conflicts around the world must respect
and uphold the neutrality, impartiality and independence of humanitarian action.
In 2005, the British government has a unique opportunity to make its views heard. In the summer it will
chair the G8 conference and then hold the EU presidency until the end of the year. Before that, the
Commission on Africa, launched by Tony Blair this year, will have delivered its own blueprint for the
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future of the world’s poorest continent. Christian Aid calls on the Prime Minister to use this opportunity
to re-focus the world’s richest countries on the plight of the poorest.
In this report we set out the mistakes of the past and show how they are already starting to be repeated.
Our message, however, is that it is not too late to rekindle the noble, humanitarian aim of aid – to
eradicate world poverty. It is also a warning: if the rich world fails in this endeavour, then our future
security will also be undermined.
Already some of the world’s poorest people are paying for the War on Terror. Programmes designed to
help them have been cut, budgets reallocated and hopes dashed as donor priorities have switched to
addressing the needs of ‘global security’. This must not be allowed to continue. The needs of these
people must not, yet again, be bulldozed by the contingencies of a global strategy in which they have no
voice.
Cingranelli, David L. and Pasquarello, Thomas E. (1985), “Human Rights Practices and the Distribution
of U.S. Foreign Aid to Latin American Countries,” in American Journal of Political Science, Vol. 29, No.
3, pp. 539-563.
It is important to keep the findings of this research in perspective. The United States gives some type of
economic or military assistance to approximately one hundred nations. A few countries like Israel, Egypt,
India, and El Salvador receive disproportionate shares of that aid when compared with their neighbors.
Our analysis says little about why those countries have been singled out for preferential treatment. Aid
decisions pertaining to these most favored countries often involve national security interests, are
nonroutine and controversial, and can probably be explained only on a case-by-case basis. However, we
are confident that our analysis of the process by which the U.S. government makes more routine
decisions regarding the distribution of foreign aid to Latin American nations is accurate, and may be
extended to explain disbursements of U.S. foreign aid to nations in other regions of the world.
We found that decisions regarding the distribution of foreign aid to Latin America were made in two
stages. Table 7 summarizes our findings concerning the role of human rights considerations during both
stages of decisions pertaining to the distribution of U.S. economic and military aid. During the
gatekeeping stage of economic aid decisions, more developed nations were excluded, and human rights
records were not a consideration in determining which nations received economic assistance. When U.S.
policymakers decided upon amounts of economic assistance, however, higher levels of economic
assistance were provided to nations with relatively enlightened human rights practices. For military aid,
nations with poor human rights records often were excluded at the gatekeeping stage, but once the
decision had been made to provide military assistance, the level of assistance could not be explained by
the human rights practices of the recipients. No simple generalizations about the role of human rights in
the making of all U.S. foreign aid policies are possible.
We do not wish to exaggerate our findings concerning the role of human rights in the decision to
provide U.S. military aid to other nations. Even at the gatekeeping stage of military aid decisions, human
rights practices were not found to be as important as was expected. If our analysis had been confined to
the relationship between a government's respect for rights of the integrity of the person, or what might
be referred to as anti-torture rights, we would have found a weaker relationship between human rights
practices and military aid disbursements to Latin American nations. The evidence regarding military aid
allocations reflects a concern among U.S. decision-makers with respect for civil and political rights. For
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some (e.g., Leyton-Brown, 1983), the change in emphasis represents an abdication of U.S. human rights
policy as it is applied to military aid allocations. For others, it only represents a change of emphasis in
the implementation of that policy. In either case, the evidence suggests that the president retains
substantial influence over the distribution of U.S. military assistance.
We were particularly surprised to find no consistent relationship between changes in human rights
practices in Latin American nations and subsequent levels of U.S. foreign aid. Much of the policy debate
concerning U.S. aid decisions has focused upon recent improvements or declines in practices. In fact,
Congress sometimes requires that the State Department “certify” that selected countries have improved
their human rights practices before it will consent to the provision of U.S. foreign aid. Though our results
are not conclusive on this point, they do indicate that the relative levels of respect which various
governments in Latin America give to the human rights of their citizens may be more important to U.S.
policymakers than recent changes in their practices. This question merits further research, involving the
measurement of human rights practices and aid levels at several points in time and the examination of
responsiveness of aid to changes in human rights policies.
In general, our findings conflict with others which have demonstrated the importance of U.S. national
security and trading interests in determining U.S. aid policies. In part our findings differ because our
research was focused upon routine foreign aid decisions. Our findings are also based upon a research
design that accounts for a wide variety of plausible alternative explanations of the distribution of U.S.
foreign aid. Most previous research on this topic has utilized the case study approach. No previous
systematic research explaining the distribution of U.S. foreign aid attempted to measure the importance
of human rights practices and also controlled for competing explanations of foreign aid decisions.
Bivariate relationships can be misleading. In addition, U.S. human rights policies have required
important substantive and procedural changes in the way in which Congress and the administration
make foreign aid decisions. Difficulties in implementing the new policies have been well documented
(e.g., Bloomfield, 1982), and may help to explain the delay in policy effects.
Given the somewhat regional orientation of the U.S. foreign assistance program, and the fact that the
determinants of U.S. foreign policy may change, only further research can determine the extent to
which our findings herald a more humanistic thrust in U.S. foreign policy. There was a time when Latin
America represented a special case for the application of U.S. human rights policy. It was a region where
the U.S. was dominant and could afford to criticize Latin American nations for poor human rights
practices without much threat to U.S. economic or security interests. It is encouraging that human rights
considerations have become a more important determinant of the distribution of U.S. foreign aid in this
region during the same period that U.S. dominance has been severely threatened.
Cingranelli, David Louis (1993), Ethics, American Foreign Policy and the Third World, New York: St.
Martin's Press.
Chapter 1: A Typology of Moral Positions [pp. 3-29]
One caveat: it is not my purpose here to argue that any particular position on morality and foreign policy
is best. Although my own position is generally Progressive and I do not attempt to hide it, my goals was
to conduct an objective, analytical, descriptive, and historical inquiring into what intentions have guided
actual American foreign policies toward the Third World. The typology of positions presented in this
chapter provides an analytical reference point for that inquiry. Chapter 2 explores in greater detail the
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mainstream debate among Nationalists, Exceptionalists, and Progressives. Chapter 3 is devoted to a
similar in-depth exploration of the Marxist position, which is one important stream of thought that often
leads to a Radical Progressive position on U.S. behavior toward the Third World. Taken together, these
two chapters provide a fairly complete picture of alternative moral reasonings about foreign policy, that
is, which “good” should be maximized and why.
Most of the remainder of the book examines different historical periods of U.S. foreign relations with
the Third World, identifying the most significant goals during each period, with special emphasis on the
post-World War II era. In each chapter, the rhetoric of U.S. policymakers is compared with actual U.S.
foreign policy during their terms of office. Military interventions, known covert operations, and U.S.
government responses to action-forcing events in the Third World are described.
The methodology employed is historical analysis, because history provides real examples of how U.S.
leaders have responded to real moral dilemmas in the making of foreign policy. This approach allows us
to identify the hierarchy of values and objectives that U.S. leaders have expressed in public statements
on U.S. foreign policy toward the Third World, to look for patterns of congruence and divergence
between public statements and foreign policy as actually implemented, and, based on this evidence, to
draw conclusions about changes in the hierarchy of foreign policy values. An understanding of notable
developments in U.S.-Third World relations also enhances our sensitivity to differences between other
historical times and our own, increases our ability to perceive and explain significant changes over time,
and heightens our awareness of basic continuities in policy.
Identifying foreign policy goals is an important and intellectually challenging task, but one that is also
fraught with danger. The evidence is indirect, fragmentary, and open to alternative interpretation.
Because motives can never be observed directly, they must be inferred from public statements and
government actions. Since the foreign policy decision-making process itself tends to be secret (for good
and obvious reasons), even the factual record about what actions were taken is incomplete. Moreover,
the available facts never speak for themselves. Thus, different analysis viewing the same facts may draw
different conclusions from them about the motives of the decision maker. These problems are discussed
in greater detail in Chapter 4. If these problems are not overcome, discussions of the morality of foreign
policies must be avoided altogether.
Chapters 5 and 6, which make up Part II of the book, briefly discuss the early history of U.S. foreign
policy toward weaker nations. Chapter 5 begins at the beginning by briefly examining the relations
between the U.S. government and the American Indians and Mexico between 1776 and the end of the
nineteenth century, with special emphasis on U.S. involvement in the Philippines and Latin America. The
term Third World, though of recent origin, is applied in chapters 5 and 6 retrospectively to countries that
would have fit the definition in earlier times. Part III (chapters 7-9) provides a more detailed account of
significant developments in U.S.-Third World relations between the end of World War II and the
beginning of the Reagan and Bush era. As noted, this was a period of fairly rapid movement toward
Progressive principles, especially during the Truman, Kennedy, and Carter administrations.
Part IV (Chapters 10 and 11) focuses on the Reagan and Bush administrations and the future. Chapter 10
in this section examines the most recent U.S. foreign policy choices and directions on North-South issues.
It presents a snapshot of the present at a time in history when many of the rules of international
relations are being rewritten. The final chapter is both retrospective and predictive. First, it reviews the
evidence showing that there has been a long-term trend towards Progressivism in U.S. foreign policy
rhetoric and behavior toward the Third World. Then, it examines three possible scenarios for U.S.
foreign policy toward the Third World in the twenty-first century. [..]
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Chapter 2: The Contemporary Debate [pp. 30-52]
Actual U.S. foreign policy toward the Third World since World War II has represented a blend of
Nationalist, Exceptionalist and Progressive principles. These principles are closely related to perspectives
on human nature, the international system, the most important targets of foreign policy, and the causes
of poverty and instability in less developed countries. These different premises lead to different
conclusions about the larger ends, concrete objectives, and acceptable means of foreign policy.
Although there is a lively debate over the proper ends and means of U.S. foreign policy toward the Third
World, few American argue against the preeminence of national economic prosperity and military
power goals. Since economic and military power are inextricably linked, both must be maintained at a
minimum threshold. Nationalist and Progressive thinkers argue about the location of that minimum
threshold, the definition of national interest, the intrinsic value of some Progressive objectives, the
morality of unilateral intervention and counterrevolutionary policies, and the consistency of Nationalist
and Progressive objectives. The Exceptionalist voice within the mainstream debate emphasizes the
responsibilities of the United States to people living beyond its borders and urges a foreign policy that
would make the world over in the U.S. image. The main thrust of the Radical Progressive positions to
oppose unilateral intervention in the Third World under any circumstances; to support the
implementation of a New International Economic Order; and to advance other reforms that would
reduce poverty in the Third World and increase the voice of the Third World nations in international
affairs. [..]
Chapter 3: The Marxists [pp. 53-68]
According to Marxists, throughout its history the United States has been guilty of bad motives when
making foreign policy toward weaker states, because it has been concerned primarily with promoting its
economic interests. Indeed, the United States’ foreign policy has been an extension of and a more subtle
form of colonialism, ensuring that most Third World states remain fragile, repressive and dependent on
the developed world for manufactured products, national security, and a substandard level of well-being.
Poverty in the Third World is no accident; it is the direct result of activities orchestrated by the U.S.
government. The Third World is not underdeveloped; it is overexploited. Capital investment in the Third
World has not brought prosperity; it has brought deeper and deeper debt and ever greater inequality in
the distribution of wealth and well-being within Third World societies.
Marxist theorists and Third World leaders would prefer a U.S. foreign policy that was based on
multilateralism and noninterventionism. They would also prefer a policy in which the U.S. leaders cared
equally about the welfare of all the world’s people, making no distinction between the people within U.S.
territorial boundaries and people residing elsewhere. Marxists often argue that such a foreign policy
would emerge as a natural consequence of world socialism.
The moral imperative behind Progressivism, the mainstream school of thought closest to Marxism, is
“when it is in your power to do good for another who needs it at no serious risk to yourself, your duty is
to do so.” Marxist theorists and Third World leaders reject this standard as too modest. In their view,
because the United States and other advanced industrial states bear such great responsibility for the
underdevelopment of Third World states, the exploiters must undertake an aggressive program of
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affirmative action benefiting Third World countries. This program is summed up by the Group of 77’s
proposals for debt relief and a New International Economic Order that was described in the last chapter.
In contrast, most U.S. leaders have proudly proclaimed the economic foreign policy objectives that
Marxist critics and some Third World leaders find so reprehensible. For them, the real issue is not
whether the United States has pursued economic interests in the Third World. Of course it has.
Mainstream thinkers differ with Marxist theorists mostly over the morality of economic and cultural
expansionism, the degree to which economic objectives have motivated U.S. foreign policy, the ethics of
unilateralism, covert action and coercion, and how and whether the hierarchy of U.S. foreign policy
objectives has changed over time. […]
Chapter 4: Knowing Motives; Reconciling Means and Ends [pp. 69-84]
Most political scientists avoid analyzing the motives of policymakers because motives are not directly
observable. Instead, they must be inferred from other kinds of information. However, since this book is
about the morality, or, at a minimum, the goals of American foreign policy toward the Third World the
problem of inferring motives cannot be avoided in the analysis that follows. The efforts and impact tests
described in this chapter, though imperfect, are the best tools available for the task and are loosely
applied in the chapters that follow.
Machiavelli’s advice to the Prince about foreign policy methods was that “He should not depart for the
good if he can hold to it, but he should be ready to enter on evil if he has to” (emphasis added). This
advice would be sufficient to prohibit the U.S. government from engaging in covert campaign activities
abroad, but it is too vague to be of much help in guiding action in other circumstances. Most, if not all,
U.S. leaders have recognized that they could not avoid using violence, deception, and broken promise to
achieve good ends, but they have differed a great deal in their willingness to resort to such methods.
Nationalist and Exceptionalist leaders in the United States, having less respect for the universal value of
nonintervention and multilateralism, have been more willing to engage in overt and covert unilateral
actions in the Third World. Progressives have been less willing to engage in such actions, and Radical
Progressives deem them morally unacceptable. […]
Chapter 11: The Past, Perestroika, and the Future [pp. 217-235]
Over time and especially since World War II, U.S. policymakers have increasingly recognized the relative
importance of universal values and of the duties to people living in other nations. This trend has not
been linear, but it is visible in the changing rhetoric, actions, and consequences of U.S. foreign policy
toward the Third World over the past two hundred years. As the history of the U.S.-Third World
relations reviewed in Chapters 5-10 illustrates, the Progressive evolution in U.S. foreign policy has been
caused, in part, by the United States’ changing place within the international power structure, by the
longstanding rivalry with the former Soviet Union over alternative conceptions of the “good society,” by
the lessons learned from the Vietnam War, and, most importantly, by the institutional changes in
foreign policy decision-making structures and processes wrought by Progressive administrations. The
evolution toward a more Progressive foreign policy is likely being fueled by a shift in American values as
well.
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We sometimes lose sight of the trend toward Progressive foreign policy values and objectives because
of a fixation on notable exceptions, cycles of party control that can obscure longer-term developments,
and inability or unwillingness to step back from current events to see the larger historical picture, and an
adherence to absolute rather than relative standards of performance. In this chapter, the main pieces of
evidence supporting this thesis are viewed along with some alternative standards that might be used to
evaluate it. Then, three scenarios of future U.S.-Third World relations are developed, leading
alternatively to greater isolation of the United States from North-South issues, a regression to previous
patterns of gunboat diplomacy, or accelerated Progressivism.
Past Patterns
Since World War II, the number of Progressive objectives expressed in relevant symbolic policy
statements has increased. The record of U.S. actions in the Third World, whether unprovoked or in
response to action-forcing events, demonstrates that the emphasis given to Progressive values and
objectives in the making of U.S. foreign policy toward LDCs has also increased. The change in priorities
guiding action has not been steady; it has been halting and cyclical, but over a long period of time, the
overall direction of movement seems clear.
For the first 125 years of the United States’ existence as a nation, there was little, if anything that was
Progressive about its foreign policy goals, objectives or methods in conducting relations with its weaker
neighbors. In the last century, U.S. leaders have continued to place primary emphasis on Nationalist
objectives in conducting those relations, but, at the margins, they have pursued others that are not
solely connected with the national self-interest. Even since the beginning of the Cold War (and partly as
a response to it), U.S. foreign policy has become increasingly affected by Progressive elements of the
foreign policy agenda.
Progressive thinkers might argue over what sets of values and objectives should guide U.S. foreign policy
and, within that set, certainly would argue over which ones were most important. For almost all of
them, the set would include support for human rights, self-determination and autonomy, economic
development, and social justice. It would also include adherence to the structures of international law,
generally, and the principle of nonintervention, specifically. Over the years, at least some U.S. presidents
have recognized all these elements as worth pursuing. Jimmy Carter was probably the only one who
attempted to increase the priority of all of them in relation to other economic and military objectives in
U.S. foreign policy. Still, with the possible exception of his administration, the overall record of
adherence to the spirit of international law has been abysmal.
The order in which different values were introduced into the foreign policy debate is important, because
a kind of primacy principle is at work. Nationalist goals of maintaining sovereignty, security from
external threat, and national macroeconomic prosperity are fundamental. In the early years, when the
United States was itself a developing country, they were the only mainsprings of foreign policy. These
values were not replaced by later, more Progressive ideals. Instead, later objectives were added and
generally have not been pursued vigorously except when prior goals have been satisfied or at least have
not been seriously endangered. Similarly, the order in which Progressive values and objectives were
interjected into U.S. foreign policy rhetoric is also significant – support for democracy, economic
development, social justice, and human rights, in that sequence. The earliest ones accepted as part of
the U.S. foreign policy debate continue to dominate over those introduced later.
Self-determination. Support for democratic or, at a minimum, for elections in LDCs has been a feature of
foreign policy rhetoric at least since the Spanish-American War, when it was used as an important
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rationale for freeing Cuba from Spanish rule and then granting that state independence. This theme is so
old and has been so persistent U.S. foreign policy that it would be difficult to argue that a particular
administration initiated it.
Economic development. Although many U.S. leaders had expressed compassion for people living in
poverty in the Third World, Truman, in the immediate aftermath of the Second World War, was the first
to initiate a substantial public program to do something about it. The foreign aid and technical
assistance programs his administration initiated and the international lending agencies it helped form
provided the foundations for contemporary U.S. policies designed to foster Third World economic
development.
Social Justice. By 1960 U.S. policymakers recognized that aggregate economic development, by itself,
would not necessarily have a beneficial effect on the poorest people in Third World societies. The
Kennedy administration, through both its rhetoric and its deeds, heightened U.S. concern for issues of
social justice and political reform. During his brief tenure in office, Kennedy dramatically expanded the
food aid program, established the Agency for International Development and the Peace Corps, and was
the first U.S. president to sanction South Africa for its policies of apartheid.
Human Rights. In 1976 Jimmy Carter added promotion of human rights to the by now substantial
Progressive foreign policy agenda. For Carter, protecting human rights primarily meant ensuring that
individuals would not be abused by their governments. The Reagan and Bush administrations have
chosen to emphasize the protection of individual’s civil and political rights. Today the term human rights
encompasses much of the Progressive foreign policy agenda. As a result, much of the current empirical
research on ethical issues in U.S. foreign policy focuses on whether, to what extent, and in what way
human rights considerations affect U.S. foreign policy toward the Third World. Recently, a few studies
have also been conducted on whether U.S. foreign policy has any impact on the human rights practices
of the Third World targets of those policies.
Progressive values and objectives have become more numerous in the rhetoric of U.S. foreign policy.
They have also become more explicit in the legislation that guides the implementation of that policy and,
arguably, more important in shaping the reality of that policy as well. However, the record on other
important aspects of the Progressive agenda – general adherence to international law, reliance on a
multilateral approach to international affairs, avoidance of the use of covert action except as a last
resort, and observance of the principle of nonintervention, in particular – has not been impressive.
Among U.S. presidents since World War II, only Carter worked had to adhere to these Progressive goals
and principles. And Carter’s four short years in office were not enough to make much progress in these
areas.
It is too soon to gauge President Bush’s position in these previously neglected areas. Certainly, his
handling of the Panama situation violated the spirit of international law, U.S. prohibitions against using
covert action to assassinate foreign leaders, and the norm against unilateral military intervention.
However, his administration’s response to Iraq’s invasion of Kuwait was quite different. At least during
the early stages of that crisis, administration actions were consistent with (though at times they
anticipated) pertinent resolutions of the United Nations Security Council. However, during those early
stages the Security Council adopted, with minor modifications, every resolution advanced by the U.S.
representative. The real test will come when the United States is forced to choose between its own
foreign policy preferences and those expressed by the United Nations or by a conference of regional
leaders.
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There has been continuity in U.S. foreign policy since World War II in the sense that Nationalist
objectives have maintained their preeminent places in the hierarchy. Progressive objectives, because
they are newer and their positions less fixed, have received slightly different priorities by different
administrations. The statements and actions of the Reagan and Bush administrations seem to reflect the
following priorities among Progressive goals: (1) encourage the development of democratic institutions
and civil and political liberties; (2) assist (free market) economic development efforts; (3) promote
human rights of the integrity of the person; (4) promote social justice; (5) respect international law; and
(6) avoid unilateral over or covert intervention.
Various U.S. administrations have differed not only on the relative positions of different Progressive
objectives of U.S. foreign policy toward the Third World, but also on the willingness to make tradeoffs
between Nationalist and Progressive values. As noted at the outset, ethical choices rarely involve
choosing between good and evil. Rather, one must usually choose between good and better or between
bad and worse. Foreign policymakers must choose among inconsistent goals. As an example, antiexpropriation policies may promote the United States’ short- and long-term economic self-interest, but
such policies may also impede the ability of some underdeveloped nations to control assets such as
natural resources within their own jurisdictions. This hurts the ability of Third World states to achieve
either economic development or social justice. As another example, providing large amounts of military
aid to a less developed country may allow it to cooperate more effectively in the United States’ own
military defense effort, but it may also increase the power of the military sector of a Third World society
to the point where civilian leaders are unable to rule effectively. Under such circumstances, democracy
will fail or will exist only as an empty form.
Since World War II, U.S. foreign policymakers have been increasingly willing to make tradeoffs that place
Nationalist foreign policy values and objectives at significant risk. The Carter administration was
criticized for taking too many risks of this type. But even the reactions of the Reagan administration to
democratic movements in South Korea, the Philippines, and Haiti are all examples of risks taken by an
otherwise risk-averse administration to promote democratic movements in the Third World.
The historical record since World War II also illustrates that Democrats have expanded the Progressive
foreign policy agenda rhetorically and have made greater efforts to follow through on that rhetoric.
Democratic presidents, presidential candidates, and members of Congress generally have advocated
1. Giving more foreign aid to developing countries.
2. Providing a higher proportion of economic (as opposed to military) aid.
3. Placing more emphasis on aiding self-determination and true democracy, not just on
establishing regular elections.
4. Giving less emphasis on private investment as a foreign policy tool.
5. Using less military intervention and covert action.
6. Relying more heavily on need and human rights performance as criteria in the disbursement of
economic aid.
7. Giving a higher proportion of foreign assistance in the form of multilateral (as opposed to
bilateral) aid in the form of grants (as opposed to loans).
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8. Relying more heavily on regional and international (as opposed to unilateral) solutions to
problems.
Republican administrations have tended to be more Nationalist in their approach to foreign policy.
Hence, when Democrats have controlled the U.S. government, there has been a ratchet effect on the
place of Progressive moral principles in U.S. foreign policy toward the Third World. If progress is
measured as the addition of new foreign policy objectives related to improving the welfare of the
poorest people in the Third World or as a willingness to take greater risks in the attainment of
Nationalist objectives to achieve Progressive objectives, then Democrats have tended to ratchet the
policy toward Progressivism during their tenures in terms of both rhetoric and actions. Republicans have
tended to allow that upward progress to erode somewhat during their terms of office, but they have not
turned the clock back completely. Thus, despite the current cycle away from the trajectory set by Carter,
the trend over time since the end of World War II still is moving toward higher priority for Progressive
foreign policy principles as guides for the conduct of U.S.-Third World relations.
Standards of Evaluations
Evaluation of any policy requires establishing an implicit or explicit measurement standard. The
presentation of historical material about U.S.-Third World relations in this work implies the use of past
foreign policy behavior as a standard for evaluating present behavior. Most people who addresses the
issue of ethics in international affairs do not use past behavior as their standard of evaluation. Instead,
they have absolute standards of ethical behavior in mind. Nations like the United States either achieve
or do not achieve them. U.S. foreign policy, as explained earlier, it is not yet truly Progressive in any
absolute sense. Thus, when absolute standards are used, the United States will fail. Instead, we employ
relative comparisons. Then, we should ask whether, in the United States, Progressive policies have been
implemented (the efforts test) and whether Progressive goals have been achieved (the impact test).
These tests are still demanding, but they are more realistic.
Relative Comparisons. One reasonable way to evaluate the extent to which U.S. foreign policy toward
the Third World adheres to Progressive principles is to compare U.S. policies to those of other
developed nations. With regard to promoting human rights around the world, Jack Donnelly, who is
generally a critic of U.S. foreign policy, admits that “It is difficult to find countries that have done much
more than the United States.”1 A brief examination of the foreign policies of the former state of the
Soviet Union and present-day Canada will serve to illustrate this point.
No other nation except what was formerly the Soviet Union has been a military superpower in the
international system since World War II. Superpower status places constraints on U.S. foreign policy
options that other nations with fewer international responsibilities do not face; therefore, a comparison
with Soviet policies from 1950 to 1989 is instructive. The former state of the Soviet Union viewed the
international system as it presently exists as fundamentally unjust. In the view of its leadership, since
capitalism and colonialism had caused underdevelopment in the Third World, fundamental
revolutionary change was the best and perhaps the only way the Third World could receive justice. A
nurturing foreign policy toward LDCs would only have supported the unjust structure of power and
prolonged the inevitable.
Thus, the vast majority of the Soviet Union’s foreign aid to Third World states was in the form of military
assistance to communist or pro-communist allies, helping them to make the transition from capitalism
to socialism in a politically and economically hostile international environment. Historically, the Soviet
Union’s main objective was to develop a network of Third World allies who would be willing to adopt
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the Soviet economic and political model. There is little evidence that the Soviets had humanitarian
objectives or even that they generally embraced the goal of assisting the economic development efforts
of less developed countries. Doing so would have forced them to prop up the world capitalist system.
The Soviet position was that economic aid was compensation paid by former colonial powers for past
exploitation. Never having been a colonial power itself, it owed no such compensation. Consistent with
its philosophical position, the Soviet Union, unlike the United States, contributed little to international
development agencies.2 Instead, Soviet economic relations with LDCs were presumed to be mutually
beneficial and were structured by what they called economic cooperation agreements.3 Usually, the
agreements presaged loans from the Soviet Union to Third World signatories a t concessionary rates of
interest. Such loans were often repayable in the form of local commodities.
The Soviet Union was more Progressive in its relations with Third World countries in its choices of
methods to achieve its own foreign policy objectives. More than the United States, the Soviet Union
showed respect for international law, for the sovereignty of other weaker states, and for the principle of
nonintervention. With the notable exception of the invasion of Afghanistan, the Soviet Union generally
did not use military force against Third World states. It is not clear whether this practice resulted from
adherence to ethical principles or from fear of retaliation by the United States and its Western allies.
Many accept the “fear of retaliation” explanation, because the Soviet Union, like the United States, was
willing to use covert methods to achieve preferred policy outcomes in militarily weaker states.
Canadian foreign policy provides an opportunity for a different kind of comparison. Its policies, like
those of the United States, are affected by a recent frontier experience and by Anglo-American values
and traditions. Many of its people and leaders favor Progressive foreign policy principles. Consequently,
Canadian leaders must face many of the same kinds of tradeoffs as those considered by U.S.
policymakers. However, because of its geographic location and its place as a middle power within the
international power hierarchy, its interests in the Third World are less intense and narrower in scope.
We would expect this combination of attributes to make Canada a leader in the application of
Progressive thinking to foreign policy toward Third World states, but it has not. Canada has adopted
Progressive principles regarding the methods, but not the goals and objectives, of foreign policy. Canada
probably seldom uses covert actions and has never used direct unilateral military intervention to
achieve its foreign policy objectives in the Third World. Neither has it assumed a leadership role in
national or international forums to promote Progressive objectives in the Third World. Indeed, Canada
has lagged well behind the United States in the use of foreign policy statements or actions to promote
improved human rights practices by Third World regimes. In most other respects, Canada has shown
about the same mix of Nationalism and Progressivism in its foreign policy objectives in the Third World
as the United States. Canadian foreign policy toward the Third World has been designed mainly to
further its own national economic objectives; to fulfill Canada’s obligations stemming from its
membership in various Western security, political, and economic alliances; and to avoid conflict with
and maintain independence from the United States, the leading power in many of those alliances.
Canadian foreign policy toward Central America has been independent of U.S. policy but not necessarily
more Progressive. According to Rhoda Howard and Jack Donnelly, the three cornerstones of Canada’s
foreign policy toward Central America are a recognition that the instability in this part of the world is a
product of: poverty, the unfair distribution of wealth, and social injustice; a preference for regional and
multilateral solutions to unrest rather than unilateral intervention by the United States; and a focus on
maintaining relations, especially trade relations, will all states, regardless of the practices of their
governments.4 On the basis of these criteria, over the past decade the Canadian government has
maintained generally friendly relations with El Salvador, Honduras, Cuba, and Nicaragua.
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One criticism of U.S. economic aid policies is that much of the aid provided is tied to the condition that it
be used to purchase U.S. goods and services.5 This proviso reduces the purchasing discretion of the
recipient, and, therefore, the value of the monetary transfer, by as much as 20 percent. However,
justifying foreign aid partly on the basis of developing markets for the donor country’s goods and
services is one way an executive administration in a democratic government maintains a winning
legislative coalition in favor of its foreign aid program. The United States is not unique in this respect.
More of Canada’s economic aid is tied to the purchases of its own products and services than any other
donor in the world except Australia.6
In absolute terms, the United States provided about six times as much official development assistance to
Third World states in 1986 than did Canada, but Canada gave a higher amount as percentage of GNP
(0.44 percent to 0.22 percent).7 Only since 1987 has Canada had a requirement linking economic aid to
the human rights performance of potential recipients, and that requirement is much more ambiguous
than the one stated in U.S. legislation. It appears as a statement in an obscure Canadian Development
Agency report, and it states only that human rights protection is now one criterion of eligibility for
foreign aid.8 Implementation of the new policy will be impeded because, unlike the United States,
Canada does not require any agency to measure the human rights practices of other nations and then
report periodically to policymakers. Indeed, only two other governments in the world compile
reasonably comprehensive reports on the human rights practices of other countries – Norway, since
1985, and even more recently, the Netherlands.
Apparently, as in the United States, there is some gap between human rights rhetoric and actual
practices. A recent study concluded that Canada gives far more foreign aid in absolute terms to
countries with poor human rights records than to countries with good ones.9 And, perhaps because of a
concern about disrupting trade relations, Canada has been even more reluctant than the United States
to impose trade sanctions on South Africa.10 As in the United States, promotion of Canadian arms sales
to Third World countries has become an important objective of the Canadian government. Canadian law
on military assistance is similar to U.S. law, prohibiting the export of arms to “countries whose
governments have a persistent record of serious violations of the human rights of their citizens, unless it
can be demonstrated that there is no reasonable risk that the goods might be used against the civilian
population.”11 However, according to Project Ploughshares, in 1986 Canadian arms were sold to the
repressive governments of Argentina, Chile, Guatemala, Indonesia, Pakistan, Paraguay, the Philippines,
South Korea, and Syria.12 Whereas U.S. law requires reasonably full disclosure of all arms sales, Canada
has no such obligation.13
Unlike the situation in the United States, Canadian representatives on the boards of international
financial institutions such as the World Bank are not instructed to consider the status of human rights
observance in the applicant’s country when making loan decisions. In this case, the Canadian
government’s policy against promotion of human rights is based on principle. In 1988 the minister of
finance wrote: “I believe that the introduction of the human rights criteria would politicize the World
Bank’s decision making with negative consequences for its activities.”14
The Efforts Test. Yet another approach to assessing whether or not Progressive principles have
motivated U.S. foreign policy behavior is to employ the efforts test. As described in this text, to see
whether stated policies actually have been implemented, it is necessary to examine the patterns of
actual foreign policy behavior. A total lack of effort or only minimal effort to implement a publicly states
policy would be evidence of official deception and immorality. Much research have been conducted on
the extent to which the United States has a more favorable foreign policy toward states with better
human rights records, as is required by existing U.S. legislation, but the evidence is not conclusive. There
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have been several statistical studies of the relationship between the human rights practices of LDCs and
the amounts and kinds of U.S. foreign aid they have received. Studies of this type tend to measure
human rights in a way that is consistent with Carter’s emphasis on respect for rights of the integrity of
the individual. The findings from Cingranelli and Pasquarello’s research on the relationship between
human rights practices and the distribution of economic and military assistance among Latin American
countries in FY1983 indicated that no simple generalizations about the role of human rights in decisions
regarding the distribution of U.S. foreign aid were possible.15
We found that decisions regarding the distribution of foreign aid to Latin America were made in two
stages. During the gatekeeping stage of economic aid decisions, when certain countries may be excluded
from the pool of potential aid recipients in a particular budget year, more developed nations often were
eliminated, and human rights records were not a consideration in determining which nations received
economic assistance. When U.S. policymakers decided on amounts of economic assistance, however,
higher levels of economic assistance were provided to nations with relatively enlightened human rights
practices. For military aid, nations with poor human rights records often were excluded at the
gatekeeping stage, but once the decision had been made to provide military assistance, the human
rights practices of the recipients could not explain the level of assistance.
In other words, we found that the human rights records of potential recipients played a role in some
decisions but not in others. Pasquarello replicated this research, this time focusing on the distribution of
foreign aid among African nations, and found that human rights considerations played a role, but a
different one than was found for Latin America.16 Steven Poe recently conducted research adopting our
“gatekeeping-level” distinction, but examining a wider sample of countries. He also found statistical
evidence suggesting that human rights concerns affected some aspects of foreign aid allocations, in
ways prescribed by existing U.S. human rights legislation.17
Many other studies have reported no relationship between the human rights records of Third World
states and the level of foreign assistance provided by the United States.18 In doing so, some have
criticized our Latin American case study on methodological gorunds.19 But the debate contains some
philosophical differences as well. Some analysts prefer to draw their conclusions from observing the
human rights conditions that prevail within the boundaries of the largest recipients of U.S. economic
assistance. In Latin America, for example, economic assistance to El Salvador accounts for approximately
25 percent of all U.S. aid supplied to the region. Human rights conditions in El Salvador are terrible, and
some of the worst violations have allegedly been perpetrated by elements of that nation’s military. The
military itself is not under unified control and is not especially responsive to the civilian authorities. If we
consider only or mainly U.S. foreign policy toward El Salvador, it is hard to argue that the U.S.
government has more favorable economic assistance policies toward nations with good human rights
practices. If, on the other hand, we admit the lesson of U.S. involvement in El Salvador, but then look at
the distribution of U.S. economic assistance among the other Latin American nations, we find that in
these less visible, more “routine” cases, nations with better human rights records receive higher levels
of aid.
But which piece of evidence is more revealing of the efforts of U.S. policymakers to achieve Progressive
outcomes in the Third World? U.S. policies toward El Salvador and Nicaragua since 1981 reflect the
preferences of two Republican administrations with the reluctant cooperation of Congress. Foreign
policy toward most of the other nations in Latin America, on the other hand, is less the subject of press
reports and congressional debates. Instead, it is the product of longer standing decision rules,
institutional arrangements, and policy processes.
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Presidential administrations have great control over the making of foreign policy except in those areas
where Congress, through legislation, has ensured a role for itself. Because of the existence of human
rights legislation, during the Reagan administration of Congress was able to use hearings and to enact
numerous pieces of country-specific legislation to alter or at least to call into question U.S. foreign policy
toward many countries including El Salvador, Nicaragua, Guatemala, Chile, Argentina, South Africa, and
South Korea on human rights grounds. Congress can prohibit human rights violators from receiving any
military assistance, but it exercises much less control over how much a country will receive if it does not
implement that prohibition. Not surprisingly, therefore, no study has shown the level of military aid a
country received to be proportionate to any measure of the human rights practices of the recipient
country’s government during any president’s administration. The existence of a legislative platform does
not guarantee close congressional oversight of administrative actions, but the absence of one makes
such oversight almost impossible.
The Impact Test. Since morality is bound inextricably to consideration of consequences, the impact test
is important too. Although we can find some anecdotal bright spots in the impacts of U.S. efforts to
achieve Progressive foreign policy goals in the Third World, especially during the Carter administration,
there has been very little systematic research on the impact of U.S. foreign policy on underdeveloped
countries. And the limited work that has been conducted on this question shows very little evidence that
Progressive objectives have had much impact. There are four possible reasons for these disappointing
findings.
First, in order for foreign policy to be effective, it must provide resources or apply sanctions that are
significant to the target.20 The United States has lost some of its significance to many Third World
countries because it has shifted much of its aid from bilateral to multilateral programs. Wealthier Third
World nations like Brazil, Venezuela, and Singapore rely less on bilateral aid and more on loans from
private international banks and public multilateral development banks (MDBs). Although the United
States remains a strong voice in the lending policies of MDBs, its own priorities much be tempered by
the need to persuade other voting members. Moreover, although the United States is still among the
largest providers of official development assistance to the Third World, Japan has exceeded the United
States in its absolute level of giving. The gap between the United States and other contributors is
shrinking as well. In some Third World countries, the U.S. aid program is so small that manipulating its
size marginally is not likely to have any effect.
Second, to have any systematic impact, the U.S. policymakers’ commitment to Progressive foreign policy
objectives must be clear, sincere, and consistent.21 The Reagan and Bush administrations gave anticommunist and other Nationalist objectives such high priority that Progressive objectives did not have a
consistent impact on foreign policy rhetoric or actions. The Reagan and Bush pattern has been to
provide foreign aid and other foreign policy benefits to noncommunist, market-oriented Third World
regimes, pushing for Progressive reforms only when it was relatively safe and convenient to do so.
Furthermore, their commitment to a domestic policy of trickle-down economics led them to subtly
move away from aid programs directly benefitting the neediest in Third World countries to programs
designed to stimulate macroeconomic growth instead. By pushing hard only when there were
extraordinary targets of opportunities for democratization, the Reagan and Bush administrations have
sent mixed messages to Third World leaders about their priorities.
Third, it is hard to measure the short-term impact of foreign policy. Most foreign policy is conducted
through quiet, routine, low-intensity instruments. Its impacts are expected to be durable and long term.
The symbolic emphasis of promotion of human rights through U.S. foreign policy is very new, so it is
unrealistic to expect dramatic results. It would be difficult enough to identify the impacts of high-priority
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U.S. foreign policy goals on the behavior of Third World states. It is especially unrealistic to expect to
find compelling evidence of the impacts of medium- and low-priority goals on policy outcomes, because
much of the time they will be overshadowed by higher priority ones.
Finally, employing the impact test leads to disappointment because the instruments of U.S. foreign
policy in the Third World are based too heavily on sanctions rather than on positive reinforcements.
Congressional legislation designed to promote human rights around the world has not carrots in it, only
sticks. The language of the legislation implies that human rights can be measured, so that the human
rights practices of all nations can be at least ranked from best to worst. It also implies a threshold for the
tolerance of human rights violations. When cross the implied threshold, the statutes require the U.S.
government to react by voting against loans or by stopping bilateral foreign aid. The policy would have
greater impact if nations received levels of rewards in proportion to the extent to which each exceeded
the threshold. Nations with the best human rights practices, other things being equal, would receive
higher levels of benefits from U.S. foreign policy than those just above the threshold. Those below the
threshold would receive no benefits at all. Or the policy could reward improvements in practices
regardless of the initial rank or starting point.
The few statistical studies of the impact of U.S. foreign policies on the targets of those policies have not
found much evidence of achievement of Progressive goals. In a crude test of the effectiveness of U.S.
human rights policy in improving the human rights conditions in LDCs, David Carleton and Michael Stohl
selected a sample of 59 LDCs (from which the United States admits refugees) and found that political
terror in 9 of the 59 countries lessened, but in 4 of the 59 it worsened. In the first five years of the
Reagan administration, the number of cases where political terror worsened and where it improved was
nearly equal. While the Carter record is a little better, the difference in impact between the two
administrations could be due to chance rather than to the effects of different foreign policies.22 On the
basis of such slim evidence, it is hard to argue that the Carter administration had much impact on
improving human rights performance. But Carleton and Stohl note that the foreign policy rhetoric of the
Carter administration had profoundly positive effect on the oppressed and downtrodden in Third World
states by providing them with hope. The authors noted that the Reagan and Bush “quiet diplomacy”
approach, on the other hand, offers the victims much less hope.23
Future Trends
The United States emerged from the Second World War as the richest and least damaged of the major
world powers. Using these advantages, it helped finance the reconstruction of Europe, was the first
nation to develop a substantial bilateral foreign aid program to assist development in the Third World,
and was a leader in the establishment of several international development agencies. In recent years,
however, things have changed dramatically. Today the United States has severe budget problems, and
its economy is second to Japan and is losing ground to Germany. As recently as 1983, the United States
was the world’s largest creditor nation, but by the end of 1989, it was the world’s number one debtor,
falling $644 billion in the hole to foreigners, primarily the British and Japanese. In this environment of
resource scarcity, new demands were made to cut back on the use of U.S. tax dollars to finance social,
economic, and political improvements in the less developed countries. While the budget resources were
shrinking, potential demand on U.S. foreign aid skyrocketed.
Beginning in 1989, in the domestic arena, the Soviet Union, under the leadership of Mikhail Gorbachev,
took a sharp turn away from political authoritarianism and economic central planning toward
democracy and free market economies. In the area of foreign policy, Gorbachev proposed an end to the
Cold War, advanced major new agreements limiting the development and deployment of nuclear and
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conventional weapons, pulled the Soviet military out of Afghanistan, and reduced its support for
revolutionary movements in the Third World. At least some of these momentous changes will be long
lasting. Indeed, the Soviet Union, the United States’ principal ideological and military rival for more than
half a century, no longer exists, having been replaced by a loose confederation of national called the
Commonwealth of Independent States. So a total reexamination and reorientation of East-West foreign
policy is taking place.
Major changes in the former state of the Soviet Union touched off similar reforms in many Eastern
European countries, including Poland, Czechoslovakia, and East Germany, highlighted by the tearing
down of the Berlin Wall in 1989. Most U.S. policymakers want the United States to be an active
participant in these transformations. If current reforms succeed and become permanent, the result will
be a safer world for the United States and its NATO allies. In the wake of these major changes in what
used to be called the Soviet bloc, the United States confronts new demands to help finance
democratization and free market reforms in Eastern Europe and the nations making up the
Commonwealth of Independent States. A less hostile international environment may allows a decrease
in the percentage of the annual U.S. budget allocated to national defense, from about one third during
the early 1980s to as low as 20 percent. These “windfall” savings could be used to offset the large
budget deficit, attack problems of poverty and environmental degradation domestically, or finance
substantial new foreign assistance programs aimed at Eastern Europe and the Third World.
These dramatic developments in East-West relations are likely to alter the rules of the game for NorthSouth relations as well. With respect to the world distribution of military power, the United States now
holds a larger share. However, in the distribution of economic power, the United States is losing ground.
The movement towards a single economy in Europe and the free market reforms in the former Soviet
bloc are sure to produce even more economic competition in the near future. Because of these poor
economic conditions, it is unlikely that transfers of tax dollars from the United States to Third World
states will grow any faster than the rate of inflation for at least a decade.
Beyond that, three alternative models of U.S.-Third World relations in the twenty-first century seem
possible and illustrate the range of choices. One possibility – the isolation model – predicts that the
United States will lose interest in the Third World and drastically cut the level of bilateral and
multilateral economic assistance it provides developing countries. Another scenario – the regressive
model – is that the United States, now unchecked by its previous superpower rival, will take even
greater license in manipulating Third World nations to achieve its own self-interested ends. Yet another
possibility – the Progressive model – is that U.S. leaders, now freed from viewing Third World nations as
prizes in the balance of power among the superpower, will give greater weight to items on the
Progressive foreign policy agenda.
The Isolation Model. Now that the threat of Russian aggression has declined, U.S. leaders could begin to
think about national defense beginning at the U.S. border. This would mean that the United States
would be less interested in the internal political, social, and economic affairs of weaker states. Instead,
U.S. resources would be used almost exclusively for domestic programs. Assuming the world is a
relatively peaceful one, the United States will continue to provide foreign aid at about the same level as
before, shifting the balance gradually away from military aid and toward economic aid. Of course, some
of this aid will be siphoned off to help Russia and the members of the Commonwealth of Independent
States and Eastern Europe, so the Third World’s share will be diminished. Moreover, it is likely to be
even more concentrated on allies whose cooperation is important for the continued macroeconomic
prosperity and military security of the United States. Consistent with this model, Senator Robert Dole,
majority leader in the Senate, suggested in early 1990 that the United States reduce its foreign aid to the
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top five recipients – India, Egypt, Pakistan, Israel, and the Philippines – and redistribute the “savings” to
the less developed, newly democratizing nations of Eastern Europe.
Several pieces of historical evidence support this scenario. The U.S. foreign aid program was initiated
when the U.S. economy was healthy, after the great depression and World War II had ended. In times of
economic decline, the United States has not been particularly generous in providing tax dollars to
poorer, less fortunate countries. Moreover, just as the Marshall Plan diverted foreign aid to Western
Europe that might have been used for economic development in the Third World, U.S. participation in
the reconstruction of Eastern Europe may have the same effect.
What is more, aid levels to the Third World might even be reduced without a dramatic shift toward
relative emphasis on economic aid. World peace would make it easier for the United States to make
such a shift, but Iraq’s invasion of Kuwait will make U.S. policymakers wonder whether there really will
be much peace in the Third World. Just as the Korean War caused a shift from economic development
aid to military aid, the confrontation between Iraq may stir fears of future wars with Third World
dictators.
The Regressive Model. Confronted by a militarily weaker, less resolute superpower adversary, U.S.
leaders might be emboldened to become more imperious in relations with Third World states. Some
observers see evidence of this strategy in recent U.S. interventions into Lebanon, Libya, Grenada, and
Panama, in the support of the Contra war against the government of Nicaragua, in the patrolling of the
Persian Gulf during the Iran-Iraq War, and the in the quick and militant U.S. response to the Iraqi
invasion of Kuwait.
As further evidence, Secretary of Defense Richard Cheney has argued that in a world where nuclear
weapons are less likely to be used, the United States must be more concerned about other threats from
lesser powers including biological, chemical, and conventional warfare. The new buzzword at the
Pentagon is LIC, for low-intensity conflict. Planners in the Department of Defense are advocating that
the United States further develop its capability for the rapid deployment and projection of highly mobile
military forces to fight limited wars. If they get their way, there may be no peace dividend after all.
In short, the United States may return to a model of foreign policy resembling the diplomacy of a
century ago – the moralizing, big stick, make-the-world-safe-for-democracy variety.24 The two military
confrontations with Third World states in the post-Cold War era (with Panama and Iraq) have some
characteristics in common and may be a preview of U.S.-Third World relations in the twenty-first
century:
1. An obnoxious Third World dictator. More dictators will certainly emerge, and many like Saddam
Hussein will have chemical, biological, or even nuclear weapons.
2. An absence of superpower stakes in the conflict. It is a one-superpower world. Balance of power
concerns are no longer particularly important.
3. A lack of U.S. inhibitions. Note the lifting of the prohibition against assassinating foreign leaders
prior to the invasion of Panama. Observing those events, Graham Fuller of the Rand Corporation
observed that “The Soviets feel deeply unhappy about unilateral American power projection.
Moscow’s worry is that the United States will treat the current disarray in the East Bloc as an
unfettered opportunity to use our power.”25
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4. A tendency toward overkill. If ten thousand troops could do the job, send fifty thousand to
intimidate the opposition and minimize the risk of losing.
5. Little respect for Third World leaders. Just as Adolfo de la Huerta of Mexico had been a “plug
ugly” to Woodrow Wilson, Manuel Noriega was presented to the American public as a “thug”
and Saddam Hussein as “sick.” The implication in both recent cases was obvious: there is no
need to negotiate with uncivilized people like that.
The Progressive Model. Finally, the easing of tensions between East and West should lessen the concern
about the expansion of Soviet-style communism, leading U.S. policymakers to be more tolerant of
communist movements, socialist experiments, and instability in the Third World. Under these
circumstances, foreign aid and other types of active U.S. assistance will be provided mainly to
democratic governments that have an equitable distribution of political power and wealth within their
societies, good human rights practices, and peaceful relations with their neighbors.
U.S. leaders will give more attention to North-South issues and will work to facilitate necessary reforms
in the Third World. These actions will increase the security of the United States from external threat and
law the foundation for mutually beneficial economic relations between the United States and less
economically developed countries. As a first step, U.S. leaders will convince the public that the foreign
aid program is essential to world peace and, therefore, to national defense. Following the guidelines
suggested by the New International Economic Order, the United States gradually will increase its foreign
aid from a meager 0.22 percent of GNP to 1 percent or more. Congress will insist that cover action and
unilateral military intervention not be used except under the most extraordinary circumstances and will
insist on the right to veto proposed covert actions. It will censure any president who does not abide by
the spirit as well as the letter of international law.
Each of these scenarios represents a different combination of choices with respect to many value
dimensions. How much should the United States try to affect the internal affairs, including the domestic
policies, of less developed countries? To what extent should scarce U.S. tax dollars be used to finance
economic, social, and political reforms and economic development in Third World states? Under what
conditions and to what degree should Nationalist objectives of expansion of U.S. military and economic
power be risked in order to achieve Progressive objectives in the Third World? The three scenarios do
not reflect all the possible permutations, but they do describe three distinctly different, yet possible,
courses of action. A Progressive tradition in U.S. foreign policy toward the Third World is emerging, but
there is no guarantee that it will continue.
Claessens, Stijn, Cassimon, Danny and Van Campenhout, Bjorn (2009), “Evidence on Changes in Aid
Allocation Criteria,” in The World Bank Economic Review, Vol. 23, No. 2, pp. 185-208.
This study observed behavioral changes over time in actual aid flows toward what appear to be more
optimal allocations across countries. Specifically, the roles of poverty and countries’ policy and
institutional environment increased while the effects of small size and the debt burden diminished.
Most of these changes occurred in the 1990s and intensified in the more recent period.
While these changes likely relate in part to reforms of the international aid architecture, it is unclear
which institutional changes at the international or bilateral level have driven the changes in behavior.
Long-standing multilateral financial institutions—such as the International Monetary Fund, World Bank,
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Paris Club, and consultative group meetings—have introduced many changes, which likely have affected
the behavior of bilateral aid flows. More attention has also been paid to aid allocation beginning in the
late 1990s, in part due to research begun in the mid-1990s. And changes such as the HIPC Debt Initiative
and the Poverty Reduction Strategy Papers process diminished the influence of debt on donor flows and
increased donor selectivity. While these and numerous other changes all likely influenced aid flows,
studies, including this one, have not been able to document specific evidence of their impacts.
Further precision in the institutional factors driving changes in behavior is important for understanding
how to make the international aid system work better for developing countries. The constraint is the
lack of good measures of changes in such factors as financial policies, transparency, and coordination at
the donor country and international level. Work on documenting institutional changes in a rigorous and
quantitative way may help identify the most influential changes. However, this study observes—as other
have—large remaining differences among donors in revealed selectivity that appear to be related to
donors’ institutional environments. This suggests that reforms will have to be multifaceted and include
further changes to the political economy and accountability in donor countries as well. It would be
desirable for future research to take into account the policy and institutional environment not only in
recipient countries, but also in donor countries, and to consider how this affects selectivity.
Clarke, D. P. (1991), “Trade Versus Aid: Distributions of Third World Developmental Assistance,” in
Economic Development and Cultural Change, Vol. 39, No. 4, pp. 829–837.
This study measures and compares the degrees of GSP [Generalized System of Preferences – scheme
proposed at the first UN conferences on Trade and Development (UNCTAD) in 1964] trade and foreign
aid concentration among beneficiaries under programs offered by Japan and the United States.
Although tariff preferences are advanced as a means of encouraging economic development through
“trade” rather than “aid,” the two forms of development assistance are distributed quite differently
across countries displaying disparate levels of economic well-being. The GSP trade is found to be
concentrated among the higher-income beneficiaries, more so under the U.S. scheme than under
Japan’s. The ODA tends to be focused more on the lower-income beneficiaries, particularly in the
Japanese case. This does not mean that issues of equity dominate foreign aid disbursement decisions.
Economic or strategic self-interest of each donor appears to play a major role in the allocation of
bilateral ODA. Modifications of GSP schemes must be undertaken in conjunction with developing
country initiatives to improve their utilization of the GSP.
Clarke, D. P. (1992), “Distributions of Official Development Assistance Among Developing Country Aid
Recipients,” in The Developing Economics, Vol. 30, No. 3, pp. 184–197, IDE-JETRO.
This study measures and compares the degree of ODA aid concentration among recipients under
schemes offered by eighteen DAC donors and multilateral agencies. Only the US bilateral ODA pattern is
found to display pronounced “middle-income” bias. ODA flows of individual DAC donors are much more
concentrated among the poorer recipients than are ODA flows under the bilateral US aid scheme. This
does not mean that issues of equity dominate any of the bilateral aid disbursement programs. Economic
and strategic self-interests of individual donors influence the allocation of bilateral aid. ODA flows from
multilateral agencies are found to be distributed in a more equitable manner than bilateral ODA
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disbursements from major DAC donors. This finding suggests multilateral aid should be assigned a
greater role in economic development assistance.
Collier, Paul and Dollar, David (2001), “Can the World Cut Poverty in Half? How Policy Reform and
Effective Aid Can Meet International Development Goals,” in World Development, Vol. 29, No. 11, pp.
1787-1802, Elsevier Science, Ltd.
Although aid may be allocated coherently, it is allocated inefficiently with respect to poverty reduction.
At present, aid is allocated partly as an inducement to policy reform and partly for a variety of historical
and strategic reasons. This produces a pattern in which aid is targeted to weak policy environments and
to countries which do not have severe poverty problems. The diversion of aid from poverty reduction to
policy improvement would be justifiable were there evidence that the offer of finance is effective in
inducing policy improvement. However, the evidence suggests that finance is ineffective in inducing
either policy reform or growth in a bad policy environment.
Even with the current inefficiencies, we estimate that in our sample of countries the present allocation
of aid lifts 10 million people permanently out of poverty each year. With a poverty-efficient allocation
this would increase to 19 million per year. Hence, the attempt over the past decades to use aid to
induce policy reform has come at a large cost.
Collier, Paul and Dollar, David (2002), “Aid Allocation and Poverty Reduction,” in European Economic
Review, Vol. 26, No. 8, pp. 1475–1500, Elsevier Science B.V.
Poverty reduction – in the world or in a particular region or country – depends primarily on the quality
of economic policy. Where we find in the developing world good environments for households and firms
to save and invest, we generally observe poverty reduction. Foreign aid can accelerate the process. It
can assist the government and society to provide public services, including critical ones needed by poor
households to participate in the market economy.
In this paper we developed and estimated a model of efficient aid in which policy and aid interact in
several important ways:
-
aid increases the benefits from good policy, while at the same time good policy increases the
impact of aid; thus, the combination of good policy and aid produces especially good results in
terms of growth and poverty reduction;
-
by introducing the concept of marginal utility of poverty reduction to first world taxpayers, we
make the volume of aid endogenous; in particular, it increases when policies are improved,
because in the better policy environment more aid can be used effectively;
-
we assume that policy is determined by developing country political processes and is
independent of aid; however, the fact that aid increases the benefits of reform suggests that a
high level of aid to strong reformers may increase the likelihood that good policy is sustained (an
idea ratified in a number of recent case studies of low-income reformers); to the extent that this
is the case, our estimates of the benefit of good aid to good policy countries are low.
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The main conclusions of our work can be shown in a simple diagram, which could represent an
individual country or a whole region such as Africa (Figure 2). On the vertical axis is a measure of
developing country policy, and on the horizontal, a measure of first world “concern” (marginal utility of
poverty reduction). The isoquant traces out combinations of policy and concern that would achieve a
certain level of poverty reduction (for example, 50% by 2015). Our first finding is that we are not
operating on this efficiency frontier. With the same level of concern, we could achieve much more
poverty reduction by allocating aid on the basis of how poor countries are and the quality of their
policies. That change alone would double the projected poverty reduction for sub-Saharan Africa; it
would put as at a point such as “A” on the poverty reduction = 30% by 2015 isoquant.
The curvature of the isoquant results from diminishing returns to aid. Given the current levels of policies
in Africa, simply increasing First World concern is not going to have much impact. Intuitively, once aid is
allocated efficiently, there remain no great opportunities for effective aid, given the current state of
policies. We argue that the best hope for moving to the poverty reduction = 50% isoquant is the
combination of policy reform in Africa and growing concern in rich countries. If Africa achieved the same
level of policy as South Asia (which seems a realistic target) and First World concern grows at about the
same rate as first world income (3% per year), we would just about make it to the international
development goal for poverty reduction!
Please do not take the point estimates too seriously. But do take seriously the notion that global poverty
reduction requires a partnership in which Third World societies and governments improve economic
policy, while First World citizens and governments show concern for poverty and translate concern into
effective assistance.
Cooper, Charles and van Themaat, Joan Verloren (1989), “Dutch Aid Determinants, 1973-85:
Continuity and Change,” in Stokke, Olav (ed.), Western Middle Powers and Global Poverty: The
Determinants of the Aid Policies of Canada, Denmark, the Netherlands, Norway and Sweden, pp. 117158, Uppsala, Sweden: The Scandinavian Institute of African Studies.
Aid policies are influenced by a multitude of factors. This study has identified a number of those which
have given the Netherlands’ aid policies their distinct direction. Several levels of influence have been
distinguished. Some specific features of the policies are influenced by specific foreign-policy
considerations, such as the Dutch attitude to multilateral-aid agencies, some specific economic
considerations and interests, some by the aid bureaucracy itself and some solidarity and human-rights
pressure groups. None of these forces is autonomous, however. All of them are in turn influenced by
more fundamental shifts and patterns in society. In analyzing why certain changes in the external
environment have provoked specific changes in the aid policies of certain countries and not in those of
other countries, one has to look to the differences in the domestic aid environment, as well as to the
way in a country is affected by external forces. In this conclusion, we attempt to draw up a certain
hierarchy of these factors.
To begin with, we believe that the aid policies of the Netherlands, both the stable broad orientations
and the recent changes, are most importantly formed by domestic factors and not by foreign-policy
considerations. The most important of these are the expectations which the public and the political
parties have of the role of the state in domestic affairs. This expectation is transferred to the relations
with developing countries. The central place which the transfer of income to low-income countries and
groups holds in aid policies and its broad poverty orientations originate from this. The relative absence
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of directly productive activities in the sector allocation of aid also stems from the domestic welfare-state
concept.
To understand why the state is looked upon somewhat differently in Holland than in other countries,
one has to trace the specific history of the Dutch state. This factor suggests that a different role of the
state in domestic affairs will go hand-in-hand with a different role of the state in aid policies. The more
recent criticism of the domestic role tends to support this thesis. It calls for an approach where the aid
policy is considered in the setting of domestic politics if the aim is to change the aid policy.
Other domestic factors, especially economic interests, play a minor though distinct role in Dutch aid
policies. This is related to the relatively small economic role of the state in domestic affairs and partly to
differences of interest within the private sector. This role, however, has been increasing in recent years.
NGOs, although occasionally successful in their lobbying activities vis-á-vis the government, are not a
major influence in the shaping of aid policies. This is due to some extent to the financial dependence of
the NGOs on the government.
Non-domestic factors also play a role in the shaping of policies. There has been quite a number of
instances in which specific foreign-policy considerations have influenced aid policies. This is most clearly
expressed in the choice of recipient countries. The fate of Vietnam, Cuba, Egypt, North Yemen and
Nicaragua is linked to these considerations, but the importance attached to multilateral organizations is
linked to them as well.
International organizations, especially the UN, the DAC and the World Bank, in turn influence aid policies
to quite an extent. In particular, the sectoral allocation of aid, targets in the LDCs, instruments such as
‘policy dialogues’, and aid approaches to Africa’s stagnation, are heavily influenced by the policy
recommendations of these organizations.
The socio-economic policies of recipient countries plays a certain role in the quantity of aid and the aid
package which recipients receive. This role, however, has declined in recent years.
Human rights play only a small and declining role in aid policies. The government uses this criterion
mainly in a reactive way, that is if serious violations occur. The clearest case in which this has happened
has been the suspension of aid to the ex-colony Surinam after serious violations of human rights in 1982.
The last factor is the role of the aid bureaucracy itself. Its role in the general orientation of aid is not a
very strong one. Because of its smallness and lack of professionalism, it can only give a certain direction
to the type of projects which are being implemented, their design and the way in which they are
executed. However, in the end, it has through this power, quite an effect on the ultimate results and the
shaping of aid policies in the Netherlands.
Cox, Daniel G. and Duffin, Diane L. (2008), “Cold War, Public Opinion, and Foreign Policy Spending
Decisions: Dynamic Representation by Congress and the President,” in Congress and the Presidency,
Vol. 35, No. 1, pp. 29-51.
The results of this study clearly demonstrate that understanding the relationship between public
opinion and U.S. foreign policy depends on understanding that neither is monolithic. That the public
holds different opinions regarding different aspects of foreign policy is nothing new. That elected
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lawmakers respond to those expressions of opinion differently is, though. We have shown ongoing
congruence between public opinion and defense spending, and an absence of congruence between
public opinion and foreign economic aid.
Although our model of defense spending proposals builds directly on the work of others, it reveals some
new and important lessons: (1) the congruence between defense spending and public opinion continued
into the post-cold war era; (2) institutional actors in American national government accommodate the
partisan composition of the Senate in making their defense spending proposals; and (3) no one branch
of government or chamber of Congress carries the load of representing public opinion in setting defense
spending levels—all are about equally responsive, demonstrating the vitality of dynamic representation
in this policy area.
When trying to model the effect of these same political variables on foreign economic assistance, we
find that the key variable of interest, public opinion, is entangled with the end of the cold war.
Disentangling this knot reveals that the cold war’s end was regarded by the public as an opportunity to
curtail foreign aid, but by political institutions as an opportunity to increase it, which they did. The effect
of public opinion on foreign economic aid proposals is null, leaving us with the evidence that aid
proposals continue to be driven more by geopolitical circumstances—namely, the presence or absence
of the cold war and the opportunities and constraints inherent to each—and less by domestic political
forces.
Danish Ministry of Foreign Affairs, Principles Governing Danish Development Assistance for the Fight
Against
the
New
Terrorism,
retrieved
from
http://www.um.dk/publikationer/danida/strategier/Principles.pdf on November 21st, 2010.
The world is changing rapidly – tomorrow’s threats, opportunities and challenges will be different from
those of yesterday. Danish assistance for the fight against terrorism must take its point of departure in
the urgent problems in the developing countries that we are able to identify now and the problems we
can see on the horizon. In this respect, development assistance is an active foreign policy instrument.
This applies in particular to the objective of promoting stability, security and the fight against terrorism.
The Government will, therefore, increase the development assistance contribution to the fight against
global terrorism as part of overall Danish anti-terrorist efforts with the aim of taking counteraction here
and now against the current terrorist threat and of making a long-term effort directed at the growing
recruitment and sympathy base for the new terrorism.
Through our development assistance, Denmark is already contributing significantly to the fight against
international terrorism, especially through comprehensive Danish assistance to Afghanistan and Iraq. In
addition, there is the Government’s new Arab initiative, which also includes measures in North Africa.
The principles set out here in this document establish the framework and earmark the funds for the
forthcoming work of carrying through new, specific efforts in selected developing countries and regions.
The commitment and will to promote change - modernisation and development; democracy, human
rights and good governance – as well as dialogue, ownership and co-responsibility are some of the
fundamental principles governing the action.
While many efforts in terms of development assistance – first and foremost the initiative for conflict
prevention and conflict management, human rights, democratisation and good governance - are
targeted at some of the underlying causes of terrorism, the principles included in this document focus
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on the altogether extra efforts which either directly enhance the potential of poor countries to combat
international terrorism or are directly targeted at vulnerable groups in countries and areas where
developments indicate a noticeable radicalisation of society. The efforts to combat terrorism must be
seen as part of the general, much broader development action, which also contributes to promoting a
more peaceful and stable world characterised by growth and progress.
With approximately DKK 145 million earmarked for new, specific efforts in the period 2004-2006,
Denmark will, also in the special sphere of countering terrorism, endeavour to contribute to making a
difference for the better. For the benefit of the societies affected – and our own society.
Diamond, Larry (2008), “Foreign Aid in the National Interest: The Importance of Democracy and
Governance,” in Picard, Louis A., Groelsema, Robert and Buss, Terry F. (eds.), Foreign Aid and Foreign
Policy: Lessons for the Next Half Century, pp. 61-85, New York: M. E. Sharpe, Inc.
Global democratic progress has slumped in recent years. Many countries that once seemed “in
transition” have settled into authoritarian rule. And even many electoral democracies are performing
poorly and loosing public confidence. Democracy assistance has achieved uneven results, and in some
countries, sizable efforts in some sectors appear to have had little if any impact. None of this is cause for
despair. The world has seen striking democratic progress in the past two decades, and most people still
want to be governed in democracy and freedom. However, if a broad reversal of democratic progress is
to be averted, if development is to be generated where it has been blocked and stalled, and if we are to
prevent the collapse of more states into catastrophic cycles of political violence, social chaos, rampant
criminality, and humanitarian crisis, we must induce sweeping transformations in the quality of
governance.
As described in this chapter, if we can extend and institutionalise the significant innovations of U.S.
foreign aid strategy and structure from recent years, designed to induce, support, and reward
fundamental governance reforms; if the United States can partner with its fellow donors to coordinate
international pressure and incentives for such reforms; and if we can, with patience and adaptive savvy,
sustain this approach with appropriate resources for two or three decades, we can help to generate the
economic and political transformations that will lift nations, and hundreds of millions of people, out of
poverty. This effort should be a higher priority in U.S. foreign policy and, if successful, will enhance the
national security of the United States.
Dolan, Michael B. and Tomlin, Brian W. (1980), “First World-Third World Linkages: External Relations
and Economic Development,” in International Organization, Vol. 34, No. 1, pp. 41-63.
The recent spate of cross-national, quantitative studies prompted by dependencia explanations of
underdevelopment has provided new evidence on the consequences of foreign economic linkages for
the economies of developing countries. We argued at the outset of this paper that the findings of these
studies are important insofar as they bear upon the general problems addressed in the field of political
economy. The subsequent analysis produced results which should be of considerable interest both to
those who must endeavor to fashion policies in response to these problems and those attempting to
theorize about the causes and consequences of development and underdevelopment.
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In the first place, the findings of this study provide virtually no support for the postulates of
conventional economic theories concerning the effects of linkages upon economic growth. On the
contrary, the conclusions arrived at by Bornschier, et al. concerning the impact of direct foreign
investment are corroborated here: direct foreign investment is cumulatively related to decreases in the
relative rate of economic growth of countries. Perhaps equally important, however, is our finding that,
in the short-term, investment is positively associated, at virtually the same magnitude, with increasing
rates of economic growth. The importance of these findings, of course, is in their joint occurrence: any
theory of development must explain both the short-term and contrary cumulative effects of investment.
Following on a suggestion made by Bornschier, et al., we explored the effects of foreign investment on
growth as they vary by economic sector. Previous studies indicated that foreign investment in
manufacturing has the largest negative relationship with growth, while the effects of investment in
extractive industry are positive.36 Our analysis, however, suggests that various sectoral concentrations of
foreign capital do not have statistically significant differential effects on economic growth. These
contradictory findings require further analysis on this question, especially in light of the apparent shift
toward internationalization of production on the part of multinational corporations.
Beyond investment, the analysis of the remaining types of linkage also failed to support the propositions
derived from conventional economics. The effects of both aid and trade on economic growth were
minimal. Trade is related to increased sectoral imbalance in the economy of a country; however,
distributions of productivity and wealth within countries were found to be unrelated to the other
linkage variables. This finding may be due to the use of levels, as opposed to changes in distribution. Any
particular distribution of wealth or productivity is likely due to a variety of historical conditions, whereas
linkages are more appropriate in accounting for changes in these distributions. In subsequent research,
we intend to explore the impact of linkages on changes in the extent of sectoral imbalance in the
economy.37
In terms of the general problem of fostering economic growth faced by most underdeveloped countries,
this analysis suggests that the role of foreign economic linkages might best be given secondary
consideration. A synchronic design will normally leave a large percentage of variance unexplained.
However, especially for the poorer countries in our sample, it is clear that a host of other economic,
social, and political forces are the primary determinants of economic growth.
The analysis of the effects of the concentration of linkages on economic growth and distribution was
included in order that this broad, cross-national study might be more easily related to previous
dependence-based analyses which focus on various forms of partner and commodity concentration.
Many regional studies of dependence have, not unnaturally, placed primary emphasis upon linkage
concentrations in efforts to explain development. Conventional economic theory, however, does not
assign importance to market and commodity diversification, or its absence. We find nothing in the
results of this analysis to support a refutation of the stance adopted by conventional economics.
The results concerning the differential statistical relationships between investment stocks and flows,
and rates of economic growth provide the most suggestive findings of this analysis. Much remains to be
done, of course, to establish the causes of these relationships. Nevertheless, the possibility that the
long- and short-term effects of direct foreign investment on rates of economic growth are opposite, and
nearly equal, is one that ought now to be considered seriously by both policy makers and theorists
attempting to deal with the problem of economic growth in the Third World.
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Dollar, David, Levin, Victoria, (2006) “The Increasing Selectivity of Foreign Aid, 1984–2003,” in World
Development , Vol. 34, No. 12, pp. 2034–2046.
In the past two decades, foreign aid overall has become more selective in the following sense: in the
second half of the 1980s, aid was allocated in favor of countries with poor economic governance, as
measured by an index of property rights and rule of law. Aid was allocated in favor of democracies, but
among low income countries there is not much relationship between democracy and economic
governance. Economic governance plays a key role in creating a climate for growth and poverty
reduction, and also for aid effectiveness. For countries at the same level of per capita income, aid was
channeled to those with weak economic institutions, where it was often not well used. More recently, a
clear tendency toward selectivity in terms of economic governance has emerged among multilateral
development agencies. For multilateral assistance, significantly more aid is channeled to countries with
good economic governance, the opposite of the case in the 1984–89 period. Multilateral aid is more
selective than bilateral aid. In the most recent period the latter has a slight relationship to good
governance, but one that is not statistically different from zero.
Dore, Roland (1982), “Japan and the Third World: Coincidence or Divergence of Interests,” in Cassen,
Robert, Jolly, Richard, Sewell, John, and Wood, Robert (eds.) Rich Country Interests and Third World
Development, pp. 128-155, London: Croom Helm.
In a number of senses, Japan differs more from the leading OECD countries than those countries differ
from each other: in internal economic structure, in international involvements and in cultural
predispositions and views of the outside world. I begin with the last. […]
Current Japanese perceptions of Japan’s interests in seeing the Third World develop are, it is argued,
rather unclear. Japan’s dependence on some Third World countries is recognized, if regretted. As long as
Saudi Arabia controls the oil, Saudi Arabia must be appeased, but it would be much better for all of us if
it were under American occupation. There is little thought that the Saudis might become more
‘reasonable’ as they become richer. Other countries have a greater significance to Japan as export
markets and fields for foreign investment and here – in Southeast Asia and South-Central America –
there is a much clearer perception of the possibilities of all-round benefits from continued economic
growth in those countries. As for Africa, the Indian subcontinent and the non-oil Middle East, however,
there is little disposition to see much profit accruing to Japan from their development except in so far as
that contributes generally to the buoyancy of world demand.
It is hard to see that these perceptions of where Japan’s interests lie will change in the future, given the
likely prospects for either a change in value priorities of the groups in power, or a change in the relative
strength of the different groups which now influence policy. Nor does this writer have the wit or the
hubris to discern where the reality perceptions of the Japanese (about what policies might have what
consequences) might be mistaken. The present general pattern of perceptions would be intensified if
new world protectionism and intensified nationalism led to a ‘vertical’ restructuring of the world with
Japan forced to concentrate on consolidating an Asian sphere of influence, perhaps in consort with
China.
That pattern would, on the other hand, be substantially modified by a second – remote – possibility,
namely that the concern for Japan’s ‘international standing’ might make attractive what one might call
the ‘super-Scandinavian option’ – the adoption of a general ‘friend of the Third World’ policy in
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international affairs. It is doubtful, however, for the reasons listed earlier, whether the cultural bases for
such a policy exist. There is, at any rate, very little sign of any interest in following such a line, even
among potential members of alternative left-wing governments.
Dowling, J. M. and Hiemenz, Ulrich (1985), “Biases in the Allocation of Foreign Aid: Some New
Evidence,” in World Development, Vol. 13, No. 4, pp. 535-541.
A survey of previous studies and the new evidence presented in this paper suggest a number of lessons
concerning the allocation of development assistance among countries. There is a bias in per capita aid
flows against large, populous countries that was again confirmed by the more recent data in our analysis.
The existence of a middle-income bias could, however, not be confirmed. The relationship between aid
flows and level of development is highly sensitive to variations in model and data coverage. A middleincome bias may result from political distortions of aid flows and from the inclusion of small island
economies which receive small absolute amounts of aid but have a high inflow per capita.
In a sample of about 90 countries where such distortions are widely eliminated, a middle-income bias
was found neither for the 1970-72 period nor for the 1976-78 period. Instead, regressions on 1976-78
aid flows and per capita incomes of recipient countries seem to suggest a low-income bias, i.e. lowincome countries (as distinguished from extremely poor countries) received more aid per capita than
middle-income countries. Whether this welcome shift in the pattern of aid allocation reflects a lasting
change of development policies of donor countries and agencies can, however, not be established on
the basis of the available evidence. But even if this were the case, a further reallocation of aid flows
towards populous poor countries such as Bangladesh and India would seem to be desirable.
Dreher, Axel, Nunnenkamp, Peter and Thiele, Rainer (2008), “Does US Aid Buy UN General Assembly
Votes? A Disaggregated Analysis,” in Public Choice, Vol. 136, pp. 139-164.
We empirically investigated the hypothesis that foreign aid is used as an instrument to influence the
voting behavior of recipients in the UN General Assembly. As the main innovation of this paper, we
employed disaggregated aid data in order to assess which aid categories were effective in inducing
voting compliance with the donor.
Different forms of aid may differ in their ability to induce political support by recipients. In particular,
program aid (notably in the form of general budget support), grants, and untied aid are most likely to
shape UN voting behavior. Other forms of aid are less likely to be employed for buying political support.
Donors may prefer project-related aid and concessional loans when pursuing other objectives, e.g.,
providing incentives for a productive use of aid in the recipient countries (especially where local
governance is weak). Tied aid may be preferred when commercial donor interests dominate over
political motivations.
The focus of our analysis is on US aid and its effects on voting patterns in the UN General Assembly over
the period 1973–2002. Compared to other bilateral donors, the United States is widely believed to be
less altruistic in allocating aid. Apart from pursuing economic self-interests, US aid is supposed to be
used to buy political support from recipient countries. Various UN members are susceptible to bilateral
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pressure by the world’s super-power, and UN voting is considered to be relevant by the United States in
defining bilateral relationships and foreign policy.
Accounting for the potential endogeneity of aid, our results provide strong evidence that US aid has
indeed bought voting compliance. More specifically, the results suggest that general budget support and
grants are the major aid categories with which recipients have been induced to vote in line with the
United States. When replicating the results for the other G7 countries, however, we did not find a
similar pattern.
By relying on specific aid categories, our analysis provides a more nuanced account than previous
studies of how the United States might bribe recipient countries. As a means of obtaining a yet more
complete picture of the relationship between political interests and aid allocation, one fruitful avenue
for future research would be to extend the analysis of disaggregated aid data to other political spheres
such as decision making in the UN Security Council. We intend to address this in future research.
As concerns the normative implications of our findings, it may be tempting to demand that aid should
no longer be used to buy political support of recipient countries in the UN General Assembly (or
anywhere else). Similar demands have been made before with respect to the practice of pursuing traderelated donor interests by tying aid to the procurement of goods and services from the donor country.
The reason is that tied aid delivers fewer economic benefits to the recipients than untied aid. Similarly,
the effectiveness of aid in fostering the economic and social development of recipient countries tends to
be compromised when aid is conditioned on political favors. The developmental impact of aid, in terms
of raising growth and alleviating poverty, is likely to be reduced if political donor motivations result in
the diversion of aid from the neediest recipients to recipients offering political support to the donor.
However, the welfare implications of using aid to induce UN voting compliance are less clear than these
concerns tend to suggest. With respect to the recipient governments of politically motivated aid, it
seems safe to conclude that their utility, though not necessarily the welfare of the neediest population
segments in these countries, increases—considering that they appear to prefer voting in line with the
donor over forgoing aid. The welfare of other recipient countries depends on whether politically
motivated aid is additional to aid given for altruistic reasons, or rather diverts aid away from the needy
but politically less compliant recipients. This tricky issue should be addressed in future research.
Finally, as concerns the United States, it appears to be politically naive to demand from the world’s
super-power not to use financial instruments to induce compliant voting behavior in international
organizations such as the United Nations. Our finding that aid is effective in this respect tends to imply
that politically motivated aid raises US welfare. Still, the use of one single (financial) instrument for
multiple purposes is unlikely to be efficient. Moreover, it would help transparency and donor
accountability if separate financial facilities were clearly related to specific donor motives. Politically
motivated support as well as trade-related support should therefore be separated from the
development aid budget.
Smaller donors may show the way to enhanced transparency and accountability for the United States.
For example, Sweden and Switzerland appear to have a clearer division of responsibilities between
different government agencies in dealing with developing countries. In the case of Sweden, the Swedish
International Development Cooperation Agency (SIDA), the Ministry of Foreign Affairs and the Export
Credits Guarantee Board are all considered to be official donors but, as it seems, with distinct mandates
in international financial cooperation. If the United States had separate budget positions along similar
lines, it would become more transparent what purposes the announced increase in US aid is actually
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meant to serve, e.g., developmental objectives such as helping achieve the Millennium Development
Goals or political objectives such as forming coalitions in the United Nations.
Drury, A. Cooper, Olson, Richard Stuart and Van Belle, Douglas A. (2005), “The Politics of
Humanitarian Aid: U.S. Foreign Disaster Assistance, 1964–1995,” in Journal of Politics, Vol. 67, No. 2,
pp. 454–473.
We began this paper by asking if (and if yes, the degree to which) political factors influence U.S. foreign
disaster assistance, rhetorically the most nonpolitical component of U.S. foreign aid. Overall, our
analysis puts to rest the notion that U.S. foreign disaster assistance is purely objective and nonpolitical.
It is not even close. Rather, U.S. humanitarian aid is strongly political, although more so in the granting
stage than in the allocative stage. Indeed, our results paint a picture of high U.S. foreign policy decision
makers as realists at heart, seeing disasters as opportunities to enhance security. The subsequent
decision of how much aid to allocate, however, appears to be left more to the foreign disaster
assistance bureaucracy (OFDA) and turns out to be only slightly less political because in addition to the
humanitarian criterion, OFDA officials also seek to be sensitive to a variety of domestic U.S. concerns, in
part to protect their own agency.
Intriguing is the fact that U.S. federal deficits and domestic disaster costs depress the likelihood that any
foreign disaster assistance will be awarded, even with OFDA's relatively open spending ceiling. While U.S.
disaster injuries appear initially to enhance empathy for foreign events, this empathy shifts to cost
concerns once OFDA officials face allocation decisions.
A striking finding, however, centers on the powerful impact of a disaster's media salience, with one New
York Times article being worth more disaster aid dollars than 1,500 fatalities. The same OFDA officials
who lament the negative influence of politics concern themselves with doing what is politically relevant;
that is, allocating aid to salient events. That U.S. officials use (consciously or not) such information in
their decisions underscores the power of the media.
Nonetheless, the observed difference between the overtly political stage and the somewhat less
political allocation stage in foreign disaster assistance merits further thought. Given that OFDA prides
itself on its humanitarian mission but is located down and within a strongly political USAID/State
Department structure, our findings may reflect an unequal values conflict between the humanitarian
norms of the foreign disaster assistance professionals, which receive at least some expression in the
allocative stage, and the almost exclusively political interests of the higher levels that dominate the
granting decisions.
Additionally, the contrast between a strong political reality and the oft-repeated claim that U.S. foreign
disaster assistance is nonpolitical is probably undercutting U.S. credibility. It must certainly be fostering
cynicism. If foreign governments, international organizations, and nongovernmental organizations see –
apparently accurately – that U.S. disaster assistance has strong political motivations, but U.S. officials
maintain that their decisions are purely humanitarian, then those entities cannot help but doubt U.S.
intentions. Consequently, the coordination of response and recovery efforts is likely more difficult.
Finally, because the values conflict (humanitarian versus political) seems to touch on some fundamental
tensions within U.S. foreign policy, further research is certainly indicated on this calculus question in U.S.
foreign disaster assistance. As additional data become available, analyses of the post-Cold War and post-
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September 11th eras should deepen our understanding of why, when, and how the U.S. government
chooses to respond (or not to respond) to emergencies and disasters around the world. The results
should be both telling and provocative.
Dudley, Leonard and Montmarquette, Claude (1976), “A Model of the Supply of Bilateral Foreign Aid,”
in American Economic Review, Vol. 66, No. 1, pp. 132-142.
This paper has presented two versions of a model of the supply of foreign aid. The model attempted to
explain two decisions made by the donor country. First was the decision whether or not to grant aid to a
given developing country. The model suggested that the probability of granting aid was a decreasing
function of the recipient’s per capita income, as well as a function of economic, political, and
bandwagon considerations. The empirical results supported these hypotheses and also indicated that
perhaps because of administrative costs that increase less rapidly than the amount of aid granted to a
given country, the probability of granting aid increases with the potential recipient’s population.
Secondly, the model attempted to explain the amount of aid granted once the decision to give to a
particular country had been taken. The apparent small country bias in the granting of per capita aid
which was observed in an earlier study does not seem to be due primarily to distortion on the part of
donor countries in favor of recipients with small populations. Rather it would seem to be mainly a result
of misspecification of the foreign aid supply model in particular, the omission of economic, political, and
bandwagon effects. Finally, there appear to be strongly decreasing returns to a donor in converting its
foreign aid into impact on a given recipient country.
Dunning, Thad (2004), “Conditioning the Effects of Aid: Cold War Politics, Donor Credibility, and
Democracy in Africa,” in International Organization, Vol. 58, No. 2, pp. 409-23.
The findings I present in this research note make two contributions to the debate concerning the
effectiveness of foreign aid conditionality. First, the analysis suggests that the causal impact of aid on
regime type may be historically contingent in ways not appreciated by previous research. The
relationship between foreign aid and democracy in sub-Saharan Africa appears to be highly conditioned
by the distinction between the Cold War and post–Cold War periods. Earlier empirical research,
therefore, may have reported misleading averages that in fact masked temporally defined shifts in
causal patterns across subgroups of cases.
Secondly, the causal mechanism to which I have pointed to explain this divergence is quite distinct from
the increasingly popular “moral hazard” or “perversity” theory of aid. Whether the latter theory is
correct or incorrect, it clearly makes no prediction about temporal variation in the effect of aid on
democracy. In other words, there is no a priori reason to expect the allegedly “perverse” effect of aid on
democracy to strengthen or weaken over time. The predictions of my credible commitment story, on
the other hand, contain an important temporal dimension, because the disappearance of the
geostrategic threat from the Soviet Union may have made threats from Western donors to withdraw aid
much more credible.
The empirical results I present in this article are consistent with the predictions of the credible
commitment story but not with the “perversity thesis.” The results therefore suggest that further
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theoretical attention should be focused on the issue of credible commitment in the allocation of foreign
aid.
These empirical and theoretical points justify increased attention as well to the geopolitics of aid
provision in future research. In contrast to recent arguments advanced by some of foreign aid’s critics,
the likelihood that aid may effectively promote democracy will in fact increase when the role of strategic
or geopolitical factors in allocating aid diminishes. Former World Bank economist William Easterly
recently launched a scathing criticism of donor organizations, entitled “The Cartel of Good Intentions” in
which he states:
among the most popular concepts the aid community has recently discovered is “selectivity”—the
principle that aid will only work in countries with good economic policies and efficient, squeakyclean institutions. The moment of aid donors’ conversion on this point supposedly came with the
end of the Cold War, but in truth, selectivity (and other “new” ideas) has been a recurrent aid
theme over the last 40 years….Unfortunately, evidence of a true conversion on selectivity remains
mixed.38
In fact, the suggestion that aid conditionality is a recycled notion may be irrelevant. What may matter is
not whether donor “selectivity” is a new idea, or whether aid will only “work” in countries with
institutions that are already “squeaky-clean.” Instead, a crucial factor may be whether the threats of
international donors to withdraw aid if democratic reforms are not adopted can be made credible and
therefore effective. The theory and evidence presented above suggest that conditioning aid on levels of
democracy in recipient countries may only be credible under certain global geostrategic circumstances—
for example, those provided in Africa by the end of the Cold War. The empirical evidence presented
above should provide a small measure of encouragement to the proponents of foreign aid. At the same
time, for those concerned with promoting democracy in Africa, there is no guarantee that the propitious
conditions posed by the end of the Cold War will persist. U.S. policymakers have recently begun point
out the strategic nature of West and Central African oil reserves, implying that geopolitical criteria could
play an important role in pending aid allocation decisions.39 The research presented here should thus
also sound a note of alarm about the future dangers that geopolitical factors could pose to the
effectiveness of aid conditionality.
Easterly, William (2003), “Can Foreign Aid Buy Growth?” in Journal of Economic Perspectives, Vol. 17,
No. 3, pp. 23–48.
The widely publicized finding that “aid promotes growth in a good policy environment” is not robust to
the inclusion of new data or alternative definitions of “aid”, “policy” or “growth”. The idea that “aid buys
growth” is on shaky ground theoretically and empirically. It doesn’t help that aid agencies face poor
incentives to deliver results and underinvest in enforcing aid conditions and performing scientific
evaluations. Aid should set more modest goals, like helping some of the people some of the time, rather
than trying to be the catalyst for society-wide transformation.
Easterly, William, Levine, Ross and Roodman, David (2003) “New Data, New Doubt: Revisiting Aid,
Policies and Growth,” Center for Global Development Working Paper No. 26, Washington, DC, United
States: Center for Global Development.
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This paper reduces the confidence that one can have in the conclusion that aid promotes growth in
countries with sound policies. The paper does not argue that aid is ineffective. We make a much more
limited claim. We simply note that adding additional data to the BD study of aid effectiveness raises new
doubts about the effectiveness of aid and suggests that economists and policymakers should be less
sanguine about concluding that foreign aid will boost growth in countries with good policies. We believe
that BD should be a seminal paper that stimulates additional work on aid effectiveness, but not yet the
final answer on this critical issue. We hope that further research will continue to explore pressing
macroeconomic and microeconomic questions surrounding foreign aid, such as whether aid can foment
reforms in policies and institutions that in turn foster economic growth, whether some foreign aid
delivery mechanisms work better than others, and what is the political economy of aid in both the donor
and the recipient.
Easterly, William, Levine, Ross and Roodman, David (2004), “Aid, Policies, and Growth: Comment,” in
American Economic Review, Vol. 94, No.3, pp. 774–80.
This paper reduces the confidence that one can have in the conclusion that aid promotes growth in
countries with sound policies. The paper does not argue that aid is ineffective. We make a much more
limited claim. We simply note that adding additional data to the BD [Burnside & Dollar] study of aid
effectiveness raises new doubts about the effectiveness of aid and suggests that economists and policy
makers should be less sanguine about concluding that foreign aid will boost growth in countries with
good policies. We believe that BD should be a seminal paper that stimulates additional work on aid
effectiveness, but not yet the final answer on this critical issue. We hope that further research will
continue to explore pressing macroeconomic and microeconomic questions surrounding foreign aid,
such as whether aid can foment reforms in policies and institutions that in turn foster economic growth,
whether some foreign aid delivery mechanisms work better than others, and what is the political
economy of aid in both the donor and the recipient.
Essex, Jamey (2008a), “The Neoliberalization of Development: Trade Capacity Building and Security at
the US Agency for International Development,” in Antipode, Vol. 40, No. 2, pp. 229-251.
I have provided an examination of the way in which a particular US state institution, the US Agency for
International Development, has acted as site and strategy for the reconfiguration of state and classrelevant practices regarding development, trade, and security. This reconfiguration, occurring in and
through the structure and strategic selectivity of the US state, forms a key part of a broader transition
between state and hegemonic projects, and produces a new cartography of development that centers
internationalizing market relations (Jessop 1990, 2001, 2002; McMichael 2002a; Peet and Watts 1993).
While this is not to suggest that this transition is complete or total, it does emphasize the ways in which
a relative unity of action and ideological commitment—in this case to trade liberalization and a
particularly narrow definition of security—is enforced in and through state institutions. USAID, as a
pivotal state agency with a great deal of power over dominant understandings and practices of
development, demonstrates one way in which the production and maintenance of neoliberalization
occurs—in this case, through the adoption of TCB [Trade Capacity Building], which posits liberalized
trade as the only appropriate path to economic development, and a security discourse that casts
underdevelopment as a national security threat. The example of food aid and food security begins to
illustrate how this configuration centers the needs of internationalizing capital and the geopolitical
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concerns of the US state—not new in the work of USAID, but to be achieved in markedly new ways. This
paper is an initial foray into identifying specific ways in which class-relevant struggles have coalesced
around USAID’s internal constitution and external relations; the next task is to identify how these
struggles may be advanced to promote something beyond the democracy of the marketplace and the
security of capitalist accumulation.
Essex, Jamey (2008b), “Deservedness, Development, and the State: Geographic Categorization in the
US Agency for International Development’s Foreign Assistance Framework,” in Geoforum, Vol. 39, pp.
1625-1636.
The continued refinement and implementation of the Foreign Assistance Framework promises deep and
significant changes in the nature of official development assistance, and in dominant understandings of
the relationship between development and security. Crucially, it reinforces and extends state and
hegemonic projects of neoliberal globalization, which hinge on instituting neoliberal state forms built on
strategic openness to capitalist internationalization, and the increasing prevalence of authoritarian
governance in controlling resultant or already existing social resistance and insecurity. The cartography
of development institutionalized in and by the framework exhibits a particularly diabolical moral
calculus of deservedness, dependent on allocating aid to those that have already helped themselves,
and leaving others out of the necessarily unequal and limited moral community delimited by capitalist
internationalization. At the least, the framework advances a restricting influence on recipients’ strategic
selectivity, narrowing the potential uses of aid, and reproducing the asymmetrical power relationships
and ethical ambivalences that come with aid (Korf, 2007). For USAID, it deepens the structural
displacement of contradictions in the US state’s neoliberal project onto the agency, re-integrating it
more fully into foreign policy structures while demanding more in terms of accountability and aid
effectiveness. The potential outcomes of continued agency restructuring based on the framework will
likely focus on further integration with the State Department and whittling of USAID’s role to that of
development program subcontractor.
Finally, an understudied but necessary component in extending this research is consideration of how
developing states encourage and internalize the categorizations found in the framework. This follows
Rankin’s (2004, p. 69) argument that “globalization studies should explicitly consider the role and
position of the periphery in globalizing processes” to better explain and resist neoliberalization. In
accordance with the strategic-relational approach employed in this paper, further investigation would
necessitate a focus on the class-relevant basis of aid allocation and use, particularly where related to the
identification and exercise of the “political will” that forms a pivotal criterion for aid deservedness. This
would, once USAID fully implements the framework and longer-term research on its effects becomes
possible, also answer the appeal Roberts et al. (2003, pp. 887, 892) make to engage with both
neoliberalism’s “interarticulation with certain dangerous supplements, including, not least of all, the
violence of American military force”, and the definition of developing states and societies by reference
to their representation as “a lack, a hole, a stain, and a site of rejection”. Critically analyzing how such
interarticulations are forged necessitates taking seriously the complex spatialities of neoliberalization as
it proceeds (and is perhaps checked) through geographic categories like those found in the Foreign
Assistance Framework.
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Everts, Jacob (1982), “Rich Country Interests and Third World Development: The Netherlands,” in
Cassen, Robert, Jolly, Richard, Sewell, John, and Wood, Robert (eds.) Rich Country Interests and Third
World Development, pp. 248-278, London: Croom Helm.
Fariss, Christopher J. (2010), “The Strategic Substitution of United States Foreign Aid,” in Foreign
Policy Analysis, Vol. 6, pp. 107-131.
The results demonstrate over a robust set of models that as human rights on the ground worsen, the
probability for a state to be selected into the food aid recipient pool increases and, once selected, so too
does the allotment of food aid. The needy people provision in the US foreign aid legislation seems to
allow foreign policymakers a degree of leeway probably not found with other economic aid programs
when crafting food aid packages. The results from the multinomial logit models suggest that the
conditional relationship between human rights and strategic interests is an important part of the
determination of the type of foreign aid that a country receives. The results from the Heckman model,
however, suggest that the conditional relationship between human rights and strategic interests does
not affect the allocated amount of food aid; however, the linear-additive effect of human rights is
substantively important during this stage.
The four-category distinction of foreign aid (no aid, food aid only, economic aid only, or food aid and
economic aid) has provided a rich view of the conditional relationship of human rights on the selection
of different types of aid recipients when compared with the two-category distinction. To reiterate, the
main hypothesized relationships are substantively and statistically important in determining the
probability of a state receiving one of the four combinations of aid in the multinomial logit model;
however, these relationships are not statistically important in determining the probability of food aid or
no food aid in the first stage of the Heckman model. This difference suggests that a simple increase in
the complexity of how foreign aid is conceptualized will allow for the discovery of previously unobserved
relationships.
Overall, the results from both models have shed some light on policy outcomes that emerge from a
complicated, interdependent decision-making process. Nonetheless, the policymaking picture is, at best,
still incomplete. For example I have not accounted for the varying interests and strategic interaction of
the USAID, Department of Agriculture, Department of State, Department of the Treasury, Congress and
the President in my theory or models. How does the strategic interaction of these competing groups
change depending on the foreign policy output in question? How does this competition influence the
crafting of aid packages? Finally, the puzzle of which aid options are more or less restricted than others
and what types of mechanisms cause such restrictions are still open research questions. Again, the
evidence obtained in this study is suggestive of a substitution effect; however, to answer these
questions and to integrate the findings from this study and other foreign policy research21 future studies
would be enhanced by the use of more sophisticated research designs such as nonparametric matching
as recommended by Ho, Imai, King, and Stuart (2007) or strategic interaction models as recommended
by Braumoeller (2003). Untangling the varied purposes of these programs, while difficult, will provide a
much more nuanced understanding of the US aid giving process and enhance efforts to integrate the
findings of existing foreign policy research.22 Furthermore, such information would allow for better
coordination between governments and NGOs to food-related crises such as those that occurred around
the world in early 2008. At the very least, such information may allow NGOs to anticipate donor
behaviors towards specific countries under specific conditions.
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Fielden, Matthew B. (1998), “The Geopolitics of Aid: The Provision and Termination of Aid to Afghan
Refugees in North West Frontier Province, Pakistan,” in Political Geography, Vol. 17, No. 4, pp. 459487, Elsevier Science, Ltd.
Aid and refugees are emerging areas of academic discourse. This paper seeks to explore the geopolitics
of aid in the context of the provision and termination of international humanitarian and development
assistance to Afghan refugees in the North West Frontier Province of Pakistan. Discussion locates the
origins of the ‘refugee crisis’ in the Soviet invasion of Afghanistan in December 1979. The exodus of
Afghans following this foreign intervention is examined in its socio-cultural context. Discussion then
progresses to consider the geopolitical motivations behind the provision of assistance and the way the
aid supplied became heavily politicized.
Levels of aid are shown to have fallen dramatically in the post-Soviet era, and this downturn is linked to
the geopolitical repercussions of the dissolution of the Soviet Union. The policy reasonings behind the
ending of assistance reflect these changed geopolitical priorities, and are considered from the
perspectives of both NGO and donor institutions. The geopolitics of the ongoing proxy war is carefully
considered and the ending of assistance to Afghan refugees is shown to be highly problematic in
humanitarian terms. Finally, discussion considers the broader implications of the conclusions drawn
from the Afghan context. […]
The Afghan context
International humanitarian assistance to Afghans forcibly displaced by the Soviet invasion of Afghanistan
in December 1979 was targeted at ‘refugees’. Research has suggested that this label of social identity is
highly problematic and contains a number of legal and theoretical omissions. It misses the socioculturally nuanced Afghan and Pakistani contexts into which aid was delivered. Discussion has also
demonstrated that the decision to provide assistance to Afghans in Pakistan was an inherently political
act reflecting Cold War priorities.
The presence of Afghan refugees in North West Frontier Province is argued to have served a number of
geopolitical agendas. For Pakistan, these forced migrants were used to defuse demands for an
independent Pushtunistun and as a bargaining tool for leverage on the West. For the United States the
Afghan refugees were a vital strategic buffer against Soviet expansionism, and part of a broad antiCommunist strategy. In many ways US aid was an extension of the war effort against the Soviet Union,
and Afghanistan a bleeding wound leading to the ultimate demise of the USSR. The politicization of
Afghan refugees was achieved by only granting refugee status to individuals who were members of
Afghan resistance parties. This paper has argued that aid itself was a political instrument, utilized to
further military campaigns. It was, however, important for aid to be seen to be humanitarian so that the
underlying geopolitical agendas could remain obscured.
In the post-Soviet era the levels of assistance to Afghan refugees have fallen dramatically. This paper has
demonstrated that there are clear relationships between declining political interest in Afghanistan and
declining amounts of aid to Afghan refugees. These trends are argued to be directly linked to the
enormous repercussions of the collapse of the Soviet Union on the geopolitical priorities of the
international (aid) community. The decision to terminate aid is argued to be a thoroughly geopolitical
act, and donor influence was of paramount importance. Now that the refugees no longer fulfill a
strategic role, there appears to be little concern about them in the West, even with the current interest
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in the rise of the Taliban militia. This paper has demonstrated that UNHCR has altered its priorities in the
post-Cold War era. Even though it claims to be apolitical, it is still bound by the geopolitical agendas of
the donors upon which it is dependent.
While the world community at large may have forgotten Afghanistan, this paper argues that a proxy war
continues to fight out the competing geopolitical agendas of Afghanistan’s neighbours. Afghanistan
retains its strategic significance as it is at the centre of an emerging economic, cultural and social bloc of
non-Arab Islamic nations. The regional powers have been shown to be competing for influence in a
future Afghan government. Hopeful conclusions about the prospects for peace bedevil many accounts of
Afghanistan’s proxy war. This paper eschews such optimistic geopolitical assessments. It is better to hold
a sceptical vision of Afghanistan’s future and be proved wrong, than for over-optimistic expectations of
the chances for peace to be confounded. Afghanistan is likely to remain politically unstable and a source
area of refugees well into the foreseeable future. Ending the proxy war is difficult because attempts to
secure peace involve increased foreign intervention which make the conflict all the more intractable.
The ending of assistance to Afghan refugees has been shown to be tied to attempts to rebuild
Afghanistan as a geopolitical entity. The use of the nation-state as a structure upon which to rebuild
Afghanistan is highly problematic, and clashes with localized power structures. The ending of aid was
also based on the erroneous assumption that peace would settle in Afghanistan. This paper argues that
in humanitarian terms aid has been ended prematurely, given the continued arrival of hundreds of
thousands of Afghans displaced by the ongoing proxy war, and the needs of vulnerable refugees that
remain in Pakistan’s North West Frontier Province. The research for this paper suggests repatriation has
adverse humanitarian consequences but is very important geopolitically.
Broader implications
Aid is a geopolitical instrument and part of the foreign policies of donor states. The importance of
overseas development assistance is argued to lie in the realm of geopolitics rather than officially
proclaimed humanitarian intentions. As the world community enters a post-Soviet era, changes in
foreign aid provision are part of a wider redefinition of donor states’ overall foreign policy priorities or
‘geopolitical codes’ (Grant and Nijman, 1995: 215). This paper has suggested that prospects for
achieving the humanitarian intentions of foreign aid are limited as long as world affairs are orchestrated
by nation states, and the process of providing aid is linked to national geopolitical agendas. It is
important for the academy to look beyond, and theorise alternatives to, the nation-state as the
fundamental unit of geopolitics.
This paper argues that it is important to question whose interests are being served by international
assistance in the context of refugee situations: the host countries, the donors, the assisting agencies or
the recipients. It appears that the NGOs serving refugees are more accountable to their donors than to
their beneficiaries. UNHCR is also donor-dependent and charged with the geopolitical role of ‘defending’
the borders of the world’s growing community of nation states, by ensuring that population movements
across international boundaries are redressed by ‘the preferred solution’ (Ogata, cited in Mitchell, 1995:
3) of repatriation. The imperatives of this geopolitical mandate may ignore the problematic
humanitarian realities of the ‘refugee’ situations UNHCR is attempting to resolve.
The origins of the Afghan ‘refugee crisis’ and the continued conflict in Afghanistan are products of
conflicting geopolitical agendas. It is important to conclude with the understanding that the decisions to
provide and end assistance to Afghan refugees make perfect geopolitical sense but are highly
problematic in humanitarian terms. This paper strongly contests Gorman’s conclusion (Gorman, 1993:
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291) that political and humanitarian objectives ‘must be forged into an ongoing partnership’. As long as
the world community allows the provision of foreign aid to be linked to geopolitics, international
humanitarian and development assistance in refugee contexts will be inconsistent, counterproductive
and highly contradictory.
The number of refugees in the world today is the largest it has ever been. There are estimated to be
about 23 million refugees world-wide and another 26 million internally displaced (Ogata, cited in
Mitchell, 1995: 4). While the number of ‘refugee’ situations requiring international assistance has risen,
the amount of Western overseas development assistance available has fallen to $53 billion, its lowest
figure in the last 23 years (Brown, 1996: 158). As the 1990s come to an end, growing numbers of
‘refugee crises’ are likely to emerge as the nation-state comes under increasing pressure as a viable
geopolitical entity. This will bring the geopolitical decision making behind the provision and termination
of aid into increasing focus, as growing numbers of ‘refugee crises’ stretch increasingly limited aid
resources.
Figaj, Monika (2010), “Who Gets Environmental Aid? The Characteristics of Global Environmental Aid
Distribution,” in Environmental Economics and Policy Studies, Vol. 12, pp. 97-114.
Just as it is important which variables proved significant in the regression, it is also important which
variables amongst the group analyzed did not prove significant. Democracy index, colonial past,
government efficiency index, natural capital index, and Muslim countries are amongst those variables
that do not have a significant explanatory value for the sum of environmental aid allocated. Therefore,
donors were not guided by these variables when distributing aid. However, the results presented in this
article explain 72%–89% of the donor’s environmental aid allocation explaining the amount of funds
given; thus, there is still room for further analysis and possibilities of including new variables. No clear
differences appeared between bilateral and multilateral donors, which may suggest similarities in their
approaches.
From both the regressions, two different patterns emerged. In deciding which country will receive aid,
the poverty–wealth related and environmental variables proved to be significant. This fits into the
donors’ (except GEF [Global Environment Facility]) main mission of poverty alleviation. Environmental
aid is determined within this primary activity. Yet, in determining exact aid amounts, it is the economic
and environmental issues that appeared as significant.
Despite the strong correlation between environmental and economic variables in the linear regression
(FDI, import amounts, CO2 emissions, GEF biodiversity index, number of threatened species, and
environmental vulnerability), it is the economic variables that dominated and had the largest statistical
significance in determining the increase of aid. Hence, donors allocating environmental aid amounts
look not only at environmental issues, but also at economic ones. This is related to the fact that most
environmental aid distributed is in the form of loans, and the funds received need to be paid back by the
recipient government. For that reason the recipient country must be financially viable, hence the
importance of economic indicators in aid distribution.
Environmental aid distribution is not a political issue, because political variables played no role in either
regression output. Therefore, one can assume that environmental issues are separated from wider
political concerns. This study does not confirm previous research results on this topic. However, the
newly added Egypt variable, which is linked to political and national security concerns, did prove to be
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an important determinant for one donor (the USA), because being Egypt was shown to be a very
significant variable. This variable has gained strength since the attacks of September 2001.
For environmental variables, the number of threatened mammals, environmental vulnerability, number
of environmental treaties, environmental sustainability, CO2 emissions, and biodiversity were areas of
special donor concern. These variables are mostly a measurement of the extent of environmental
degradation. Allocating aid based on these indicators is the most fruitful path to fighting environmental
degradation. For all the analyzed donors, at least one environmental variable proved to be significant for
distributing environmental aid and deciding on its amount.
Regional variables were present in all the donor linear regression outputs, but were absent in the logit
outputs. Thus, regions are not the main guide to allocating aid, although they do play a role when
determining the aid amount. Out of the four donors, two (Japan and World Bank) specifi cally focused
on Asia. Non-Asian countries for GEF and Egypt for USA were also statistically significant. Therefore,
environmental aid amounts are regionalized for donors, because each one of them has a geographical
preference.
Fleck, Robert K. and Kilby, Christopher (2001), “Foreign Aid and Domestic Politics: Voting in Congress
and the Allocation of USAID Contracts Across Congressional Districts,” in Southern Economic Journal,
Vol. 67, No. 3, pp. 598-617.
A variety of factors – USAID's promotional literature, anecdotes about political influence, and the simple
correlation between contract spending and congressional votes – suggest links between the geographic
distribution of USAID contract spending within the United States and support for foreign aid in Congress.
Yet econometric analysis, based on data for all USAID contracts active during the 104th Congress,
reveals only weak links. Once we control for differences in contractor qualifications across districts, the
level of contract spending does not depend substantially on the representative's support for foreign aid
or other political variables. Although USAID activities do provide “direct economic benefits” to “almost
every state in the Union,” there is little indication that USAID systematically manipulates the allocation
of contracts in an attempt to garner political support. Furthermore, the level of contract spending in a
representative’s home district has at most a small effect on his or her support for aid (except in the case
of Beltway Republicans).
The larger question raised by this research is whether domestic economic benefits significantly increase
support for foreign aid programs. Although we explored only one dimension of the issue, we find little
evidence that the economic benefits of aid translate into support for foreign aid in Congress. Traditional
pork-barrel politics, which link votes to the distribution of benefits across districts, are not apparent in
the data. If the commercial benefits of foreign aid programs have little effect on support for aid, a
coalition that substitutes commercial interests for waning national security concerns is unlikely to win
increased funding. Yet the costs of such a coalition may be high. Catering to commercial interests is
likely to reduce development effectiveness and, especially in the long run, undermine public support
(Jay and Michalopoulos 1989; Zimmerman and Hook 1996). In sum, trading away quality is unlikely to
obtain a substantially higher quantity of foreign aid.
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Fleck, Robert K. and Kilby, Christopher (2006a), “How Do Political Changes Influence U.S. Bilateral Aid
Allocations? Evidence from Panel Data,” in Review of Development Economics, Vol. 10, No. 2, pp. 210–
223.
Our analysis of panel data from 1960 to 1997 indicates that several aid allocation criteria—development
concerns, commercial importance, strategic importance, and democratization—play a role in the
allocation of US bilateral aid. Moreover, aid allocation criteria differ systematically and substantially
between liberal and conservative regimes. Under liberal regimes, the distribution of US bilateral aid
more closely mirrors that of small donors known for their development-oriented and humanitarian
approach to aid. Commercial concerns have greater weight under conservative regimes than under
liberal regimes. Specifically, under conservative Congresses (relative to liberal Congresses), the US
allocates aid in a manner that appears more mercantilist-oriented. Conservatives appear to place
greater weight on whether the US exports much to, and does not import much from, aid-receiving
countries.
These findings contribute directly to the understanding of the domestic politics of US aid and, by doing
so, provide new insight into the prospects for reforming aid policy. Over the last decade, a vigorous
debate over how to improve aid effectiveness has led to calls by aid agencies and scholars for a policy of
ex post selectivity—less funding for traditional projects and structural adjustment programs, more
general budgetary support for developing country governments that have already demonstrated
improved governance (World Bank, 1998). Proponents of this position attribute the failure of traditional
aid programs at least in part to lax donor enforcement: even when recipients flout aid conditions,
donors often continue making disbursements and even new commitments (Mosley et al., 1995). Ex post
selectivity may be able to solve this enforcement problem (because aid flows will not occur until after
reform takes place), but only if donors consistently reward desired changes in developing countries. In
other words, selectivity can work only if donors can credibly commit to the policy. Yet if donor policy
changes with the political cycle—and in the US it apparently does—the ability for the donor to make a
credible commitment is questionable.
Understanding the aid allocation process is also central to the debate over the effect of aid on growth.
The fact that development aid is targeted toward countries with poor records of growth has long
clouded measurement of the link between aid and growth. Recent attempts to solve this potential
endogeneity problem make use of factors that influence aid allocations yet do not depend on recipient
need; the most notable of these factors stem from the political motive for aid (Boone, 1996; Burnside
and Dollar, 2000). This debate remains contentious (Easterly et al., 2004; Hansen and Tarp, 2001;
Roodman, 2004), and a more fully developed model of the political economy of aid allocation would
allow more precise estimation of the effects of aid. Our findings are a step toward such a model.
Furthermore, our results point to an important caveat for those attempting to instrument for aid with
political variables: the political circumstances in donor countries are likely to affect not only the
amounts of aid to developing countries, but the motivation for providing that aid—including the extent
to which aid is focused on reaching development objectives. Thus, political variables may instrument, in
part, for the purpose of aid. And the purpose of aid will likely influence the effects of aid on
development.
Fleck, Robert K. and Kilby, Christopher (2006b), “World Bank Independence: A Model and Statistical
Analysis of US Influence,” in Review of Development Economics, Vol. 10, No. 2, pp. 224-240.
136
The empirical analysis, motivated by a model of agency-donor interaction, yields results largely
consistent with significant US influence over World Bank lending, but through evolving rather than
stable relationships. US interests in and policy toward the World Bank change frequently with
presidential administrations and with economic and political circumstances.
Taking the 1968 to 2002 period as a whole, two measures of US interests have a significant and robust
link with World Bank lending allocations. The first relates to trade. While there is no apparent link with
world trade, the differential impact of purchasing of US exports is positive: ceteris paribus, the greater
the share of US exports that a country purchased, the more funds the country got from the World Bank.
This is consistent with the political economy of trade in the US, which favors exports over imports. The
second significant measure may be interpreted as geopolitical. After including a number of controls for
development concerns, we find countries favored in US bilateral aid allocations also received a
disproportionate share of World Bank funds.
These aggregate results mask significant variation across the period, both in US policy toward the World
Bank and in underlying US interests. From the Johnson administration through the first Bush
administration, the link with US exports remains positive and, except in Nixon’s first term, significant.
The first Clinton administration saw a change with a negative though insignificant relationship, reflecting
large aid flows to transition economies which had no established trade ties with the US. The years since
then suggest this may be a transitory pattern with trade interests reemerging as a significant influence.
The relative consistency of the trade variable, as compared to the financial flow indicators, mirrors the
more long term nature of trade ties.
The link between US aid and World Bank lending is more variable; we would expect this since bilateral
and multilateral aid are distinct foreign policy tools. In many situations when a powerful donor wishes to
fund a recipient country, it would provide its own funds and pressure the multilateral agency to
supplement these. However, in some cases, the logic is reversed, for example when the donor cannot
publicly support the recipient. This may explain why US bilateral aid enters positively and significantly in
the Ford, Carter, and first Clinton administrations, but negatively and significantly in the second Reagan
administration.
Taken as a whole, the evidence points to US influence over the World Bank, influence used in pursuit of
US economic and strategic interests. These links are substantial though not overwhelming.11
Nonetheless, when a multilateral organization serves the narrow interests of a powerful member, its
unique character—its legitimacy—is necessarily eroded. Equally, the ability to commit credibly to future
policies is reduced as donor objectives change with its domestic political cycle. This poses a critical
problem for the World Bank and its current pursuit of selectivity. The policy of ex post conditionality
promises substantial funding for developing countries governments only after reforms have taken place.
Governments’ willingness to do this depends heavily on faith in the reform package and the implicit
promise of future loans, that is, on the World Bank’s legitimacy and credibility.
Fleck, Robert K. and Kilby, Christopher (2010), “Changing Aid Regimes? US Foreign Aid from the Cold
War to the War on Terror,” in Journal of Development Economics, Vol. 91, pp. 185-197.
The advent of the War on Terror and the leadership of the George W. Bush administration have clearly
reshaped and refocused many aspects of U.S. foreign policy. There is considerable concern in the
development community that the renewed importance of foreign aid as a geopolitical tool has
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undermined the development orientation of aid. One notable possibility is a re-emergence of Cold War
practices, with less emphasis on need and hence declining funds for poor but geopolitically unimportant
countries. In this paper, we analyze changes in aid funding from the Cold War to the War on Terror,
assess the impact of these changes on aid to poor countries, and explore new trends in U.S. aid
allocation policies.
The current decade began with a shift from a liberal to a conservative government, followed by a huge
increase in foreign aid. Our analysis of the overall U.S. aid budget over a longer time horizon (1955 to
2006), however, finds that conservative governments typically provide substantially less economic aid
than do liberal governments, all else equal. This suggests that a simple comparison of budget levels
understates the effect of the War on Terror and underscores the enormous impact of the War on Terror
on aid.
But what about the allocation of this larger budget? Does the War on Terror signal a return to Cold War
aid practices – less funding for poor countries, less emphasis on need – as some scholars have suggested?
According to our evidence, as the overall U.S. economic aid budget has increased with the War on Terror,
so too has U.S. aid to poor countries of little immediate geopolitical importance. Indeed, since 1996
expected aid to lower income countries has increased steadily. But there has been an important shift in
another aspect of U.S. aid allocation, one that coincides precisely with the George W. Bush
administration taking office and the start of the War on Terror. For the 35 years preceding the War on
Terror, there was a clear upward trend in the weight given to need in the allocation of aid to core
recipients. In the years since, the weight given to need has decreased rapidly and steadily. This sharp
reversal is not well explained by other developments, such as the shift toward greater selectivity in aid
allocation. With the general increase in aid, thus far the decreased weight on need has merely slowed
the growth of U.S. aid to poorer countries rather than actually reducing aid levels. But if this policy shift
away from need outlives the general increase in the aid budget, U.S. aid to the poorest developing
countries will decrease.
Forsythe, David R. (1989), “Humanitarian Assistance in U.S. Foreign Policy,” in Loescher, Gil J. and
Nichols, Bruce (eds.), pp. 63-90, The Moral Nation: Humanitarianism and US Foreign Policy Today,
Notre Dame: University of Notre Dame Press.
Some observers would like to return to a system of international humanitarian assistance which is
essentially private.52 This view reflects and erroneous understanding of the situation. The reason that
governments and intergovernmental organizations became involved was that the PVOs acknowledged
the lack of financial and commodity resources to handle the problems, and asked the public authorities
for aid. It is only governments, especially the U.S. government, which have access to money and
commodities in sufficient quantity to respond to the sizeable humanitarian problems arising principally
out of the developing countries. Particularly from the standpoint of donations of all types, but also at
times from the standpoint of logistical support, governments must necessarily play a central role in
international humanitarian assistance.
The U.S. government is likely to remain directly involved in all phases of international humanitarian
relief, whether it is disaster relief centered around food, war relief, or refugee relief. The lead agencies
like the ICRC and the UNHCR depend on that support, as do the charitable PVOs themselves. There is
strong support for an active humanitarian assistance program in Congress, with some elements trying to
increase the level of funding despite general budgetary and economic problems.53 With considerable
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public support, Congress has protected the moral and humanitarian aspects of the Food for Peace
Program. There is increased competency in AID and its Office of Disaster Relief, although questions
remain about the sufficiency of ties to intelligence sources, proper staffing, and clarity of priorities.
NGOs like the ICRC, as well as IGOs like the UNHCR and the World Food Program, remain important to
the United States as lead agencies and focal points for action. Many charitable PVOs are still seen as
acceptable, flexible, knowledgeable conduits for assistance. The task for the U.S. is to find the proper
mix of public and private agencies that will provide the best and most rapid delivery of assistance to
those civilians in exceptional need.
The United States has shown over the years that there can be an assistance policy that is primarily
driven by humanitarian concerns, even if at times strategic and economic considerations of an
expediential sort get mixed in.54 Some of this is inevitable in an imperfect world. The use of multilateral
agencies and PVOs can help restrain this sort of influence, so that, at least at the margins of its foreign
assistance program, the United States can claim without controversy to be a moral nation. So much the
better is this form of morality turns out to be expediential as well.
Fukuyama, Francis (2004), “The Imperatives of State Building,” in Journal of Democracy, Vol. 15, No.2,
pp. 17–31.
State-building—the creation of new governmental institutions and the strengthening of existing ones—
is a crucial issue for the world community today. Weak or failed states are close to the root of many of
the world’s most serious problems, from poverty and AIDS to drug trafficking and terrorism. While we
know a lot about state-building, there is a great deal that we do not know, particularly about how to
transfer strong institutions to developing countries. We know how to transfer resources, people, and
technology across cultural borders. But well-functioning public institutions require certain habits of
mind, and operate in complex ways that resist being moved. We need to focus a great deal more
thought, attention, and research on this area.
The idea that building up, rather than limiting or cutting back the state, should be at the top of our
agenda may strike some as odd or even perverse. After all, the dominant trend in world politics for the
past generation has been the critique of “big government” and the attempt to move activities from the
state sector to private markets or to civil society. Yet particularly in the developing world, weak,
incompetent, or nonexistent government has been and continues to be a source of severe difficulties.
For example, the AIDS epidemic in Africa has infected more than 25 million people and will take a
staggering toll of lives. AIDS can be treated, as it has been in the developed world, with anti-retroviral
drugs. There has been a strong push to provide foreign assistance for AIDS medicines or else to force
pharmaceutical companies to permit the marketing of cheaper forms of their products in Africa and
other parts of the Third World.
While part of the AIDS problem is a matter of resources, another important aspect is the government
capacity to manage health programs. Anti-retroviral drugs are not only costly, but complicated to
administer. Unlike one-shot vaccines, they must be taken in complex doses over long periods of time;
failure to follow the proper regimen may actually make the epidemic worse by allowing the HIV virus to
mutate and develop drug resistance. Effective treatment requires a strong public-health infrastructure,
public education, and knowledge about the epidemiology of the disease in specific regions. Even if the
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resources were there, the institutional capacity to treat the disease is lacking in most countries in subSaharan Africa (though some, like Uganda, have done a much better job than others). Dealing with this
epidemic thus requires helping afflicted countries develop the institutional capacity to use what
resources they may acquire.
Lack of state capacity in poor countries has come to haunt the developed world much more directly. The
end of the Cold War left a band of failed or weak states stretching from the Balkans through the
Caucasus, the Middle East, Central Asia, and South Asia. State collapse or weakness had already created
major humanitarian and human rights disasters with hundreds of thousands of victims during the 1990s
in Somalia, Haiti, Cambodia, Bosnia, Kosovo, and East Timor. For a while, the United States and other
countries could pretend that these problems were just local, but the terrorist attacks of September 11
proved that state weakness constituted a huge strategic challenge as well. Radical Islamist terrorism
combined with the availability of weapons of mass destruction added a major security dimension to the
burden of problems created by weak governance. In the wake of military actions taken since 9/11, the
United States has taken on major new responsibilities for nation-building and state-building in
Afghanistan and Iraq. Suddenly the ability to shore up or create from whole cloth missing state
capabilities and institutions has risen to the top of the global agenda and seems likely to be a major
condition for the possibility of security in important parts of the world. Thus state weakness is both a
national and an international issue today of the first order.
Goldstein, Judith and Keohane, Robert 0. (eds.) (1993), Ideas and Foreign Policy: Beliefs, Institutions,
and Political Change, Ithaca, N.Y.: Cornell University Press.
Goldstein, Judith and Keohane, Robert 0. (1993), “Ideas and Foreign Policy: An Analytical Framework,”
in Goldstein, Judith and Keohane, Robert 0. (eds.), Ideas and Foreign Policy: Beliefs, Institutions, and
Political Change, pp. 3-30, Ithaca, N.Y.: Cornell University Press.
This book is about how ideas, which we define as beliefs held by individuals, help to explain political
outcomes, particularly those related to foreign policy. As social scientists we are interested in using
empirical evidence to evaluate the hypothesis that ideas are often important determinants of
government policy. Our argument is that ideas influence policy when the principled or causal beliefs
they embody provide road maps that increase actors’ clarity about goals or ends-means relationships,
when they affect outcomes of strategic situations in which there is no unique equilibrium, and when
they become embedded in political institutions.
For millennia philosophers and historians have wrestled with the issue of the role of ideas in social and
political life, and for as long as social sciences has existed its practitioners have debated these questions.
In many ways this volume is an extension of the approach first enunciated by Max Weber. Like Weber,
we do not argue that ideas rather than interests (as interpreted by human beings) move the world.
Instead, we suggest that ideas as well as interests have causal weight in explanations of human action.
If the study of impact of ideas on policy is so old, why revive it now? Simply because in modern political
economy and in international relations, the impressive elaboration of rationalist explanations of
behavior has called into question old assumptions about whether the substantive content of people’s
ideas really matters for policy. To many economists, and to political scientists captivated by their modes
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of thinking, ideas are unimportant or epiphenomenal either because agents correctly anticipate the
results of their actions or because some selective process ensures that only agents who behave as if
they were rational succeed. In such functional arguments, effects explain causes through rational
anticipation or natural selection.1 The extreme version of this argument is that ideas are just hooks:
competing elites seize on popular ideas to propagate and legitimize their interests, but the ideas
themselves do not play a causal role.2 These interests may be strictly material – in many economic
models, individuals are wealth-maximizers – but they also may encompass broader utility functions, in
which such values as status and power are included. Whatever the details, in this rationalist view
interests are given and logically prior to any beliefs held by the actors.
The most widely accepted systemic approaches to the study of international relations, realism and
liberal institutionalism, take rationalist models as their starting points. Both realism and institutionalism
assume that self-interested actors maximize their utility, subject to constraints. In such models, actors’
preferences and causal beliefs are given, and attention focuses on the variants in the constraints faced
by actors.3 More analysts who rely on such approaches have relegated ideas to a minor role.4 […]
Three Types of Beliefs
At the most fundamental level, ideas define the universe of possibilities for action. As John Ruggie has
pointed out, “fundamental modernist concepts such as market rationality, sovereignty, and personal
privacy would not have been comprehensible before the development of appropriate terms of social
discourse.”13 These conceptions of possibility, or world views, are embedded in the symbolism of a
culture and deeply affect modes of though and discourse. They are not purely normative, since they
include views about cosmology and ontology as well as about ethics. Nevertheless, world views are
entwined with people’s conceptions of their identities, evoking deep emotions and loyalties. The world’s
great religions provide world views; but so does the scientific rationality that is emblematic of modernity.
Ideas have their broadest impact on human action, when they take the form of world views. The world’s
major religions, for instance, have deeply affected human social life in a variety of ways and across
millennia.14 Similarly, it has often been argued that new conceptions of sovereignty led, at the Peace of
Westphalia in 1658, to a new international order, dominated by independent states.15 Still, the
connections between world views and shifts in material power and interests are complex and in need of
investigation. They do not all run in one direction.
Of the major ideas discussed in this volume, none – neither human rights nor sovereignty not Stalinism –
would have made any sense in those premodern societies in which people’s lives were governed by
notions of magic or fate. Indeed, all of the chapters in this book take for granted a world view according
to which human beings are assumed to be active agents in the construction of their own destinies. For
traditionalist or religious fundamentalist societies even today, the individualistic and secular scientific
premises of this world view remain intellectually and morally alien. Since all of the subjects discussed in
this volume have been profoundly affected by modern Western world views, and our authors all share
this modernist outlook, we can say relatively little about the impact of broad world views on politics.
Only John Ferejohn and Stephen Krasner, writing about events in the seventeenth century, explicitly
focus on changes that appear to have been affected by the intellectual movement toward individualistic,
human-centered thinking. Understanding the impact of world views on general politics or foreign policy
would require a broader comparative study of cultures, such as that on which Hedley Bull was engaged
at the end of his too-brief career.16
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Our second category of ideas, principled beliefs, consists of normative ideas that specify criteria for
distinguishing right from wrong and just from unjust. The views that “slavery is wrong,” that “abortion is
murder,” and that human beings have the “right of free speech” are principled beliefs. Principled beliefs
are often justified in terms of larger world views, but those world views are frequently expansive
enough to encompass opposing principled beliefs as well. For instance, although many opponents of
slavery justified their arguments with references to Christianity, Christianity had tolerated slavery for
almost two millennia. Principled beliefs mediate between world views and particular policy conclusions;
they translate fundamental doctrines into guidance for contemporary human action. Millions of people
have died on behalf of their principled beliefs; many people now alive are willing to do so. The
revolutions of 1989 in Eastern Europe attest to the continuing vibrancy of principled beliefs in politics:
people risked their lives in mass demonstrations, although material self-interest alone would have led
them to be “free riders.”
Changes in principled beliefs, as well as changes in world views, have a profound impact on political
action. In Chapter 6, for example, Kathryn Sikkink argues that the killing, torture and maltreatment of
millions of innocent people during World War II led both Europeans and Americans to believe that
human rights should properly be a matter for international agreement and regulation, not shielded from
international surveillance by the doctrine of sovereignty. The effects on policy were profound, since new
ideas on human rights conditioned the definition of nations’ interests. “The adoption of human rights
policies,” she suggests, “represented not the neglect of national interest but a fundamental shift in the
perception of long-term national interests.”
The ideas in a third category, causal beliefs, are beliefs about cause-effect relationships which derive
authority from the shared consensus of recognized elites, whether they be village elders or scientists at
elite institutions. Such causal beliefs provide guides for individuals on how to achieve their objectives.
Scientific knowledge may reveal how to eliminate smallpox, for instance, or how to slow down the
greenhouse effect in the earth’s atmosphere. Similarly, the Hungarian and Polish revolutions in the fall
of 1989 showed people in East Germany and Czechoslovakia that unarmed mass protests could bring
down long-standing repressive governments. Under such conditions, the efficacy of individual action
depends on support from many other people, and therefore on the existence of a set of shared beliefs.
Causal beliefs imply strategies for the attainment of goals, themselves valued because of shared
principled beliefs, and understandable only within the context of broader world views.
Changes in the conceptualization of cause-effect relationships take place more frequently and more
quickly than do changes in either world views or principled beliefs. Thus specific policy shifts can often
be traced to such changes, particularly when technical knowledge is expanding. The foreign policies of
the United States and many other countries with respect to regulation of the production of
chlorofluorocarbons (CFCs), for example, changed dramatically between 1985 and 1990, largely in
response to new scientific evidence about the hole in the atmospheric ozone layer over Antarctica.
Policy shifted because scientific models linked ozone loss to cancer and climate change, and attributed
much of it to increased levels of CFCs in the atmosphere.17 John Ikenberry’s discussion of the importance
of monetary theory in the postwar economic settlement (Chapter 3) provides another example of how
causal ideas –here ideas about the functioning of the economy – influence policy outcomes. Similalry,
Nina Halpern argues in Chapter 4 that Stalinist economic ideas, which postulated a radically different set
of relationships between market participants, became a guide for economic development in Eastern
Europe.
Our categorization of beliefs is clearest in the abstract; in social life all three aspects of ideas may be
linked. Doctrines and movements often weave conceptions of possibilities and principled and causal
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ideas together into what may seem to be a seamless web. The “epistemic communities” studied by
Peter Haas and other scholars, for example, are constituted by knowledge-based experts who share
both cause-effect conceptions and sets of normative and principled beliefs.18 Nevertheless, it is
worthwhile for purposes of causal analysis to distinguish ideas that develop or justify value
commitments from those that simply provide guidance as to how to achieve preferred objectives.19
The Impact of Ideas on Policy
The central issue of this volume concerns causality: Do ideas have an impact on political outcomes, and
if so, under what conditions? The most egregious error that proponents of the role of ideas have made
is to assume a causal connection between the ideas held by policy makers and policy choices. Ideas are
always present in policy discussions, since they are a condition for reasoned discourse. But if many ideas
are available for use, analysts should not assume that some intrinsic property of an idea explains its
choice by policy makers. Choices of specific ideas may simply reflect the interests of actors. It is crucial
for anyone working on ideas and policy to recognize that the delineation of the existence of particular
beliefs is no substitute for the establishment of their effects on policy. Advocates of an ideational
approach to political analysis must begin by identifying the ideas being described and the policy
outcomes or institutional changes to be explained. We must also provide evidence about the conditions
under which causal connections exist between ideas and policy outcomes.
In general, we see ideas in politics playing a role akin to that enunciated by Max Weber early in this
century: “Not ideas, but material and ideal interests, directly govern men’s conduct. Yet very frequently
the ‘world images’ that have been created by ideas have, like switchmen, determined the tracks along
which action has been pushed by the dynamic of interest.”20 Ideas help to order the world. By ordering
the world, ideas may shape agendas, which can profoundly shape outcomes. Insofar as ideas put
blinders on people, reducing the number of conceivable alternatives, they serve as invisible switchmen,
not only by turning action onto certain tracks rather than others, as in Weber’s metaphor, but also by
obscuring the other tracks form the agent’s view.21 […]
Conclusion
Ideas can be categorized as world views, principled beliefs, and causal beliefs. They can have impacts on
policy by acting as road maps, helping to cope with the absence of unique equilibrium solutions, and
becoming embedded in durable institutions. Policy changes can be influenced by ideas both because
new ideas emerge and as a result of changes underlying conditions affecting the impact of existing ideas.
Ideas matter, as a result of a system of interacting multiple causes of which they are a part. […]
Goldstein, Markus P. and Moss, Todd J. (2005), “Compassionate Conservatives or Conservative
Compassionates? US Political Parties and Bilateral Foreign Assistance to Africa,” in Journal of
Development Studies, Vol. 41, No. 7, pp. 1288-1302.
These findings explicitly do not comment on either the utility of US aid or its impact on development in
Africa. We do not consider modalities of aid delivery or implementation systems, which are likely to be
more tied to developmental outcomes than are overall aid flows. Neither does this article deal at all
with the disaggregation of aid, which recognises that not all ‘aid’ is the same. A dollar given to former
President Mobutu of Zaire is clearly not expected to have the same developmental impact as a dollar
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given to a successful Ugandan education project. Lastly, we have used only one limited proxy of
engagement with Africa, bilateral aid flows, which might not be the best such measure.
Nonetheless, these findings do demonstrate that total real US assistance to Africa has been rising over
time. The data clearly show that the amount of aid or the relative importance of Africa is not affected
solely by which party occupies the White House. Rather, our results show that the relationship between
the President and Congress is what matters; when both are controlled by the same party, aid to Africa is
higher, when it is split, aid is lower – both in terms of absolute flows and as a percentage of total aid.
Lastly, at least in terms of real US aid flows, concerns over possible increased African marginalisation
with the end of the Cold War have not materialised.
Goldman, Marshall (1967), Soviet Foreign Aid, New York: Praeger.
Chapter 11: Conclusion (pp. 185-201)
Although Soviet economic relations with the less developed countries have varied according to time,
place, and politics, certain conclusions may be drawn by posing four major questions: What has been
the Russian purpose in undertaking economic relations with the less developed countries? What has the
Soviet Union accomplished with its aid and trade programs? What has it failed to do? What lessons can
Americans draw from the Soviet experience?
The Reasons for Soviet Aid and Trade
The Russians have had many reasons for undertaking economic relations with the less developed
countries. Their motives are not very different from those of any large country. In fact, the Soviet
experience with the less developed countries of the world differs only in emphasis from that of the
United States. This means, therefore, that the motives are mixed and not entirely consistent.
1. One of the earliest stimuli for Soviet interest in less developed nations was the desire and need
to maintain trade relations. In some cases, these areas possessed vital raw materials. In the years
following World War II, Russia relied heavily on the East European countries for coal, oil, uranium, and
other commodities. The technologically more advanced countries, such as Czechoslovakia and East
Germany, also supplied the Soviets with machinery. Eventually, the Russians cultivated trade relations
with the non-Communist developing countries as well; even here, trade often preceded aid and
diplomatic activity. Through such trade, the Russians were able to obtain rubber, cotton, sugar, cocoa,
and coffee.
Before long, the Russians had other reasons for promoting trade. By the late 1950’s, the export side of
trade became almost as important to the Russians and their East Europeans allies as the import side. As
Communist Europe passed through the initial agony of industrialization, it found that much of its
industrialized capacity had been overdeveloped in terms of basic heavy industry and unsophisticated
consumer goods. After a time, many markets in Eastern Europe and the U.S.S.R. had become saturated.
When trade relations with China were drastically curtailed in 1960, the problem became especially
serious, for China had been a major market for such products. Since the goods affected were not readily
salable in the more advanced countries of the West, it became necessary to cultivate the markets of
developing countries.
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With few exceptions, however, the newly developing areas continued to rely on the West for
merchandise and machinery. In some cases, the Soviet Union and East Europe were able to penetrate
such markets by entering into all-encompassing barter agreements. This approach was successful in the
case of countries that experienced a drop in the price of their primary export commodities. In the
absence of such a barter arrangement, it was usually very difficult for Communist countries to make any
inroads. About the only other way local businessmen in the developing countries could be weaned from
the habit of trading with the West was through the use of credit or the inducement of repayment in soft
currency. Hence, for the Soviet Union and its allies, aid became a very important means of displacing
Western merchandise from its traditional markets. At the same time, it provided an outlet for excess
goods produced by Communist Europe’s industry. In the words of a senior Polish trade official. “The
West no longer has a monopoly on foreign trade. But to compete, the Communist countries, especially
the smaller ones, have to provide the sweetener of credit. Without credit the developing countries
would naturally buy from the West. This is important to Poland, since we now have to worry about
securing markets for our own domestic industry. Our heavy industrial sector is overbuilt and we are now
unable to sell all we produce within Poland or even to other Communist countries.”
In 1965-66, the Russians openly began to revert to the imperialist position that foreign aid should be
used to stimulate the flow of raw materials to the Soviet Union. Articles in Voprosy Ekonomiki of
November, 1965, February, 1966, and April, 1966, argued that Russian aid should be channeled so that it
promoted the flow of tin, copper, zinc, aluminum, oil, rubber, iron ore and cotton to the Soviet Union.
2. A second motive for foreign aid has nothing to do with conventional commercial considerations.
For some Russians, just as for some Americans, the prime motivation for allocating one’s own resources
for the benefit of another country is a humanitarian one. Helping someone poorer that oneself has
always appealed to man’s nobler instincts. Moreover, many Russians believe that the countries in Africa,
Asia, and Latin America are poor today because of their exploitation by the capitalistic West. Therefore,
even though their own country is relatively poor, the Russians feel they have an obligation as
Communists and human beings to facilitate the industrialization of these areas.
The Russians had much the same feeling about China until the late 1950’s. China, too, had been
plundered by the imperialists – including Czarist Russia. As a consequence, the Russian made a sincere
effort in the early 1950’s to provide economic aid. In terms of present Russian capabilities, Soviet aid to
China may not appear to have been so generous, but in relation to Soviet potential at the time it was a
major effort and undoubtedly reflected Russian compassion for the poverty of China.
3. Perhaps the most important consideration underlying Soviet actions is the one of political selfinterest. It can be argued that all Soviet economic relations with the less developed countries are
subservient to political calculations – whether or not an action will advance the interests of the U.S.S.R.
It is only when confronted with pressure in the form of unrest, as in Europe in 1956, or competition for
prestige or influence, as in India, that the Russian will respond with any meaningful help.
In evaluating Soviet motives, it would be an oversimplification to assert that a particular decision was
made solely political, economic, or humanitarian reasons. Certainly behind every action there are mixed
motives. It is true, however, that the U.S.S.R.’s relations with its satellites until 1956 were governed by a
determination to promote Soviet national interests and to take as much out of Eastern Europe as
possible. All other considerations were secondary. Stalin felt that the cause of world Communism could
best be served be reconstructing and strengthening the U.S.S.R. and by maintaining tight control over
Eastern Europe and China. The growth and fortification of the Soviet bloc in relation to the United States
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and the NATO countries was viewed as an urgent necessity. The best way to assure such a goal was to
promote the development of a strong Soviet state.
In the mid-1950’s, as the field of East-West contention shifted to the non-Communist world, the
Russians sought to increase their prestige and well-being by making inroads in areas long under the
influence of the United States and its West European allies. As a challenger of the status quo, the
Russians had to adopt a much more generous policy than was necessary in Eastern Europe. Wherever
possible, the Russians encouraged anticolonial sentiment and the formation of independent states. It
was anticipated that ultimately these governments would be transformed into Communist regimes – the
goal foreseen by Lenin and others who argued that the road to London and Paris lay through Asia and
Africa. Soviet trade and aid could help to produce this desired result.
The Russians soon found, however, that it was often much wiser, at least in the short run, to settle for
independent by anticolonial governments in the Afro-Asian bloc than for Communist governments. In
the case of the Communist regime in Cuba, the Russians discovered that supporting Castro was very
costly. The Russians simply lacked the necessary materials and logistical facilities. With a nonCommunist but anticolonial regime, the Russian could provide whatever aid they though appropriate
and then watch as the Western countries paid the bulk of the bills but continued to face the wrath of
the embittered new nations. In this way the Russians could have their cake without having to assume
complete responsibility for training and supplying the cooks. While gaining national prestige and
appreciation for their foreign aid, the Russians could wait contentedly fort the Communist revolution
they were confident would come one day – when they would be better able to support it.
It was not too long, however, before it became apparent that furthering Russian national prestige
sometimes ran at cross purposes with the long-range goal of spreading international Communism. To
the extent that Soviet foreign aid did in fact facilitate the industrialization of developing countries, and
to the extent that these countries became economically viable, a Communist revolution became less
likely. While the Aswan Dam brought immense international prestige for the Soviet Union, there was no
satisfactory answer for those who asked what, if anything, the millions of rubles spend on the dam had
done for the Communist movement in Egypt. Such questions became especially embarrassing when
Nasser decided to jail members of the local Communist Party. More than anything else, such actions by
aid-receiving countries highlighted the conflict between the national self-interest of the Soviet
government and its commitment to revolution and the spread of Communism. This was especially
disturbing to those in the Communist movement who resented the fact that the Russians usually
subordinated the international movement to purely national aims. Thus in Latin America, the Russians
extended official diplomatic recognition to Eduardo Frei’s government in Chile at the same time that
Fidel Castro was calling for a revolt in the country. Castro’s supporters charged that such “Soviet actions
in Chile and Brazil hold back the struggle for liberation.”1 These activities also upset the Chinese, who
seized upon such dilemmas to embarrass and attack the Russians.
As the feud between China and the Soviet Union intensified, foreign aid was used for a new political
purpose: both countries used it to increase their national prestige at the other’s expense. Although both
were still anxious to outperform the NATO countries, they were often more concerned about competing
with each other. The climax of this competition occurred prior to the cancellation of the second
Bandung Conference in Algeria, which after many earlier postponements was scheduled for June, 1965.
A comparison of the aid commitments of both countries for the months preceding this meeting indicates
how much like a poker game the foreign aid negotiations had become. (See Table XI-I.) Numerous offers
of long-term credit were given in the hope that the donor would thereby gain support for either the
inclusion or the exclusion of the Russians at the forthcoming conference. These loans in turn were
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generally met by counterbids from the other country. In Cambodia and Algeria, the counterbids were
followed by yet a third offer. At this stage, neither the Russians nor the Chinese appeared to be seriously
interested in the furtherance of international Communism; behind the ideological camouflage it was
essentially a question of Soviet national interest versus Chinese national interest.
What Has Soviet Aid Accomplished?
The purposes of Soviet aid, then, are complex, although generally not much different from those of
other providers of foreign aid, but what has this foreign economic program accomplished? Russia’s
efforts in Eastern Europe left those countries in an extremely poor condition. Even though the Russians
tried to redeem themselves after 1956, it was too late to remedy the basic wounds and fractures that
will pain those countries for years to come. In China and the neutralist world, Russian efforts have been
much more constructive. Undoubtedly, their foreign aid program has won them numerous friends and
increased their international prestige. While there is much to be criticized, on the whole the Russians
have tried to promote economic growth in the non-Communist countries they have aided. No country in
Africa, Asia, or Latin America is poorer today because of its experience with the U.S.S.R. (Some countries,
such as China, Cuba, Guinea, Indonesia, and Ghana, may have been their own worst enemies, but the
Russians cannot be blamed for this.) Most neutralist countries are considerably better off because of
Russian economic help. This pertains especially to those countries where military purchases from the
Soviet Union have been at a minimum and where political involvement with the U.S.S.R. have been
circumspect.
With few exceptions, the Russians have stressed basic industrial projects. With Soviet assistance, new
industries have been built at an astonishing rate. At times, excessive enthusiasm on all sides has led to
the creation of over-ambitious projects, but this should not detract from the basic contributions which
have been made. The Russians seem to have a knack for the spectacular. Much of the Soviet success has
been due to concentrating on certain key projects, which are generally industrial in nature. These major
impact projects not only excite the imagination, but result in productive and visible monuments. The
workmanship and administrative efficiency that go into these showpieces are often more impressive
than those in the U.S.S.R. itself. On occasion, the Russians have also been able to suggest improvements
in already projected plans; in the case of the Aswan Dam, their suggestions saved Egypt considerable
domestic and foreign currency. The Russians are also to be commended for training native technicians
and turning over to them the operation of projects. In addition to on-the-job training, the Russians have
invited large numbers of foreigners to the U.S.S.R. for training in Soviet schools. On occasion, such
policies have backfired; native technicians have failed to perform properly; and the Russians have been
criticized either for poor training or for poor quality of equipment. Nevertheless, their efforts deserve
praise.
The successful Soviet projects are also distinguished by the efficiency and flexibility of Soviet
administrative procedures. When a project is singled out for priority handling, the full resources of the
Soviet Union are put behind it. The Bhilai steel mill was considered to be as important as any steel mill in
the Soviet Union, and Soviet specialists in the field had authority to make decisions without referring to
Moscow. When it is necessary to obtain a decision in the U.S.S.R. about a priority project, the answer is
usually fast in coming.
It is in the field of public relations that Russians appear to be at their best. Their preference for impact
projects, together with their sense of timing, creates exciting drama and wins them applause from the
recipients, their own people, and even their competitors. Because there was no need to seek the
approval of any legislative body for its projects, the Soviet Union was able to announce its willingness to
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finance the Aswan Dam very soon after the Americans withdrew. They reacted the same way after the
United States decided against financing the Bokaro steel mill in India. Similarly, as soon as the French
proclaimed they would no longer help Guinea, Russian promises of aid were immediately sent off to
Conarky, just as they were sent to Tunisia when the French bombed the naval base at Bizerte. Until
recently, it was a rarity when an international crises or realignment of power was not followed by a new
Soviet aid agreement.
But perhaps the Russians’ most notable accomplishment is that through the combined use of political
expansion and foreign aid they have stimulated the use of economic aid by others. It was largely
because of the fear of Russian expansionism in Europe that the United States introduced the Marshall
Plan for European reconstruction. Until the Russian feelers in Afghanistan and India, American foreign
aid to Africa and Asia was at a minimum. For example, annual American promises of aid to India, which
were only $4.5 million in 1951, rose to $87 million in 1954 and to more than $100 million in 1959. In
addition, the decision to counter Soviet aid helped to bring about the creation of numerous
international and financial institutions whose sole purpose was to aid economic development. The
International Bank for Reconstruction and Development (World Bank) was joined by the International
Finance Corporation, the International Development Association, the Development Assistance
Committee, and the Inter-American Development Bank.
From the Soviet point of view, perhaps the most important contribution of the foreign aid program was
that it made neutralism a practical alternative. The very existence of the alternative of Soviet aid
provided needed leverage for the numerous countries that obtained their independence in the 1950’s
and 1960’s. After the unexpected Russian decision to finance the Aswan Dam, the West and the
developing countries learned that the Soviet Union was prepared to commit immense quantities of
resources for countries that were willing to stand up to NATO powers. Consequently the emergent
countries did not have to worry as they once did that Western boycotts would ensure submission. It is
entirely possible for example, that Premier Mohammed Mossadegh’s attempted nationalization of the
Iranian oil companies in 1951 might have been successful if it had taken place only five years later. As
Soviet support for Egypt indicates, by 1956 the Russians had decided to support actively just such
provocative challenges.
What Soviet Aid Has Not Been Able to Do
If Soviet aid and trade has helped to produce neutralism and has increased the national prestige of the
Soviet Union, it has not helped to bring a Communist regime to power. Even when the Communists did
take over in a developing country, as in Cuba, it was done without Soviet aid. Although Russians were
probably delighted by their success in promoting and winning the support of the neutralist movement,
eventually they began to wonder about the imminence of Communism in the rest of the Afro-AsianLatin American bloc where Soviet aid had been applied. As we have seen, this provoked some conflict
over the ultimate purpose of Soviet aims, especially when “neutralism” in favor of the U.S.S.R. became
“neutralism” for the West.
Similarly, Russian aid and trade policies have not always been warmly received by fellow Communist
states. The list of the openly disenchanted includes Yugoslavia, Albania, China, North Korea, and
Rumania. At one time or another, protest has also come from Hungary, Poland, East Germany, and even
Bulgaria and Czechoslovakia. As a result, even CMEA, which has some merit as an institution for
stimulating foreign trade, is regarded with considerable hostility. Thus, although Russia’s economic
policies toward its satellites at one time brought short-run advantages, the long-run effects have
brought dissension and economic inefficiency for the bloc as a whole.
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As we have seen, the Russians, like other aid dispensers before them, have not yet discovered how to
avoid mistakes in the implementation and administration of their foreign aid and trade programs. The
frivolous nature of some projects such as the luxury hotels in Burma and Guinea, and the unproductive
nature of others, such as the stadiums in Guinea, Mali, and Indonesia, have generated complaints about
poor Soviet advice. Like their Western competitors, the Russians have sometimes failed to make
adequate feasibility studies. Many of these difficulties are due to the relative inexperience of the
Russians, but they are also due to problems inherent in any underdeveloped country.
The Russians are also beginning to realize that while their system has the advantage of permitting swift
action in priority situations, it also has shortcomings. After all, there can only be so many priority
projects. Those projects that are not in the priority category move very slowly, and often run afoul of
the Soviet bureaucracy. The emphasis being placed on the so-called Liberman reforms indicates how
much remains to be done to bring about improved quality and efficiency within the U.S.S.R. itself. Until
such reforms are implemented successfully, Soviet industrial aid and trade will not be completely
satisfactory. The very debate over the reforms helps to focus world attention on Soviet economic
difficulties. Similarly, Russia’s inability to solve its own agricultural problems generates a skepticism with
regard to Russia’s agricultural aid programs. Russia’s agricultural problems also embarrass those Soviet
critics who complain that the United States stresses agricultural at the expense of industrial help. All of
this detracts from attempts to make the Soviet Union a model of economic development for the poorer
countries of the world.
One particular aspect of Soviet domestic economic policy deserves special mention because of its effect
on Soviet foreign aid. The keystone of the Soviet aid program is its emphasis on industrial help. Yet there
seem to be an increasing number of situations where lack of restraint in applying such a policy has come
in for criticism. The Russians have a tendency to build factories on a scale more suited to Soviet
conditions than to conditions in the developing countries. This disregard for scale and the tendency to
concentrate on industrial projects have been partly due to the absence of the interest rate in Soviet
calculations on plant size and feasibility. The loan fee of 2.5 per cent that the Russians charge is not the
same as the capital charge used to determine the amount of capital (capital intensity) in a particular
project. The capital or interest charge is used by project designers to decide on the optimum scale of the
plant. The more limited the availability of capital, the higher the interest charge will be and the more
likely it is that the planners will be persuaded to use less capital. In all likelihood, the plant will be
smaller in size and less mechanized. In some cases, if the interest rate is high enough, a change in plans
may be necessary and no factory be built at all. The absence of a capital charge signifies that capital is
free and that there need be no limit on the amount of capital that is used. This is what leads to excessive
scale and unprofitable operations.
Because American project calculations take into account the capital charge, American factories in Africa
and Asia tend to be smaller in size. Americans recognize that capital is a commodity in short supply. This
helps to explain why they are more cautious than the Russians in building industrial projects in the less
developed countries. Such enterprises must not only earn enough revenue to meet current expenses for
inputs like labor and raw material, but they must also meet capital expenses. It is not true, as the
Russian assert, that Americans are reluctant to build factories in the less developed countries because
they fear subsequent competition with their own domestic industry. American investment and factory
construction in Western Europe indicate that the possibility of future competition does not inhibit
overseas investment by Americans. It is just that the risks are greater, the supply of capital is smaller,
and the changes of profitability are more remote in the Afro-Asian bloc. Ironically, as the Liberman
reforms take hold in the U.S.S.R. and as the Russians being to use capital charges in the economic
calculations at home, it is only to be expected that a similar calculation will enter into Soviet foreign aid
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projects. This in turn should induce a more conservative attitude as to the size and economic feasibility
of industrial projects financed by the Soviet Union. The increase in interest charges to 4 per cent on a
1966 loan to Brazil indicates that this may be happening.
The Russians are likely to move in this direction not only because of domestic economic reforms but also
because they are now harvesting the fruit of past unrestrained policies. Many of the less developed
countries find themselves with serious balance-of-payments problems once their debt repayments to
the Soviet Union fall due. As we have discovered, even the more conservative countries of Asia and
Africa are having such difficulties. Where the national leaders are profligate spenders and/or dreamers,
the chaos is likely to be monumental. The “go-go” generation of the revolutionaries – Nkrumah, Sukarno,
Ben Bella, Sékou Touré, Nasser, and Castro – have generally been unable to sublimate their frenetic
energy and the political plotting of the soap box to the methodical plodding of the drawing board and
accounting ledger. In addition to a common penchant for such useless endeavors as stadiums, statues,
and oversized factories, these firebrands have also obligated their countries to pay for large quantities
of unproductive military equipment; this further complicates their already serious balance of payments.
In Egypt, Ghana, Cuba, Guinea, and Indonesia, this has led to default on repayments of Soviet debt or at
least to requests for debt postponement. As Soviet aid projects are completed and more and more
countries find themselves having to begin to repay their debts, this is bound to become more serious
and generate considerable friction between the Russians and those they help.
The sale of munitions highlights another problem area in Soviet external affairs. The countries of
Communist Europe, especially the Soviet Union and Czechoslovakia, have become major munitions
manufacturers. Partly out of choice and partly out of necessity, they are now important suppliers of
arms to the Afro-Asian bloc. In some cases, the Communists have been forced to sell weapons in order
to retain the friendships and to protect the inroads already won. In other instances, they encourage the
sale of arms in order to keep their munitions industry producing at full capacity. A curious aspect of the
Communist arms business is that the Russians almost never publicize their sales of weapons to neutral
countries. Although they mention the military help and equipment they give other Communist countries
– Cuba, Vietnam, Poland, and china – there is virtually no indication of the scope of the Russian and
Czech arms traffic to non-Communist areas. As a result, most Russian citizens are ignorant of such
activities. Presumably they would be as disturbed about the profits of the munitions industries in their
own countries as they are about such profits when earned by Western firms.
But while the munitions industries in the Soviet Union may do their best to promote the sale of arms,
the finance ministry undoubtedly opposes such transactions. The sale of military goods not only
complicates the repayment problems of the recipient country, but almost always creates additional
unrest in the region. Now that the Russians are owed over several billion dollars’ worth of economic and
military debts in various areas around the world, they are discovering for the first time that they have a
vested interest in the status quo. They found that the governmental changes that took place in Algeria
and Indonesia in 1965 and in Ghana in 1966 were distressing for economic as well as for political reasons.
Similarly, military or political disturbances in India jeopardize the billion-dollar investment the Russians
have in that country. As we saw, such considerations help explain Russia’s moderating influence in the
clashes between India and Pakistan. Thus the Russians are beset by the same dilemma as other donors
of foreign aid. Although they like to sell military equipment, they realize that the political aftermath as
well as the financial effect on their nonmilitary loans may be unfortunate.
The Russians have not been able to do away with yet another feature of foreign aid and trade which has
been sharply criticized: tying strings to their economic help. The Russians were especially domineering in
dictating policy to their satellites. Aid was offered and then withdrawn in Yugoslavia, Albania, and China
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because these countries refused to accede to Soviet political demands. It was subsequently resumed in
Yugoslavia. As the Chinese put it the Peking Review of September, 1964, “After receiving aid [Albania]
was plundered, its internal affairs interfered in and it was even confronted with subversion.” Other
countries that have found themselves penalized or threatened economically or politically because of
some indiscretions include Finland, Israel, Cuba, Algeria, Guinea, Indonesia, Ghana, and Iraq.
It would be a futile to determine who pulls the most strings, the United States or the Soviet Union. The
fact remains, however, that both countries have interfered when they deemed it to be in their short-run
interest. No country likes to spend large sums of money for the benefit of another country only to see
the recipient refuse to follow advice. Like parents with their adolescent children, the reaction is even
stronger when the recipient begins to criticize or attack the donor. It is unrealistic to expect that
economic support will be maintained under such circumstances.
Lessons for the United States
With time, Soviet foreign economic policy has produced experiences and reactions similar to those of
the United States. As their investment in foreign aid increases, it is likely that the Russians will become
more cautious. Whether they pull string, whether they worry about the repayment of the credits that
they have extended, whether they are attacked for not providing enough industrial help, or whether
they are criticized for the ineffectiveness of their aid, the Russian find themselves with problems that
are all too familiar to Americans. What lessons are there in all of this for the United States and its aid
program?
The most obvious conclusion is that foreign aid and trade with the developing nations is by its very
nature a challenging and often thankless task. The returns are slow in coming, and failure and criticism
are as much to be expected as success and praise. Patience, perhaps, is what is needed more than
anything else. Consequently, it is encouraging to see that we have no monopoly on impatience.
Impatience, plus dissension among Communist allies and economic troubles at home, led to a
moratorium on new aid promises by the Russians in late 1961. All of 1962 passed without a single major
new commitment. This was a complete reversal of the pattern of the preceding years; it also meant the
Russians had to watch the formation of an independent Algeria in July 1962, in silence. It was not until
about fourteen months later, in September, 1963, that the Russians decided to offer any major promise
of aid and finally announced a loan to Algeria. Then, as we have seen, the competitive battle with the
Chinese generated a sharp increase in aid. A second reason for the extension of new loans was that the
Russians found themselves trapped by what can be called the “quicksand effect.” Once they have
undertaken to support a country like Egypt or India in its program of economic development, it becomes
extremely difficult to refuse requests for supplemental aid. Failure to promise new aid creates the risk
that the political gains from past aid will be lost. Thus as we saw, against the advice of his economic
counselors and the Soviet Presidium, Khrushchev announced a new loan to the United Arab Republic of
$277 million in May, 1964. Carried away by the flush of enthusiasm over the completion of the first
stage of the Aswan Dam, he was just a man who couldn’t say no.
A third factor explaining the resumption of Soviet aid commitments is the traditional one of seizing new
opportunities to penetrate new areas. In the early 1960’s the nations of the CENTO pact became restless
and disappointed with American support. Since most of these countries have common borders with the
Soviet Union, the temptation to developed improved economic relations with these areas was too much
for the Russians to resist. Thus, for all three reasons, the Russians resumed their aid program until early
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1965, when it was cut back again because of the growing economic problems at home and an increasing
awareness that the means and ends of Soviet foreign aid were contradictory.
Nonetheless, whatever Soviet shortcomings or hesitations, in terms of per dollar expenditure on foreign
aid, the Russians seem to have done better than the United States. In India, the United States has
offered almost $6 billion and the Russians only $1-1.5 billion; in Egypt, the respective figures are $1
billion and $820 million. Yet Russian aid has had much more of an impact and is considered to have
contributed more to the industrialization of both countries. It is true that this is partially because the
Russians are newer at the game and not all of their promises have yet had to meet the test of reality. As
their projects are completed, there is certain to be more criticism mixed in with the praise. Yet there are
some techniques the United States would do well to copy from the Soviet Union.
A praiseworthy feature of Soviet aid is its flexibility. The U.S. foreign aid program tends to move from
one extreme to another. First, we stress grants in aid. When that does not bring immediate results, we
adopt a loan policy. We should be much more willing to use a little of both. When necessary, the Russian
can move very rapidly to implementing their aid program. American procedures are often timeconsuming and cumbersome. Without restricting our flexibility, we might profit from preparing a
prepackaged “shell” of prototype aid projects that could be easily utilized and put into operation. This
might make it possible to reduce the months usually required to produce working plans for such basic
projects as sugar mills, canneries, dairies, and lumbermills. Of course, it would still be necessary to make
adjustments to local conditions, but the existence of standardized plans might reduce much of the
frustration created by excessive delays that often precede the actual construction of American aid
projects.
Where we are already more flexible, we should do more to publicize the fact. For instance, American aid
officials should make an effort to show that American aid is not limited to privately sponsored projects.
Our aid is divided much more evenly between private and state enterprises then is Russian aid, which
tends to be concentrated on government projects. Here we tend to be more flexible than the Russian,
but few people know about it.
The Russian could also teach us something about public relations in foreign aid. Soviet officials and the
Russian press go out of their way to draw attention to Soviet efforts. It would help in senior American
officials, especially the President and the Vice President, would make a point of inspecting or
inaugurating American-sponsored projects on their foreign tours, as Soviet officials do. Similarly,
American firms should be encouraged to publicize their work on American-sponsored foreign aid
projects. This would help to inform the public about the existence of such projects and would also be a
way of indicating how foreign aid appropriations benefit American businessmen. After all, this is no
more than what American corporations presently do after each space shot. They vie with one another to
show off their engineering and technical accomplishments. They should do the same about their foreign
aid accomplishments.
To provide an image for its over-all efforts, the United States should adopt the Soviet practice of
“flagship projects.” Projects such as the Aswan Dam and the Bhilai steel mill focus world-wide attention
on Soviet foreign aid and lend an atmosphere of substance to all their efforts. One of the greater
shortcomings of the American aid effort is its diffusion. Few Americans can name one American project.
Had the United States undertaken to build the Bokara steel mill, it could have served as a symbol of
tangible American support. The prestige from such a project would probably flow over to other
important by less exciting America projects, such as agricultural help and educational and technical
assistance, where the results are highly useful in the long run but less apparent in the short run. The
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United States should undertake one or two such flagship projects and commit itself to the necessary
financial credits for more than one year. Although political hand-biting by the recipients may occur in
the course of construction, this is something the United States must be prepared to tolerate. These have
been insufficient swings in the political pendulum in the last twenty years to indicate that if one waits
long enough, a hostile regime will eventually be replaced by a more favorable government. In the
meantime, the aid project can make a basic contribution to economic development; this should redound
more to our benefit than to the Soviet Union’s.
Americans should also take a somewhat less skeptical and hostile attitude toward Soviet aid. Although
we should not forget that behind Soviet aid there are political motives and ambitions just as there are in
American aid, we should nevertheless recognize that in the long run, a successful aid project that
strengthens and stabilizes an economy will help the United States more than the U.S.S.R. While the two
may be connected, we should distinguish between subversion, which is destructive, and aid, which is
constructive. History so far shows that Communism does not flourish or spread in countries that seem to
be solving their economic problems. Logically, therefore, instead of discouraging Soviet aid, we should
encourage it. Every project they undertake is one less we have to bear. There are short-run political risks
in such a policy, but the long-run effects, both economic and political, seem to be in our favor.
Experiences shows that if the aided country prospers because of Soviet aid, it is less likely become
Communist. On the other hand, if Soviet aid is unsuccessful, the Russian are often made to share the
blame for the country’s problems and the country is likely to turn to the West for support. This has been
the case in Indonesia and Ghana. In countries where the Russians have been excluded, for example,
Guatemala, Communism often seems to make the greatest inroads. Although the absence of Soviet aid
in such countries is not the main reason why there is a strong Communist movement in the country, it is
an interesting paradox.
Recognizing that Soviet aid may not always be detrimental to American interests, it is worth noting the
emergence of a new and promising phase in the administration of American foreign aid. Largely at the
initiative of sincere and committed aid and foreign service officials from both countries, there are a
growing number of cases where the United States and the U.S.S.R. are attempting to coordinate their
aid efforts in a particular country. There are immense advantages for all parties concerned in such a
trend. Already it is possible to find some such joint efforts. In Afghanistan we saw how American roads
end where Russian roads begin. In Ghana, water provided by American projects with irrigate sugar case
which is to be processed in a Polish sugar mill. Other cooperative efforts may only take the form of a
discussion as to what each country plans to do. Even this can help to eliminate or reduce duplication and
overcapitalization. On occasion it may even lead to a component-building process whereby one project
supplements another. There seems little doubt that while both donors benefit from such an approach,
the one who benefits the most is the recipient country.
Nonetheless it would be unrealistic to assume that American-Soviet cooperation in foreign aid will take
place on a significant scale. This is not entirely to be regretted. Regardless of the advantages that
coordination and cooperation may bring, history still shows that in the long run foreign aid, investment,
and trade are most beneficial when rendered as a result of international competition. At best,
coordination is most effective in a context of over-all competition. When a developed and powerful
country or a group of large countries has a franchise to do as it pleases in a smaller country, the results
are usually not entirely salutary from the poorer country’s point of view. This has been true of American
operations in Latin America and Soviet activities in Eastern Europe. Accordingly, Russian interest in Latin
America has forced the United States to take a les selfish look at Latin America. Similarly, greater
American and Western economic interest in Eastern Europe has caused the Soviet Union to re-examine
its economic relations in that area. The West could probably bring about further improvement in
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conditions there if we took even more interest in Eastern Europe by offering better trade and credit
privileges to the East European countries which seemed particularly deserving. In the past the most
successful foreign aid projects have resulted where the United States, the Soviet Union, other Western
countries, and, now, the Chinese have found themselves engaged in courting the favors of a particular
country. For the country whose affections are being sought, this may be all to the good. To the extent
that it can play off one faction against another, it is possible that it may be able to obtain more foreign
aid and political concessions than it would if there were no competition from the other powers. The
threat of Communist penetration has given birth to the Marshall Plan and to the Alliance for Progress,
among other project; the promise of neutralism has sparked a $4-billion aid program by the Soviet
Union to the developing countries; and the likelihood of a Chinese takeover of the 1965 Afro-Asian
Conference in Algeria caused the Russians to resume their foreign aid program and increase their loans
by over half a billion dollars.
The role international foreign aid is gradually changing from what it was in the late 1950’s and early
1960’s. Then acceptance of aid from a particular donor often implied strict adherence to the donor’s
particular point of view. With time this has changed. While there is still a danger of economic subversion
under the guise of Soviet aid or trade, more and more, the developing nations seem to have learned
how to balance off the various lures of the donor countries without losing their equilibrium. As long as
the U.S.S.R. continues to invest in various projects overseas and as long as the recipient countries
continue to reject Communism, there is growing likelihood the U.S.S.R. will act as a moderating force in
these areas. Conceivably some day the Chinese may react the same way. In the meantime, the United
States should continue to compete and even cooperate with the Soviet Union in the developing
countries, both Communist and non-Communist.
Gounder, Rukmani (1995), “Population and Middle-Income Biases in Australia’s Bilateral Aid,” School
of Applied and International Economics Massey University, New Zealand, Discussion Paper No. 95.10 –
July 1995.
This paper has considered the economic literature on population and middle-income biases in overseas
aid allocations, and has tested these hypotheses for the Australian bilateral aid program for the six years
from 1986-87 to 1991-92. It is argued here that some of the previous empirical studies on the twin
biases issue are subject to criticism on the grounds that the models employed are too simple and/or ad
hoc. An appropriate way to proceed is to apply the general models of the aid allocation process that are
to be found in the aid motivation literature. This approach is applied to data on Australia's bilateral aid
program. More specifically, a RN [Recipient Need] model and a comprehensive model (incorporating
both RN and DI [Donor Interest] variables) on bilateral aid are estimated in a quadratic and linear form.
It is also important to estimate the equations in various years to determine if the relationships have
shifted over time.
The empirical results reported in this paper are for the equations estimated which have the dependent
variable specified as both per capita aid and absolute bilateral aid. The results for the per capita aid
equations provide no evidence of a middle-income bias in the allocation of Australia's bilateral aid to
recipient countries. In fact, the econometric results indicate that per capita aid decreases as recipient
countries' incomes increase, ceteris paribus. However, the relationship is linear, not quadratic. With
respect to the population bias, or the small country effect, the empirical results of the per capita aid
equations provide some support for the view that Australian bilateral aid discriminates against more
populous countries.
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The conclusion obtained on the absolute aid equations for the middle-income bias are similar to that of
per capita aid equations. There is no evidence of Australia's aid being allocated to middle-income
countries. On the issue of the other aid bias, i.e. the population bias, the results indicate a reversal of
the conclusion reached from the per capita aid equations. The absolute aid equations show an aid bias
in terms of a “large country” effect.
Gounder, Rukmani and Sen, Kunal (1999), “What Motivates Foreign Aid: A Case Study of Australia’s
Aid to Indonesia,” in Journal of Developing Areas, Vol. 33, No. 3, pp. 379–94.
Overseas aid to many developing countries has become an important source of external financing that
contributes to a substantial part of their GDP. Despite the fact that sustained economic growth in
Indonesia has benefited many, some 27 million people still remain in poverty. Australia's aid program
has been directed to poverty alleviation, education, health, rural development, environmental
management, and public infrastructure development. Even though Indonesia's sustained growth has
promoted higher levels of development, the World Bank estimates that the need for substantial
development assistance still remains.
The earlier cross-section studies of aid motivation by McKinlay and Little, and Maizels and Nissanke for
Germany, France, Japan, the United Kingdom, and the United States, found that the RN model fails and
the DI model explains the aid allocation of these five major donors. These results are different from
those of Gounder for Australia's aid, where both these models are accepted, thus necessitating the
application of nonnested tests. It has been argued here that time-series analysis is more important in
answering the question of aid motivation to individual countries than the cross-sectional evaluation
used in previous studies. The use of cross-sectional data conceals the question of aid motivation by
aggregating the specific country characteristics and averaging the impact of aid allocation to all recipient
countries.
The general conclusion of this study for these two separate models for Australia's aid to Indonesia is that
both models fit the data. This necessitates the application of nonnested tests. The nonnested results
reported here produced strong or decisive results in support of the RN model. Thus, there is
unambiguous support for one motivation: all the nonnested tests reported in the study indicate
acceptance of the RN model and rejection of the DI model. What do these results mean? The
“conventional” results show that Australia’s aid program to Indonesia can be said to exhibit both RN and
DI concerns. On the issue of which motive dominates the other, the nonnested tests produce a definite
result in terms of accepting the RN model and rejecting the DI model. Thus Australia’s aid to Indonesia
explains the recipient need concerns.
Grant, Richard and Nijman, Jan (1997), “Historical Changes in U.S. and Japanese Foreign Aid to the
Asia-Pacific Region,” in Annals of the Association American Geographers, Vol. 87, No. 1, pp. 32-51.
The foreign-aid regime that emerged after World War II was in many ways an integral part of Cold War
international relations. By the time the Cold War ended, foreign aid was a widely accepted way for
countries to cooperate with one another so as to further economic development and human welfare. In
addition, foreign aid was an established and important instrument for promoting the foreign-policy
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interests of donor countries. This foreign-policy instrument was susceptible to change, however, after
the Cold War came to an end.
This study has described the ways in which the U.S. and Japan, the world’s largest donors of foreign aid,
have altered their policies toward the countries in the Asia-Pacific region following the Cold War. The
analysis has concentrated on changes both in discourse and in rhetoric (as evident in policy documents
and statements) and in actual aid disbursements in the Asia-Pacific region.
The rhetoric of Japanese aid started to change in the late 1980s. In response to critics at home and
abroad who insisted that Tokyo assume a level of international political responsibility commensurate
with its economic role in the world, the Japanese developed for the first time a declaratory policy on
foreign aid. In earlier years, Japan’s foreign-assistance programs were fueled mainly by economic and
commercial motivations. The Japanese made relatively little effort to clarify their motives to the public
or to couch their foreign-assistance programs in statements of goals and purposes. By the early 1990s,
however, the Japanese discourse intensified. An increasing number of policy statements emphasized the
importance of a growing foreign-aid budget in order to serve broad principles of international
cooperation and development (including environmental programs and projects for women) and to
reaffirm these principles through criteria that make aid contingent upon the political behavior of
recipients. Japan’s aid policies have indeed moved beyond geo-economics; Japan’s warning to China
that further nuclear tests might hinder future aid allocations is a case in point.
The discourse of American foreign aid underwent important changes as well. The tone of its declaratory
policies shifted from Cold War notions of development in order to secure freedom and democracy
toward notions of “sustainable development” and facilitation of democratic transitions in former
communist states. “The opportunity to put into practice what the Cold War often precluded is now upon
us. We have entered an era . . . of cooperation and collaboration” (Wharton Report 1993:63). The
Clinton administration’s discourse was at least in part characterized by an optimistic ideological
commitment to reshaping a global order of cooperation, peace, and development. What was lacking in
the new discourse was a reoriented foreign-aid policy that took advantage of the ending of the Cold War
by shifting the emphasis of foreign-assistance programs in ways that were commercially beneficial to
the U.S.
In terms of actual aid disbursements to the Asia-Pacific region, the U.S. and Japan have responded in
opposite ways to the ending of the Cold War. The U.S., despite efforts to come up with new rationales
for aid, has found it difficult to replace Cold War motivations. The only exception to this is American aid
to the former communist states. Consequently, countries once prized for geopolitical interests have
witnessed large-scale cutbacks in American aid after 1989; nor were these reductions of security aid
compensated by other kinds of aid. Thus while a number of Asia-Pacific countries (NICs) offer wide
opportunities for commercially motivated aid, Washington has not seized these opportunities. Across
the region, U.S. aid has fallen to its lowest levels in forty years.
Tokyo’s response was precisely the opposite. If, for the U.S., the ending of the Cold War created an
identity crisis and a frantic search for a new geopolitical code, for Japan it opened the door to a great
power role in the world and especially in the Asia-Pacific. More than that, the ending of the Cold War
actually forced Japan into a role that it had been reluctant to adopt—the assumption of political
leadership. In contrast to the U.S., Japan has had the funds that are commensurate with that role. Since
1989, Japanese aid to the Asia-Pacific region has increased rapidly; by 1993 it was nine times the level of
American aid. The Japanese increased aid to the NICs, to countries like India and Nepal, and to new
recipients such as Vietnam. Also during this period, China became Japan’s largest aid recipient in the
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world. As to the future, there is no evidence that the so-called bursting of Japan’s “bubble economy”
will have any effect on Japanese aid volumes. According to official statements, MOFA over the next five
years expects to increase aid allocations that contribute to peace, stability, and prosperity in the world
(Yanagitsubo 1998).
Foreign-aid policies are a reflection of the foreign policies of the donors. After the Cold War, American
foreign policy stumbled into a rationality crisis that preempted a solid replacement for its foreign-aid
policy. Lacking a convincing purpose for foreign aid, criticism of foreign-assistance programs has
intensified and may result in dramatic budget cuts in the coming years. From the perspective of great
power politics, this retreat from aid giving amounts to curtailment of an important foreign policy
instrument and surrender of influence around the world. This is especially significant since the Japanese
increasingly value foreign aid as a way of obtaining influence and leverage in international affairs. To be
sure, it is not self-evident that the U.S. should shape its policies according to Japan’s. But either Japan is
wasting its money or the U.S. is wasting its influence in one of the world’s most dynamic regions.
Griffin, K. B. and Enos, J. L. (1970), “Foreign Assistance: Objectives and Consequences,” in Economic
Development and Cultural Change, Vol. 18, No. 3, pp. 313-327.
The pattern of development is complex and the effect upon it of foreign assistance is still undetermined,
but it is clear that the relationship usually assumed to exist between aid and growth is too simple. In
general, foreign assistance has neither accelerated growth nor helped to foster democratic political
regimes. If anything, aid may have retarded development by leading to lower domestic savings, by
distorting the composition of investment and thereby raising the capital-output ratio, by frustrating the
emergence of an indigenous entrepreneurial class, and by inhibiting institutional reforms. Precisely how
widespread and strong are these negative influences still remains to be determined, but the limited
evidence available suggests that aid programs, as currently administered, and insofar as they are
concerned with economic development, frequently are counterproductive.
Many commentators, while ignoring the points we have raised above, have emphasized the growing
debt burden of the poor countries, their consequent acute balance-of-payments problems, and the
severe constraint this imposes on growth.34 Evidently, this is a major problem of contemporary aid
programs which stems directly from the concentration on loans rather than grants. The long-run
importance of this problem should not be exaggerated, however, as it is rather unlikely that the loans
will ever be repaid. Loans were made in the past, but repayments occupy the future. What happened in
the past is history, and what happens in the future is politics – and there is a great difference between
politics and history. Had the loans been productive, they would have generated the funds for
repayment,35 but since they generally have not been, there is little reason to imagine that there will be a
connection between the two. Since there was no growth generated, the debtors may feel no obligation
was created.
The prospect of default can be seen in the statistics on loans and repayments from and to the powerful
countries: according to UNCTAD data, between 1961 and 1965 the flow from the strong to the weak
rose from $5.8 to $6.6 thousand million, while repayments rose from $0.7 to $1.2 thousand million. The
net flow has leveled off, and was stationary in the last years (at $5.3 thousand million). In other words,
repayments from the weak to the strong are becoming so large that they offset the annual increases in
assistance from the strong to the weak.
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As the repayments grow, they become more of a burden to the in-debted countries. In Latin America,
for example, the servicing of foreign debts absorbed 6 percent of total export earnings in 1955; in 1964
this had risen to 15 percent. This is an average, and individual countries vary considerably. One country,
Chile, found a few years ago that it was in the position of having to allocate half of its foreign exchange
to debt repayments. In this case, as in several others – for example, Turkey, Brazil, Ghana, where the
debts have increased beyond the ability of the country to liquidate them – it led to the first move of
what will probably be many in the game of default, namely, “rephasing.” The second step will be from
postponement to avoidance. There are any number of reasons or justifications that can be given for
such action; a new regime can disown the debts of its predecessor; a vacillating regime can shift its
allegiance from one to the other of the great powers, shifting or dropping the burdens of the past at the
same time. When faced with a poor and disloyal debtor, unable to repay and unwilling to repent, there
will be little the creditor can do. (Ejecting his government usually costs the creditors more, not less.) Lest
one think that we delight in the prospect of default, we shall end on a solemn note. Just as assistance
has not created obligations, so default will not promote concord. “When ingratitude barbs the dart of
injury, the wound has double danger in it.” The breaking of agreements between the lenders and
borrowers, no matter which one instigates the act, will deepen yet further the chasm between the rich
and the poor, the strong and the weak. That the weak countries should avoid the breach goes against
economics; that the strong should absolve them of their burdens goes against politics. Thus aid,
ostensibly given in friendship, seems inevitably to lead to enmity.
Griffin, Keith (1991), “Foreign Aid After the Cold War,” in Development and Change, Vol. 22, No. 4, pp.
645–85.
This paper argues that foreign aid programmes originated as part of the ideological confrontation known
as the Cold War and that the motives behind aid were always more political than economic. It is further
argued that the economic justifications for foreign aid — filling ‘gaps’ in capital, technology and skills—
are suspect and that the economic benefits in terms of long-term development are at best negligible.
Turning to the future, foreign aid programmes are bound to change to reflect the new realities of global
international relations. Nine specific predictions are made about the future size and composition of aid
programmes. The outlook for those who favour aid is not bright, but recent changes in thinking about
development suggest that more sell-reliant strategies could well be more beneficial to the poor than
conventional aid-supported strategies. […]
Foreign aid as it is understood today has its origins in the Cold War. It is largely a product of the
ideological confrontation between the US and the Soviet Union which dominated international politics
for forty-five years between 1945 and 1990. It began not as a programme to assist the long-term
development of impoverished countries but as a programme to facilitate the short-term economic
recovery of Western Europe after the Second World War. The political motivation of what was called the
Marshall Plan was to prevent the spread of communism to France and Italy (where the communist party
was strong), to stabilize conditions in West Germany (and create an attractive alternative to the socioeconomic system imposed in East Germany) and to reduce the appeal of socialist policies in the UK
(where the Labour Party enjoyed considerable popularity).
The Marshall Plan was followed by President Truman’s Point Four programme – named after the fourth
point in his inaugural address – which was a technical and economic assistance programme for Greece
and Turkey, two poor countries bordering on the communist world and thought to be in danger. The
third phase was a response to the disintegration of the old European empires and the proliferation of
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newly independent countries, first in Asia and later in Africa. Freedom from colonial rule led to a contest
for the ‘hearts and minds’ of the people throughout what came to be called the Third World. Foreign aid
was one weapon in this contest, not the only weapon and seldom the most powerful one, but none the
less significant a tool of Western diplomacy.1
Particularly difficult problems were posed by the collapse of the Japanese Empire, for it was in the
territories occupied by Japan prior to and during the Second World War that the confrontation between
the First World and the Second became most heated. After the liberation of China by the communists in
1949, the anti-communist nationalistic opposition retreated to Taiwan and mounted a political and
economic challenge to the mainland. The challenge was supported by large amounts of foreign aid.
Korea was divided into two countries, a communist North and a capitalist South, and in the early 1950s
the Korean War was fought over the issue of reunification. South Korea won the war, thanks to massive
military support from the West, and then after the war received large amounts of foreign aid. Similarly
in Vietnam, the country was divided into a communist North and a capitalist South, and again a war was
fought over the issue of reunification, with North Vietnam ultimately winning in 1975. Throughout the
war, however, South Vietnam received huge amounts of military and economic assistance. Indeed, the
political purposes of foreign aid were perhaps most clearly revealed in Taiwan, South Korea and South
Vietnam.
The early foreign aid programmes, however, were not confided to the fringes of the communist world.
The Cuban Revolution of the late 1950s extended the Cold War to the Western Hemisphere and posed a
challenge to the long-standing hegemony of the US in that region. The response was multifaceted and
included the diplomatic isolation of Cuba, sponsorship of a military invasion and an economic embargo.
Also included in the package was a foreign aid programme for the rest of Latin America – Kennedy’s
Alliance for Progress – which attempted to use the promise of financial assistance as an incentive to
governments of recipient countries to introduce policy reforms.
Later foreign aid programmes were not always wholly dominated by US-Soviet rivalry but instead
reflected narrower regional concerns, as in French aid to Francophone Africa, British aid to
Commonwealth countries and Dutch aid to Indonesia. Moreover, although foreign aid was born out of
political and ideological rivalry, it has always had an economic dimension, namely, an attempt to create
a strong, expanding, global capitalist economy. These qualifications are important, but they must not be
allowed to obscure the primacy of politics.
The origins and objectives of foreign aid cannot be understood outside the global political context.
Foreign aid is a product of the Cold War, of the division of the globe into First, Second and Third Worlds
and of the hostility of the two superpowers. Were it not for the Cold War there would have been no
foreign aid programmes worthy of the name, for without the Cold War it would have been impossible to
generate the domestic political support in donor countries necessary to sustain foreign assistance for
more than four decades. Other motives apart from ideological confrontation also played a role, not so
much in initiating aid programmes as in sustaining them once the general principle had been accepted.
Diplomatic considerations clearly were important, e.g. in mobilizing support in the General Assembly of
the United Nations and, in the case of France and Britain, in retaining influence in colonial territories
after they became independent. Commercial advantage soon became a prominent motive: securing
markets, promoting exports, creating a favorable climate for private foreign investment. And of course
there were genuine humanitarian motives, e.g. in Scandinavia and one or two other small donor
countries. But the conflict between the two superpowers was the sine qua non.2
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Despite the stimulus of the Cold War, foreign aid may already have been running out of steam before
the remarkable political developments of 1989. This is particularly true when seen from the perspective
of the recipient countries, as is apparent in Table 1. Measured in real terms, i.e. the nominal value
deflated by a world export unit value index, the average annual amount of official aid from the OECD
countries doubled between 1950-5 and 1956-60. In 1980 prices, the yearly flow of aid rose from US$8.2
billion in the first half of the 1950s to US$16.6 billion in the second half. It increased by another 50 per
cent in the next half decade (1961-5) and then remained more or less constant until the 1980s, when
falling export prices pushed up the real value of aid. The flow of aid reached a peak in 1972, the year
before the first oil crisis, and this peak was not regained until 1983.
Even these figures, unexciting as they are, may overstate changes in the real value of aid. A more
appropriate deflator might be a unit value series of manufactured export goods, since the content of aid
flows consists largely of manufactures; and the technical assistance component of aid would surely be
subject to a higher deflation factor, reflecting an increase in the salary and other costs of Western
advisors, teachers and technical experts. In addition, account should be taken of servicing and debt
repayment of loans from multilateral aid agencies. Many borrowers of World Bank non-IDA funds, for
instance, are now receiving very little in net terms. Thus, when viewed properly, real flows of foreign aid
to developing countries have not increased all that much since the 1960s. The Cold War may have
provided the fuel for foreign aid programmes, but the fuel was not very powerful.
Now that the Cold War is over, two questions are raised. First, as the ideological divisions begin to blur,
as globalization proceeds and the three worlds blend into one, what is the outlook for foreign aid to
developing countries? Second, if the end of the Cold War is to be accompanied by a significant reduction
in foreign aid to poor countries, will this necessarily damage their development prospects? We shall
begin by examining the second question, for if foreign aid does not in fact promote development, our
joy over the end of the Cold War need not be tempered by sadness over the possible demise of foreign
aid.
Guess, George M. (1986), “The Political Economy of US Foreign Aid: Past and Present,” in Guess,
George, The Politics of United States Foreign Aid, pp. 1-51, UK and Australia: Croom Helm Ltd.
As the US struggles for influence in the world power arena, its foreign assistance program follows along
as a willing and important appendage. In a precarious context, characterized increasingly by desperation
policy response to coups, counter-coups, terrorism and religious fanaticism, the lines between US
foreign policy, foreign aid and trade activities become blurred. That foreign aid lacks autonomy among
American public policies is harmful in several ways to US interests abroad and to the needs of the
developing world. First, foreign aid may be erroneously credited for foreign policy power successes
though development projects fail and underdevelopment may be increasing. Second, and more
commonly, foreign aid is unjustly blamed for foreign policy failures. The rantings of a Khadafy are
viewed by many as another failed foreign aid attempt, the cut-off of which penalizes the Libyan people
and not their officialdom. Consistent with this, some believe that foreign aid is not criticized enough.
“Who could be against aid to the less fortunate?” ask Bauer and Yamey (Thompson, 1983: 119). “When
aid advocates talk of the disappointing record of aid, they mean not that aid has been ineffective or
damaging but that the amounts of aid have been insufficient.”
Foreign aid consists of five programs: (1) Economic Support Fund (ESF), (2) Development Assistance (DA),
(3) Food Aid or PL 480, (4) Security Assistance, and (5) multilateral Development Banks. These
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interrelated programs have separate constituencies and are proposed for funding by bureaucratic actors
that are, in turn, controlled for efficiency and effectiveness by Congress working in conjunction with
them. But these “checks and balances” have produced paralysis instead of health competition. Task
definition is imprecise and institutional distrust among key actors tend to inhibit the proper functioning
of checks and balances.
Further, that US foreign aid is a “microprogram” evaluated as a “macropolicy” creates false expectation
and the likelihood of unfair judgment. Over the five major phases of foreign aid, the programs have
been billed as dramatic macropolicies: spreading democracy, containing communism, and getting the
poor ready for developmental “take off”. Tangled up with foreign policy events and the personal
agendas of congressional “experts” and high-level amateur appointees in USAID, it can be stated
without great risk that the bulk of foreign aid programs have been largely “unsuccessful” (or successful
in a trivial sense). Perhaps the most successful program was also the shortest and most uncomplicated:
the Marshall Plan. But since that program, the goals of foreign aid have broadened in almost inverse
proportion to useful knowledge on the causes of poverty and underdevelopment. As the “fall guy” of
foreign policy, the foreign aid program has been blamed by the left for neo-imperialism and by the right
for generating exaggerated expectations among the poor which destabilizes political systems.
Foreign aid is a product of the American political system, a highly bureaucratized network of actors that
clash over resources and the authority (or turf) to influence policy. To the extent that we can analyze
foreign aid through the Bureaucratic Politics lens, we may be able to point the way to a more
autonomous policy that will be more likely to achieve realistic objectives. This book seeks to describe
the evaluative dilemma of US foreign aid as part of foreign policy and to explain how and why the
program is often ill-designed and poorly executed. The goal is constructive: to enhance the capacity of
foreign aid to benefit the Third World which indirectly can enhance US influence in world affairs.
The making and execution of foreign aid policy has been characterized by intense confusion over both
objectives and evaluative criteria since its initiation in the early 1940s. Foreign aid is not really “foreign”
policy or a “domestic” program; yet it is planned, executed and evaluated as if it were both. Hence,
despite its marginal budgetary expense in US terms, it is nearly always a controversial policy
(Montgomery, 1986: 94) In [sic] FY 1985, the Presidential foreign aid request amounted to less than 2%
of the budget ($15.2 billion out of $925 billion or 1.6%). In FY 1978, US aid amounted to only 0.23% of
GNP or about the same level provided by Austria, Japan, Switzerland, or Germany (Congressional Budget
Office, 1980: 9). Nevertheless, Congressional Quarterly (1985: 2688) suggests that foreign aid “one of
the most unpopular issues that Congress faces each year.”
Many have written of US foreign aid; many have written it off. But few have provided other than general
frameworks for analysis. Critics of foreign aid tend to provide the more rigorous policy-oriented
frameworks. Still, they tend to be simplistic, ignoring the real world of interest-driven bureaucratic
policy-making which constrains both the US and its recipient countries. It is suggested that a
Bureaucratic Politics model emphasizing “role conflict”, largely over budgetary resources, can be useful
in explaining past failures and successes as well as providing a more solid foundation for foreign aid
reform.
Guess, George M. (1986), “US Aid to Latin America,” in Guess, George, The Politics of United States
Foreign Aid, pp. 133-178, UK and Australia: Croom Helm Ltd.
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In sum, aid to Latin America is the product of a process that rigidly examines the scope of the program
according to criteria that favor security of “hard” solutions in crisis contexts. The bulk of countries are
not examined regularly by the process as a whole in other than superficial terms. Reacting to individual
country crises or events, Congress proceeds to expand the list of statutory requirements to which AID
must conform. This satisfies constituents on high-visibility issues such as El Salvador and Haiti. But it
tends to inhibit communication between executive policy-makers and Congress. Congress thus weakens
its own role and diminishes the value of foreign aid by refusing to treat economic aid as the primary
means to development, rather than as diplomatic leverage. In Latin America, the lack of policy continuity,
indicated by repeated and sudden injections of non-developmental aid via supplemental appropriations,
is largely the result of superficial conflict between rule-bound executive and a Congress which retaliates
with more rules to keep ostensible control of foreign aid. It cannot be said that more thorough debate of
foreign aid funding to each Latin American country by both the executive and Congress, beginning in
1944, would have eliminated all developmental obstacles and produced functioning political
democracies in 1944, would have eliminated all developmental obstacles and produced functioning
political democracies in each case. But it would have helped!
Guess, George M. (1986), “US Aid to Asia,” in Guess, George, The Politics of United States Foreign Aid,
pp. 179-221, UK and Australia: Croom Helm Ltd.
Realistic conflict in the Philippine aid case increased mutual consensus by US actors, eventually including
President Regan himself, that Marcos should fall. According to Apple (New York Times, February 26,
1986) “Never before had the US pushed so publicly for the removal of a leader of major ally.” Though he
notes that Washington eventually conspired to secretly end the regimes of Rhee in South Korea, the
Shah of Iran, Duvallier in Haiti, Somoza in Nicaragua, and Diem of Vietnam, the Philippine case was
different because a middle class alternative existed (and still does if Aquino falls) to Marcos.
The 1986 Philippine aid case suggests that where the roles are clarified by lengthy institutional conflict,
communication and trust improve which increases consensus for foreign aid policy-making. Future US
provision of aid to the Aquino and subsequent Filipino governments will occur in an improved “ecology”
of policy-making. US aid to Asia should gain in improved chances of producing more actual security and
development. Foreign aid economic “success stories” where political structure have not conformed to
US “liberal premises” are now on notice that the US may well support reformist but not revolutionary
alternatives. South Korean President Chun had the Kim opponents jailed for attempting to petition
South Korean voters for a presidential election. Recently, after the demise of Marcos, he had the Kims
released. The “second Japan” may find that the road to Tokyo does not pass through Manila (New York
Times, February 26, 1986).
In the Philippines, to contrast with earlier US aid to Vietnam, “genuine cooperation” and “continuity of
purpose” (Montgomery, 1962: 104) were attained by bureaucratic role conflict. The lesson, of course, is
that US institutions should be receptive to the same realistic debate on all recipients before crises occur.
As indicated by institutional behavior in Iran and Nicaragua, the US ignores most crises until they are
irreversible. Where no political necessity exists for a hard look before a hard choice, foreign aid
institutions maximize their respective turfs, Congress votes authorizations and appropriations on a
superficial uninformed basis, and foreign aid continues its course despite evidence of major
shortcomings.
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Guess, George M. (1986), “US Aid to the Middle East,” in Guess, George, The Politics of United States
Foreign Aid, pp. 222-255, UK and Australia: Croom Helm Ltd.
In sum, successful technical assistance projects, food aid, balance of payment support, and trade
depends not merely on the “terms of trade” (bases for aid) or more US knowledge and sensitivity to
local cultures. The ultimate effectiveness of aid to achieve security, profitability, and development
objectives in this region depends on mutual agreement and trust. This mutuality is established not by
laws and regulations or obedience to US bureaucratic routines, but rather from intense and realistic
sparring about the issues over time. For this reason, Egyptian-US relations have evolved to an all-time
high, and have been since Kissing-Sadat trust was achieved in 1974 following the Syrian-Israeli
disengagement accord (Burns, 1985: 181). Nasser and his successors have been sparring with the US
over food aid, military aid, refugee issues and the scope and purpose of economic aid projects for over
30 years. By contrast, aid to Israel has been based less on realistic conflict than its “special relationship”
with the US and historical sympathy for the Jewish plight. This means that aid provides only marginal
leverage and, of course, is not programmed or executed in the traditional sense by AID. The US has even
less-realistic relationships with the rest of the Middle East, in part because of its Israeli client. This has
assured that regional aid policy is the result of intense political rivalries and bureaucratic in-fighting.
Intense conflict can lead to improved role definition, trust and better results (as in Egypt) or
maintenance of the status quo (and more Irans).
Guess, George M. (1986), “Conclusion,” in Guess, George, The Politics of United States Foreign Aid, pp.
256-272, UK and Australia: Croom Helm Ltd.
Introduction
In this final chapter we summarize what has been said so far, review the major problems with foreign
aid policy as revealed through the BRC [Bureaucratic Role Conflict] model, and make recommendations
for improving both the process and results. Foreign aid is planned and funded like most US domestic
policies but it is unique in that it has both a domestic and international component. Since foreign aid
(military, food, development) is the most tangible vehicle of US foreign policy, it receives the most
blame (as a perennially unpopular congressional issue) but little of the praise because its results lack
visibility and attribution. Lacking a political base of its own (most of its clients are abroad; powerful
domestic clients of its subproducts distort results), foreign aid has been moved along by conflicting
pressures from all directions, mostly in response to some actor’s (DOD, State, Presidency, Congress)
perception of military threats or developmental need. Decisions have not generally been informed by
realistic field assessments, largely because the institutions making foreign aid policy are primarily
interested in other issues (DOD – defense; Congress – domestic policy; USDA – US agriculture, etc.).
Foreign aid becomes an unstable byproduct of other policies.
Nearly 35 years ago, political theorist Verne Lewis (cited in Lyden and Miller, 1982: 264) was hopeful
that improving the objectivity of budgetary analysis would permit decision-makers to compare relative
effectiveness of economic and military aid programs to the achievement of “national security”. In the
context of intense budgetary politicking by all foreign aid actors, several attempts along the “rationality”
front were made. AID introduced PPBS in the early 1970s. The language and routines of program
budgeting still permeate AID decision-making, contributing to better understanding of input-output
relationships and permitting more incisive inquiries. At a higher level of aggregation, State Department
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developed the Integrated Foreign Aid Budget Request that included the SAPWRG process which
coordinated the development of requests for all foreign aid programs.
But State Department sets most of the funding ceilings and program proportions in advance. Consensus
and trust may have increased among foreign aid actors, but results may not have improved because
communication and conflict is still unrealistic – the product of “frozen pluralism” and immense power
differentials among actors. The foreign aid budget is made, then, in true ‘incremental” fashion by mixed
role actors that jockey for marginal gains while “guardians” examine the controversial aid issues only,
and “advocates” rely on Presidential, DOD and Congressional support for budget authority. But, given
the mixed role conflict, the process tends to exclude the value of implementation efficiency and
effectiveness. Such problems can be best resolved by structural adjustments from Congress to give
USAID greater input and control over results.
Summary and Conclusion
From World War II to the present, the cluster of programs called foreign aid have moved all over the
board, emphasizing profitability, welfare, and security objectives at different times and places almost
without pattern. Since the path by which aid can lead to “development” is debatably, objective
assessment of the results of foreign aid over its 5 evolutionary historical phases has been difficult. The
first phase of US aid, Postwar Relief, was unusual in that a fiscally conservative Congress (fearing gold
drainage) multilateralized US aid funding which financed predominantly humanitarian assistance to
Europe. Aid policy was defined by Allied needs to rebuild war-torn economies on which massive political
support and consensus existed in the US. Only on contemporary defense aid to Israel has the popularity
of a foreign aid issue ever peaked this high with Congress and the US public.
From 1949-1960, foreign aid was primarily the vehicle for establishing military alliances against the
Soviets. The twin incentives of military (stick) and economic (carrot) aid were used to “contain” the
Soviets along “frontiers” established largely in the minds of several US presidents. Given the palpable
failure of this simplistic security approach to developing capitalist countries and building true militarytrade alliances, the third phase (1961-72) stressed exportation of US liberal political ideas via the
Alliance for Progress. The ambivalent application of liberal principles where revolutionary changes
actually occurred resulted in return to more traditional uses of aid as a cold war leverage instrument. By
1973, the Alliance and prior cold war aid had been lumped together as the traditional model – top down,
capital intensive, with benefits “trickling down” to the poor. The 1973 New Directions effort of the 4 th
phase stressed “bottom up” development via aid programmed to the poor in smaller projects, executed
often beyond the reach of large donor or recipient bureaucracies in PVOs. Given the fact that crisisdriven foreign policies governed the overall uses of foreign aid (evident in State Department budgetary
ceilings) in both traditional and New Directions periods, the comparative results of specific aid
expenditures have been difficult to isolate and attribute to aid policies. The contemporary Reagan era
rhetorically stresses the private sector and PVOs, and views government as a constraint on economic
development (capitalist) in the Third World. In practice, aid is still programmed by crisis to countries and
regions. Though ESF and MAP expenditures remain large, DA projects seem to be decreasing in size and
focusing more on the profitability and entrepreneurship of both private and public sectors than before.
Though profound disagreement exists on the results of even a single aid project, it was suggested that
general results could be lumped into three categories: (1) recipient dependency, (2) technocratic and
complex products transferred and (3) multiple unexpected consequences. Occasionally aid has not
produced recipient dependency but rather, interdependence; nor complexity but rather, appropriate
scale “user friendly” projects, and fewer unintended or unexpected results. On the other hand,
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dependency, complexity and unexpected results have occasionally been positive and led to growth and
development! A major purpose of this book was to explain some of these field differences by stressing
US policy-making as the major determinant.
In Guatemala, for instance, US military aid reinforced US ties to unelected military regimes which
depended largely on military aid for their legitimacy and continued existence. Further, despite
enormous amounts of DA to Nicaragua, an unintended consequence was that the landless rural labor
force was 100% higher in 1977 than in 1950. The red tape and complexity of US aid, requiring full
recipient understanding of the US budget process, often produces capital intensive glamor [sic] projects
that fragment the local bureaucracies into state enterprises and autonomous institutions. This creates a
public sector coordination problem for recipients as US-financed projects push ahead in isolated sectors.
Nevertheless, aid to Costa Rica, Brazil and Colombia produced many more successes and fewer
instances of dependency, complexity or unintended consequences. Aid to Haiti even produced the
leverage that led to Duvalier’s demise! In Asia, aid produced dependency and little leverage in Vietnam.
But aid to Taiwan and South Korea was quite successful in contributing to economic growth. Aid to the
Philippines contributed to Marcos’ downfall as well. In the Middle East, US aid often “delegitimized”
regimes in India, Egypt, and Turkey, making it hard for them to govern. The US sought dramatic and
complex projects like the Aswan High dam, and through aid, sought to spread the effects of US-Israeli
interdependence around other states like Saudi Arabia, Jordan, and Egypt with success in the latter case
only. US food aid provided leverage and nutritional well-being in Egypt and encouraged Egyptian
concessions to Israel, contributing to the peace necessary for foreign aid to achieve any kind of success.
The BRC model (Figure 3.1) was proffered as a conceptual vehicle by which more precise explanations of
these aid results might be advanced. The model suggests that certain goal combinations drive aid in
contradictory directions. Aid programs are translated into policy by (1) legislative and bureaucratic rules
and repertoires which constrain action, and (2) role conflict among institutional actors of widespread
differences in power. The efficacy of security, profitability, or developmental aid goals depends upon the
utility of the operational rules and the degree of rival trust that exists between actors. Unfortunately,
the rules have been accumulated according to specific congressional concerns over time (human rights,
AIPAC interests), contributing to an almost permanent power imbalance where the level of distrust
among actors is higher than ever (US versus Latin America on trade protection and debt repayment;
Congress versus President over G-R-H; authorizations versus appropriations committees where the
latter now makes legislation; and Congressional earmarks versus USAID needs on the use of aid funds).
Foreign aid actor conflict over these kinds of issues can evolve into realistic conflict and rival trust, with
more positive aid results. Conflict tends to be incremental, which is useful in avoiding big errors and
assuring continued communication, but costly in excluding key values such as implementation. Where
properly managed for long-term political considerations, aid can facilitate rival trust and contribute to
development. Though more precise research is needed on the interaction of these variables in
comparative project perspective, application of the BRC perspective to Latin American, Asian and Middle
Eastern instances suggested general verification of the variables and provided a broad explanation of
differences between success and failure.
Based on the BRC model, conclusions can be reached and recommendations proffered for (1) achieving
better aid results, (2) clarifying goals appropriate to differing country problems, (3) modifying internal
and external operating rules, and (4) improving the relationship between institutional actors and policy
results. For example, from the regional aid reviews several propositions can be formulated on the
results of economic and military aid. First, we have seen that military aid can be a two-edged sword,
increasing or decreasing US leverage and recipient regime legitimacy. Pouring military aid into
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personalistic and authoritarian regimes such as Haiti and the Philippines for vague and doctrinaire
security objectives, will provide carte blanche for misappropriation of funds with much greater political
than financial (unprofitability) costs to the US. Though increasing military aid to a greater percentage of
the local budget, and to the mythical “center” of the military should bring leverage, where consensus
between US actors and recipient political/economic objectives is initially lacking or unclear, the aid
becomes a “sunk cost”, useful to the recipient and regime critics as a counter-control device against US
pressures. For instance, decades of military aid to Somoza for stability purposes, ignored the need to
develop effective opposition to his regime. Failure to direct aid beyond the ruling family or junta creates
a political vacuum that is always filled by extremists of the left and/or right.
Further, “aid” to Duvalier increased his repressive capability. Though many of the DA projects were
extremely successful by narrow technical criteria, the aid lesson from Haiti is that authoritarian regimes
negate these successes. In Haiti, no amount of successful DA projects could compensate for the terror
and overt corruption of the regime which locals perceived correctly to be US-financed. Here, the US paid
twice for Haitian aid – once for DA projects, then for political refugees in Miami! Conversely, military aid
for specific purposes, such as stabilizing a coalition, on which the recipients can at least agree to
disagree clearly and rationally, can stabilize a political system and prevent extremist sniping and
blackmail at centrist programs. A lesson of aid to El Salvador seems to be that properly targeted and
monitored, military aid can be effective in achieving “soft” objectives, despite decades of civil war.
Additionally, despite accounting norms, net political results can be positive even if gross aid exceeds
local financial and institutional absorptive capacity and produces waste and more corruption. The key
seems to be prior mutual consensus among US actors, and between the US and recipient on goals and
implementation.
Second, results can be improved by redefining the role of foreign aid in the foreign policy process.
Though total foreign aid amounts to less than 2% of the annual US federal budget, its consequences are
far greater for US “national security” and global trade objectives. If a few billion dollars in PL 480 and ESF
aid to Egypt and Israel can contribute to holding the Middle East together, this keeps the oil flowing and
prevents inflation, unemployment and political unrest in the US as well. However, aid policy-making
inputs are distorted and tend to interfere with its real responsibilities around the world. While the
congressional foreign aid authorization process may be enhanced by new leadership, e.g. Fascell and
Lugar on the respective committees, other congressional oddities such as G-R-H remove policy-making
power from Congress and shift more of it to the President where foreign policy power already existed.
This increases the disjointed tendency of the foreign aid program to move ahead according to the
politics of supplemental appropriations, earmarks and continuing resolutions, all of which de-emphasize
debate and analysis. These practices inhibit the development of rival trust among the relevant US
institutions which could improve foreign aid results. Such newsworthy issues as “aid” to the Contras
absorb hours of debate, despite the fact this had little to do with foreign aid. Rather, it is an issue of war
powers, with management and funding by DOD and CIA, distribution only by USAID. Nevertheless, the
public confuses Reagan hyperbole on aid to the Contras (like the French resistance; conflict only 2 days
drive from Texas border, etc.) with foreign aid generally. The foreign aid process should be able to
defend itself against being used for such transparent purposes. US aid was discredited for a time by the
Mitrione affair in Uruguay in the late 1960s, where a CIA operative used USAID cover. The foreign aid
policy process should be able to debate the issue squarely before funding and responsibility follow.
Where were the “freedom-loving” Contras during Somoza’s reign? How did these exiles, many of whom
were officers in Somoza’s National Guard, support the Chamorro opposition then? Since they were
clearly co-opted and did nothing to aid freedom then, why support them now in the cause of creating
yet another regime in Nicaragua? Such issues need to be debated by foreign aid actors if funds are to be
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termed “aid”. Otherwise, the support should be classified as Defense or Foreign policy, not foreign aid.
Thus, aid results could be improved by its formal dissociation from foreign/defense policy.
Third, aid results can be enhanced by increased emphasis on implementation of projects. Since projects
are often learning experiences in themselves with many unexpected consequences, it would be more
useful if AID were directly responsible for both programming and execution. Currently, the knowledge
that private contractors implement aid with only periodic official oversight tends to weaken AID
incentives to develop innovative project implementation approaches based on lessons learned. While
much has been written on this, little finds its way into institutional routines and repertoires. For
example, roles might be reversed with private contractors overseeing and evaluating AID project
implementation. AID would gain corporate memory and experience; contractors could tear into AID
activities with a vengeance that would ultimately enhance results. Both parties would have every
incentive to perform; greater trust and a better working relationship would result.
The field results of US aid are a product of goals translated by institutional rules and roles. The
predominant goal of the foreign aid program has been security, and this definition is largely the product
of inordinate DOD, Armed Service Committee and State influence over the scope of the program. DA has
its advocates in the process: USAID and multilateral agencies, such as OAS and World Bank. Early
postwar US aid to Europe was both developmental and multilateral. In a stable world, unsullied by petty
tyrants and terrorists, total DA emphasis would be appropriate. The US could provide capital grants and
technical assistance for projects similar to the US Office of Economic Opportunity (OEO), Economic
Development Administration (EDA), and urban redevelopment. Security problems, of course, have had
little to do with the success or failure of federal poverty and development programs, other than where a
housing project is overrun with crime.
But in the Third World, projects are not implemented in a stable federal system where roles are
relatively clear and conflict eventually leads to rival trust (or program termination before it occurs). Aid
projects in El Salvador, for example, must also contend with left (FMLN) and right (ARENA) extremists
who fear loss of support from successful US aid projects. The “outside agitator” premise on communist
infiltration is obviously exaggerated and produces an almost total concern with East-West issues when
the substantive issues are local (Turkey versus Greece over Cyprus).
Nevertheless, outside agitators seem to make unscheduled appearances to fill US-created political
vacuums in places like Nicaragua. Hence, the solution to what become regional security problems, after
years of neglect and indifference to developmental issues, has to be something more than disbursement
of more DA funds. While this dilemma should not lead to support of additional outside agitators, such as
aid to roving bands of exiles from the last coup, security assistance to the military “centers” of
neighboring countries to build up political centers as in El Salvador, cannot be resonably [sic] opposed.
Even more important than the appropriate mix of development-security goals behind aid is the degree
of prior mutual consensus between recipient and US aid planners. Where the recipient agrees on the
purposes of aid, improved results usually follow (Taiwan, South Korea, Egypt and Brazil). Whatever form
the aid takes (ESF, PL 480, FMSC, MAP or DA), success depends less on the right mixture of aid
subprograms than on mutual agreement on how the funds should be spent properly. What this suggests
is that even abstract “liberal” premises of aid may be appropriate if both recipient and US agree to their
translation into programs meeting local needs. Aid to Costa Rica, Venezuela, Colombia for “liberal”
political purposes such as electoral democracy worked reasonably well because both parties to the
transaction agreed, i.e. aid was not perceived to be a mere quid pro quo for US leverage.
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In theory the, all aid need not be either DA or military aid to achieve success. On the other hand, under
current usage of the term, “aid” means all things to all people – it builds clinics, supports Contras, trains
teachers, mines ports, and provides arms to petty tyrants. To improve such issue analysis and program
marketability to the US public, foreign aid should be divided into clearer responsibility centers. USAID
should be responsible for PL 480- and DA aid. DOD should be responsible, i.e. pay for, all military aid. ESF
funds fall in the gray areas between the two. AID manages them with State guidance, and many are
spent for defense-related purposes. Hence, it may be more appropriate to draw ESF funds from the DOD
budget and let AID manage them for agreed upon purposes. This would leverage executive policymaking control away from DOD-CIA-OMB technocrats and State senior staffers. With greater authority
to influence development of the Integrated Request each year, those in AID who work daily on both
foreign aid and its political implications would have more voice in policy-making. This additional
authority would remove some of the incentive to institutionalize criticism that detracts from program
implementation. As noted, AID receives most of the responsibility and criticism for the total foreign aid
program with little effective authority to control its scope or direction.
For the late 1980s, the goals of US foreign aid are likely to remain the same except that the notion of
“profitability” will lead to even greater unexpected political results. Increasing evidence that rightist
authoritarian regimes have neither more rational economic policies nor greater in US-style political
democracy have led to the logistical question: For what was all the US aid used then? In Haiti and the
Philippines the answer is clearly: personal profit for the ruling kleptocracy and oppression of legitimate
opposition to the regime. That such uses of foreign aid are both financially and politically unprofitable
for the US is evident now to even the Reagan Administration. Other Republican leaders such as
Undersecretary of Treasury for International Affairs David Mulford, have recently opposed loans to Chile
on human rights grounds. The point is that viewed by key policy actors as a high risk political and
financial proposition, aid can achieve liberal developmental ends. To this end, more policy analysis and
issue debate is required to avoid incrementally recycling the mistakes of the past. One can expect to see
increased emphasis in time, resources, and media interest in foreign aid authorizations and
appropriations which can only benefit future aid results.
Even if initial mutual agreement could be reached between US and recipients on the scope, purpose and
pace of aid, the current rules by which foreign aid is planned and implemented would continue to
constrain effective action. We have seen that externally, foreign aid must deal with G-R-H “outlay
savings” zeal and that this penalizes early year, rapid paced outlays like military aid or capital projects.
To subject an already confused program, promulgated annually from the conflicting pressures of
institutional actors with entirely different objectives and grasps on reality, to arbitrary across-the-board
cuts for the “abstract” objective of a balanced budget is both inefficient, and naïve. For, in the long run,
such “savings” are likely to contribute to greater deficits as required military expenditures increase in
world trouble spots to put out fires that earlier aid might have remedied by providing leverage and
construction of stable political centers. A lesson of El Salvador is that even under textbook conditions,
building the center is a costly and long-term commitment.
Similarly, Congress tries to make foreign aid policy via continuing resolutions, earmarks, supplemental,
conditions and prohibitions on executive requests. The executive responds by “counter-control”
techniques such as reprogramming, transfer, deferral and rescission to make ends meet and preserve
managerial flexibility. Though the executive usually “wins” such bureaucratic wars, they waste time and
resources that could be spent on effective implementation. These kinds of “wargames”, made even
more deadly by resource cutbacks likely to results from G-R-H, also diminish time available for debate on
regions and countries that do not have current “hotspot” status.
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Earmarks and other constraints are expressions of congressional distrust of the President, learned from
such historical crises as Vietnam; transfers and deferrals are expressions of executive distrust for a
Congress perceived to be sluggish and ill-informed on international issues. This tension cannot lead to
healthier debate and better policy results until adversary roles and responsibilities are clarified. The
arbitrary interventions by Congress then encourage AID to create a defensive superstructure of rules.
Such rules stress elaborate programming over innovative implementation and this damages foreign aid
results. However, stronger leadership on the authorizing committees and appropriations subcommittees
is already enhancing the role of congressional guardianship in foreign aid. Needed is a more objective
standard for aid disbursement than the political visissitudes of the moment. For example, the
appropriations process could be strengthened by use of agreed upon guidelines or a “formula” for
disbursement of aid. Simon (Washington Post, June 14, 1975) argues that foreign aid is disbursed largely
on “whim or casual conversations of a Secretary of State with a foreign aid official.” He suggests that “no
other government program provides as unrestrained an opportunity for executive expenditure as does
our foreign economic aid.” Use of a “needs based” formula that also stresses “restraint on military
spending” and “respect for civil liberties”, however, might increase congressional propensity to earmark.
But it could also provide a mutual focus for bureaucratic rivals, reducing fragmentation and distrust.
The rules of the game for recipient side have also been discussed briefly. ESF aid, for example, is
deposited in recipient central banks for withdrawal according to agree-upon purposes. Usually, as in the
case of Marcos officials using aid funds for his re-election campaign, there is no specific mutual
agreement, especially where base rights are the quid pro quo. Hence, cronies of the regime can spend
millions in US funds for personal preferences (often consumer and military goods) and the US usually
does not dramatically intercede from fear of neo-imperialist backlash.
In the case of Taiwan, US foreign aid was placed in a separate extrabudgetary recipient’s fund. In
contrast with AID policy in many countries where US dollar aid or aid-generated local currency becomes
part of the governmental budget, aid to Taiwan was administered outside the budget by semiautonomous institutions. During the 1951-65 period, Chiang Kai-shek wanted to increase military
expenditures to recover Mainland China from the Communists (a personal agenda). Through the
extrabudgetary fund mechanism, the US was successful in both keeping the lid on Taiwanese military
expenditures and preventing fungibility of funds for development purposes (Jacoby, 1966: 221-222).
This mechanism prevented substitution of military funds demanded by the powerful military
establishments for its “development” priorities. The key to effectiveness of US aid to Taiwan was also
the high degree of competence and personal continuity of local oversight institutions – the Council on
International Economic Cooperation and Development, and the Joint Commission on Rural
Reconstruction (1966: 59). Where large amounts of US aid tax the absorptive capacities of small regimes
often besieged by a variety of opponents, opportunities for fund diversion are enormous. Since this
costs the US leverage as well as out of pocket sums, both AID and Congress should ensure that aid is not
disbursed before: (1) mutual agreement on its uses (meaning more recipient input into project shape
and on the participation of US contractors) and (2) agreement on extrabudgetary funds and oversight
commissions are reached.
The most serious constraint and the greatest opportunity for improving foreign aid results lies in role
redefinition and clarification. Currently, foreign aid policy is formulated by a host of bureaucratic
spenders with different primary missions and different sets of assumptions. Though such diversity can
be good, differences in institutional power prevent translation of differing premises into a coherent
policy product. Guardians such as Congress act significantly during crises but do not exercise consistent
programmatic oversight. Congressional foreign aid policy-making thus lacks coherence. Operating in
piecemeal fashion, this permits the most powerful actors in the executive branch to exercise primary
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control. AID has the least influence on practically every issue, meaning that despite AID’s elaborate
programming and the apparent consensus generated recently by the SAPWRG process for an Integrated
Request, final policy is still a product of power politics between DOD-Armed Services Committeescontractor lobbies and softer perspectives exercised by weaker actors such as AID and State. Agency
positions on aid cannot always be predicted. But AID’s influence is marginal, limited often to siding with
the agency likely to carry the day in order to reduce external criticism and ensure future funding
(continuing resolutions). Shifting patterns of dominance between the executive generally and Congress
on particular issues leads to many unexpected consequences and the establishment of rigid ties with
client regimes that can produce trouble later. […]
Gulhati, Ravi and Nallari, Raj (1988), “Reform of Foreign Aid Policies: The Issue of Inter-Country
Allocation in Africa,” in World Development, Vol. 16, No. 10, pp. 1167-1184.
The aim of this paper is to assess the inter-country allocation of foreign aid by selected donors to I8
recipients in Eastern and Southern Africa (ESA). The five country cases discussed in this paper, show that
the aid environment has not been supportive of recipients reform efforts during the 1980s. A
comparison is made between International Development Agency (IDA) allocation and other donors.
Cross-section and time-series regressions demonstrate a variety of considerations influencing bilateral
aid. Lastly, in discussing present aid policies and coordination efforts, three options arc analyzed with
respect to future aid policies. It is suggested that new initiatives by IDA in its allocation criteria and aid
coordination efforts can yield some progress.
Halpern, Nina P. (1993), “Creating Socialist Economies: Stalinist Political Economy and the Impact of
Ideas,” in Goldstein, Judith and Keohane, Robert 0. (eds.), Ideas and Foreign Policy: Beliefs,
Institutions, and Political Change, pp. 87-110, Ithaca, N.Y.: Cornell University Press.
As the cases of China and Yugoslavia clearly indicate, Stalin’s ideas exercised an independent power to
influence the policy choices and institutions of other countries by offering persuasive answers to the
most compelling questions they faced: What did socialism mean? How should a social economy be
developed? How could the making and implementation of policy be coordinated? These questions could
be answered in a variety of ways, but Stalinism represented a unique set of ideas that had already been
formulated and moreover was associated with success. It is hardly surprising that neither Mao nor Tito
seems to have contemplated any alternative notion of socialism, at least until Tito found himself forced
to do so. The implication of these two cases is that because the other East European countries faced the
same needs and pressures as China and Yugoslavia, they would have been likely to adopt Stalinist ideas
even if Stalin had granted them a much greater degree of independence than he did.
The Chinese case suggests that ideas that are accepted as correct need not necessarily exert their
influence immediately: they must first seem relevant to the situation in which one finds oneself. The
Chinese initially did not believe that the conditions necessary for socialism existed in their country, so
their attention first centered on creating those conditions. But because they had accepted a particular
idea of socialism, pressures soon built to put it into practice. Primary among those pressures was the
need for coordination: they needed an acceptable, agreed-upon guide to policy and its implementation.
This need, as well as enhanced control over society and economy, produced a more rapid adoption of
Stalinist political economy than China’s leader had anticipated. And once the Stalinist model was fully
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institutionalized within the body of the economics discipline and the political infrastructure, it proved
remarkably resilient. It continues to shape Chinese policy to this day.
The Yugoslav case demonstrates that although ideas can sometimes be hooks, or justifications for
policies adopted for reasons of interest, they can also be pursued even when they go against the
national interest. Yugoslavia’s relations with the USSR would certainly have been smoother if Tito had
been willing, like other Eastern European leaders, to tailor his policies to Stalin’s wishes instead of his
theories. The idea of moving toward socialism and acceptance of Stalin’s definition of socialism
motivated him far more than Stalin’s policy pronouncements. The Yugoslav case also demonstrates that
ideas do not necessarily prevail against all counterincentives; faced with a fairly desperate situation,
Yugoslavia eventually relaxed its hold on Stalinism. Facing the same needs for legitimation, information
and coordination as the other socialist states, Yugoslavia was forced to embark upon the difficult and
costly path of defining its own version of socialism.
The overall conclusion to be drawn from these cases is that, particularly after a revolution, countries
seize on preexisting ideas to guide them through times of uncertainty and to allow them to legitimate
and coordinate their actions. This solution can often produce a more slavish imitation of another
country’s experience than might seem merited on ground of pure efficiency. And once the practices and
doctrines taken from abroad have been institutionalized, they may have very long-lasting effects.
Decades from now the countries of Eastern Europe may marvel at their willingness in this current period
of revolution to adopt so wholeheartedly the ideas and institutions of Western capitalism. But at this
time their need for ideas is no less urgent than it was after their socialist revolutions. And the ideas they
adopt are likely to have equally long-lasting effects. One can only hope that fifty years from now their
current choices will appear more fortunate than those they made nearly fifty years ago.
Hansen, Henrik and Tarp, Finn (2000), “Aid Effectiveness Disputed,” in Journal of International
Development, Vol. 12, No. 3, pp. 375–398.
What can we conclude from this survey of cross-country literature on a long and contentious debate on
the macroeconomic effectiveness of foreign aid? Other literature surveys hold, in the words of the
Economist (26 June, 1999), that ‘countless studies have failed to find a link between aid and faster
growth’. We have surveyed three generations of empirical work: early Harrod-Domar models, reduced
form aid-growth models, and new-growth-theory reduced-form models. We find a consistent pattern of
results. Aid increases aggregate savings; aid increases investment; and there is a positive relationship
between aid and growth in reduced form models. The positive aid-growth link is a robust result from all
three generations of work. As a corollary, using perceived ineffectiveness of aid as an argument against
cross-country regressions at large is not substantiated. Important information is embedded in the
similarities among countries, and cross-country work does provide clues to how aid interacts with
savings, investment, and growth.
The obvious question is why do other surveys find that the aid-savings evidence is mixed and that the
evidence in favour of a positive aid-growth link is weak – or non-existent? A few highly influential
studies in each generation of work have argued the negative. There has been a tendency for negative
studies to dominate the debate. Our survey covers 131 first- and second-generation regressions and
compares them with third-generation work in a common analytical framework. We find that in each
generation of studies those arguing the negative are clearly in the minority. When all the studies are
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considered as a group, the positive evidence is convincing. The micro- macro paradox is non-existent.
Microeconomic studies indicating that aid is beneficial are consistent with the macroeconomic evidence.
Third-generation work goes beyond earlier empirical studies to address the necessary conditions for
(increased) aid effectiveness. Burnside and Dollar (1997) offer a solution to what has so far appeared as
a Gordian knot, i.e. the perceived ineffectiveness of aid at the macro level. They argue that aid is
effective, but only in a good policy environment. This intriguing result – which is broadly in line with the
‘Washington consensus’ view of development – is appealing to many. It suggests how donors and aid
recipients can learn from mistakes in the past and improve aid effectiveness in the future in a
straightforward manner.
Nevertheless, the basic Burnside-Dollar result turns out to be sensitive to data and model specification.
The significance of the crucial aid-policy interaction term depends on five observations (an extension of
the sample by about 2 per cent). In addition, Burnside and Dollar depart from the other three thirdgeneration studies in that they do not report any regressions with squared aid terms in their estimations.
They only include the aid-policy interaction term to capture polynomial effects in the aid-growth
relationship. This is in contrast with the by now common result in empirical growth modeling, where
squared terms appear as the rule rather than the exception. This issue of specification is critical. The aid
squared term is statistically significant and robust, while the same cannot be said about the aid-policy
interactions term.
What general policy lessons can be drawn from this extensive literature. The Economist (1999) argues:
Rich countries should be much more ruthless about how they allocate their largesse, whether
earmarked or not. Emergency relief is one thing. But mainstream aid should be directed only to
countries with sound economic management (emphasis added).
While the extreme view that aid only works in an environment of sound policy appears wrong, there is
evidence that economic policies have an impact on the marginal productivity of aid. Yet, the world is
heterogenous and noisy, and it may well be that many of those countries where aid works the best are,
at the same time, among those that need foreign aid the least. In contrast, countries that are less
fortunate in having good policies in place, may need help badly to help bring them on track. They may
need different forms of aid, but such real-world dilemmas remain unresolved. Single-cause explanations
and mechanistic aid allocation rules are neither robust nor useful guides to policy makers.
The third-generation work recognizes that development is a complex process with interactions between
economic and non-economic variables. The past decade has seen enormous changes in the world
economic environment and the economic systems in place in many countries. Using past performance
as an indicator of future performance is especially dubious in this environment, given the existing
limited understanding of the interplay between aid, macroeconomic policy, and political economy
variables. In sum, the unresolved issue in assessing aid effectiveness is not whether aid works, but how
and whether we can make the different kinds of aid instruments at hand work better in varying country
circumstances.
Hansen, Henrik and Finn, Tarp (2001), “Aid and Growth Regressions,” in Journal of Development
Economics, Vol. 64, pp. 547–70.
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Aid effectiveness is likely to remain a contentious area of debate. Substantial resources are involved,
and the widespread perception that aid has been ineffective in fostering growth at the macro level has
led to aid fatigue in many donor countries. In this paper, we have investigated what modern crosscountry growth regressions can tell about the effect of aid on aggregate growth. We find that aid
increases the growth rate, and this conclusion is not conditional on the policy index established by
Burnside and Dollar (2000).
Using a fairly standard growth model capturing non-linear effects between aid and growth, the empirical
specification, with most support by data, does not include an aid–policy interaction term. We therefore
believe to have substantiated that it is premature to rely on policy indexes, such as the one proposed by
Burnside–Dollar, in the allocation of aid.
We also note that empirical conclusions about aid effectiveness, based on cross-country growth
regressions, depend on poorly understood non-linearities and critical methodological choices. As such,
lack of robustness should not come as a surprise. On this background, it might be tempting to discard
cross-country growth regressions altogether. Yet, some regularities do seem to exist across countries.
The focus in this paper has been on whether there is regularity in the impact of aid across countries. This
seems to be the case.
The diversity of developing countries in their natural endowments and cultural and socioeconomic
characteristics is another recurrent theme in cross-country comparisons of aid effectiveness. In this
paper, the effect hereof on the growth impact of aid is captured through the introduction of country
specific effects in the regressions. Moreover, aid allocation issues are taken into account by inclusion of
aid as an endogenous regressor. It emerges that these two factors have strong implications for the
empirical results.
Finally, we reconfirm the empirical support for the hypothesis that aid impacts on growth via investment.
This effect is shown to be potent, while an alleged negative effect on total factor productivity has only
weak support in the data. The above observations underline that better theoretical explanations about
the aid–investment–growth processes are required before we can derive satisfactory empirical
specifications and formulate useful testable hypotheses.
Harris, Stuart (1982), “Australia’s Interests in Third World Development: The Perspective of A
Resource Exporter,” in Cassen, Robert, Jolly, Richard, Sewell, John, and Wood, Robert (eds.) Rich
Country Interests and Third World Development, pp. 156-181, London: Croom Helm.
Historically, Australia has seen itself threatened by developing countries and has sought the protection
of developed countries. Its cultural links tie Australia to developed countries while its affluence, its
advanced economic institutions and its technological base are developed country characteristics.
Moreover, despite its similarity of interests with the Third World on some issues, on others, and as a rich
nation, its interests often compete or conflict with those of developing countries. Australia tends to see
itself as of the West, even if – no doubt like others – with a difference. Yet it has had increasingly to take
Third World development more seriously.
Policy attitudes probably remain predominantly orthodox but, from recent public debate, increasingly
enlightened. The Harries report, reinforced more strongly by the Senate report, argued that Australia
should distinguish between the interests of the West, which it should support and those of particular
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members of the West, which it normally should not. Both argued for compromise, for co-operative
approaches to Third World views and for ways to satisfy the practical possibilities underlying Third
World objectives. This is an improvement on Australia’s previous frequent uncritical acceptance of
Western attitudes, often leading in rejecting Third World proposals without offering constructive
alternatives. Yet, although Australia’s stated political attitudes may now be constructive, responses in
practice on economic issues remain unhelpful. Although Australia’s economic and political relations are
now more interlinked, Australia has a much smaller strategic role as counterweight to the great powers
and is increasingly judged in the region by its contribution to the trade and development efforts of Third
World countries, even if outside Asia its political attitudes are more important. Yet its renewed interests
in Third World development evidenced in policy statements have not reflected themselves in economic
terms. Support from the Common Fund was already in place, but aid has not increased. Some
downwards pressure on industrial tariffs may ultimately eventuate but decisions made in 1980 were
discouraging.
Frequent entreaties for outward-looking Third World policies have not been paralleled in Australia’s
policies nor, with the deterioration in the post-war international co-operative system, and the West’s
inward-looking attitudes, do the chances of outward-looking approaches globally seem high. Moreover,
outward-looking policies alone are insufficient for the Third World. There are disadvantages as well as
advantages for developing countries in their links with developed countries; these disadvantages may
have to be reduced before positive gains are recognized by developing countries. Arguments for an
outward approach which start by largely denying any disadvantages are unlikely to achieve that.
For various reasons, Australia’s position warrants a constructive, moderately reformist, approach less
aligned than currently, with the West which, while improving world productive efficiency, would make
some concessions to income and power distribution inequalities of the Third World. 36 First, the Third
World’s case against the existing international system has some substance. Secondly, reduced
protection would benefit Australia directly and, by international example, indirectly. Thirdly, Australia
benefits from accepted rules for international relationships, which developing country support would
reinforce. Fourthly, it cannot avoid close relations with Third World countries. Finally, rational
accommodation with the Third World will improve world stability. If power is shifting to developing
countries, orderly negotiated changes might be desirable; even if Third World countries fail to achieve
greater power, Australia could be vulnerable in that failure, with its resource abundance, its geography
and its immigration and racial policies.
The Harries report argues that Australia should support measures mutually beneficial to developed and
developing countries alike. The debate, however, is largely about what policies benefit mutually the
Third World and the West. If, like the Harries report, few imperfections are acknowledged in the existing
system, few changes are mutually beneficial; unsurprisingly, mutuality arguments favor the status quo in
such circumstances. This is even more so if each issue is decided on its merits as the Harries report
proposed for economic issues: long-term national interests – which the Senate report emphasized may
have to be pursued at the expense of short-run interests – will then normally be ignored. Most
importantly, whether or not there are mutual benefits is ultimately decided by the West. The mutuality
argument therefore either simply reaffirms the West’s power or it lacks policy value since it begs all the
important questions.
Even then, limited moves by Australia in supporting its interest Third World development such as
support for the Common Fund, stimulated surprise and scepticism among Western spokesmen. If the
West continues to assume that Australia’s interests in Third World development are identical to its own
a constructive approach by Australia to the Third World could involve some cost in terms of Western
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relationships. Australia has therefore a long way to go in clarifying its interests in Third World
development. It is a major step that the debate has at least started.
Hattori, Tomohisa (2003), “The Moral Politics of Foreign Aid,” in Review of International Studies, Vol.
29, pp. 229-247.
To briefly summarise this inquiry into the moral dimension of foreign aid, this article has identified the
donations of states to multilateral grant-giving organizations as the ethical core of a larger
institutionalisation of foreign aid in the postwar era as a collective endeavour of the former colonising
states. What in a bilateral face-to- face relation merely signals and euphemises the material hierarchies
of the postwar world is transformed in this process into a virtuous practice, ethically justified as
contributing to the peace and prosperity of the community of states. This article has further argued that
the key organisation behind this institutionalization process is not the multilateral grant-giving agencies
but the Development Assistance Committee of the OECD. By setting the standards, monitoring,
evaluating, and ranking the aid programmes of member states, the DAC has assumed the new role of
‘moral bookkeeper’, authenticating and encouraging foreign aid as a virtuous practice. Finally, this
article has argued that such ethical discourses and forms of public scrutiny and praise have indeed
created an incentive, if not to increase, then to conform the practice of foreign aid to more beneficent
standards. It is this institutionalisation process, in short, that constitutes the empirical substance behind
President Truman’s original claim that foreign aid is a moral practice, embodying moral vision and intent.
There are two implications of this specification of the empirical substance behind the ethical claims for
foreign aid. First, it extends the metatheoretical insight of Alexander Wendt that states are ontologically
real by demonstrating that they are also capable of ethical justification. The ethical discourses and forms
of public scrutiny and praise described in this article not only attribute virtue to states but have real
effects: they have encouraged a collective practice where none would have existed; and they have
disciplined existing bilateral practices to higher ethical standards.65 The institutionalisation of foreign aid
in the postwar era constitutes, in short, an empirically significant moral dimension of interstate relations.
The second implication is that these particular ethical discourses and practices are fostering a very old
pattern of moral distinction across material lines: they are helping to legitimise the dominant role that
donor states have assumed in the postwar world as an ethically justified desert, over and above the
imperatives of power politics or market forces. Like the civic virtue identified with the practice of foreign
aid above, this larger process can also be identified with Aristotle, only in this case, not his virtue ethics
but his politics. A closer reading of Aristotle suggests, in fact, that he compromised his ethics of giving in
service of his larger political ideal of civic republicanism, or the rule of the virtuous few over the mass.66
Although Aristotle’s encouragement of giving extended to all citizens, he created two special categories
for ‘great gifts’, arguing in numerous passages that they deserved greater praise. The virtues expressed
– magnificence, or ‘great deed’, and magnanimity, or ‘greatness of soul’ – were regarded as superior to
the liberality of ordinary citizens.67 In short, he strategically embraced ‘the sweet bait of honor’ in the
service of his city.68 Though the archaic language of virtue is absent, the public ranking and peer review
processes of the DAC have similarly set the great givers of the postwar era against one another,
establishing the conditions and purposes of a competition for honour in the community of states.
Liberal political theory, of course, has moved substantially beyond civic republicanism in the modern
era.69 In contemporary interstate relations, it provides the basis both for a political discourse of rights
that strongly resists any claim of virtue on the part of the wealthy states and for a substantive political
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agenda of international taxation and other measures that, it is argued, could rectify current inequalities
and better realise such rights.70 The arguments in this article imply that the actual practice of foreign aid
is fundamentally at odds with this liberal project. This opposition emerges, first, as a basic categorical
distinction in the type of resource allocation entailed: whereas a liberal project of rights requires some
form of centralised apparatus to redistribute resources from the wealthy to the poorer states, foreign
aid remains a gift, a voluntary gesture of the wealthy states.71 It also follows from a further specification
of aid practice within the anthropological literature of giving: as an unreciprocated gift, foreign aid works
not to mitigate but rather to euphemise the existing material hierarchies between the North and the
South.72
Finally, the opposition between foreign aid and liberal ideals characterises even the most beneficent
portion of foreign aid, the multilateral grants of states, where symbolic domination shifts to ethical
discourses. As this article has argued at some length, the institutionalisation of foreign aid as collective
endeavour of the former colonising states works to confirm the virtue of donors as opposed to the rights
of recipients. What the successive specifications of the practice of foreign aid add up to is a fundamental
political opposition: whereas a liberal project of rights entails a real shift in power from the
industrialised states, the moral politics of foreign aid legitimises the power they already have.73
By extension, this article reveals a fundamental confusion in the ethical justifications for foreign aid in
the liberal tradition noted in the introduction. Identifying foreign aid as an ‘imperfect obligation’ of the
wealthy to the poorer states, for example, fails to see that it is the recipient’s obligation – specifically the
failure to reciprocate a gift – that operationalises this practice, compelling gestures of gratitude and
acquiescence in the status quo, instead.74 Identifying the motivation to give foreign aid as a
humanitarian ‘moral vision’ fails to see the ‘moral hierarchy’ that can arise when such a practice is
institutionalised across material lines.75 Finally, identifying the donor-recipient relation as a ‘moral
doctor–moral patient’ relation misses the necessary fiction of moral agency on the part of recipients in a
virtue-centric world. Only by treating recipients ‘as if ’ they had moral agency can the superior moral
agency of donors emerge.76 In short, while all of these ethical justifications identify with liberal ideals of
rights, humanitarianism, and improvement, the aid practice they justify tends towards the opposite
effect, anticipating neither the eventual perfection of donors’ obligation into a right, the mitigation of a
material hierarchy, nor the remedy of a diseased condition.
In the 1996 DAC report, Chair, James H. Michel, warned of ‘deeply entrenched gaps between theory and
practice’ and ‘patterns of donor activism and recipient passivity’ consistent with the argument I have
just laid out. To ‘change incentives’, he went on to argue, required substantially more than a new
programmatic focus or greater recipient participation in development planning and implementation. It
required self-discipline and hard work – yet another virtue ethic that has infused the discourse of
foreign aid from the start. As he put it:
If, as partners, we can exercise the disciplined will to address the contradictions and to implement
the strategy, its vision will come to be seen as a realistic prediction of a better future. If we do not
make the effort, it will become equally apparent that the strategy projects no more than a cruel
mirage.77
Hatzipanayotou, Panos, Michael, Michael S. (1995), “Foreign Aid and Public Goods,” in Journal of
Development Economics, Vol. 47, No. 2, pp. 455–467, Elsevier.
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Most trade theoretic studies that examine the terms of trade and welfare effects of international
income transfers assume that these transfers are lump-sum distributed to consumers in the recipient
country. But, most non-private international aid, especially to LDCs, finances public consumption goods
or public inputs in the recipient country. This paper examines the terms of trade and welfare effects of
an income transfer when it is used by the recipient country to finance a public consumption good.
The paper demonstrates that if (i) the imported and public goods are net complements, (ii) the
consumer's marginal willingness to pay for the public good exceeds its unit cost of production, and (iii)
the marginal propensity to consume the imported good in the recipient country exceeds the marginal
propensity to consume the same good in the donor country, then an income transfer improves (worsens)
the donor (recipient) country's terms of trade. Under conditions (i) and (ii) a small transfer can raise the
welfare of the donor, and can reduce the welfare of the recipient country. Under condition (ii) a small
transfer increases world welfare, in which case it is possible for welfare to increase in both the donor
and the recipient countries.
Since the level of public goods is small in most LCD's, it is expected that the consumer's marginal
willingness to pay for the public good exceeds its unit cost of production, thus when foreign aid is used
to finance a public good, it can lead to a welfare improvement not only for the recipient developing
country, but also for the donor developed country. This result may be of policy relevance for the, once
again, timely issue of international economic aid (e.g., foreign aid to Russia and to former Eastern
European Countries).
The present analysis considers the case where the public good is only produced in the recipient (e.g.,
developing) country, while the donor (e.g., developed) does not produce a public good of its own. The
same or qualitatively similar paradoxical welfare effects (e.g., welfare immiserization for the recipient
and welfare improvement for the donor country) due to an income transfer can arise whenever the
recipient country supplies the public good at a suboptimal level using foreign aid to finance its
production. For example, the same results emerge when the donor country produces its own public
good at a fixed level independent of the amount of the transfer. Qualitatively similar paradoxical welfare
effects can emerge if the donor developed country is producing its own public good at an optimal level
(i.e., at the level where the consumer's marginal willingness to pay for the public good equals its unit
cost of production), while the recipient country produces a public good at a suboptimal level.
If, however, in the pure theoretical rather than practical case where both countries are capable of
financing and producing the public good at its optimal level, and the income transfer is lump-sum
distributed in the recipient country, then the transfer is always welfare immiserizing for the donor
country, welfare improving for the recipient country and does not affect world welfare. 8
He, Fan and Tang, Yuehhua (2008), “Determinants of Official Development Assistance in the Post-Cold
War Period,” in Chinese Journal of International Politics, Vol. 2, No. 2, pp. 205-227.
Foreign development aid since the end of World War II has increased in significance within international
relations as a way of developing strategic interests and improving the international environment.
Foreign aid is an important policy tool for expanding nations’ influence upon international affairs and
maintaining local and international economic stability, and has played a special role within China’s
foreign relations. Aid from China has grown in the recent years along with its economic development,
and the corresponding change in the objectives, functions and manner of Chinese aid have given the
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country a higher standing within the sphere of worldwide development aid. Research into development
aid policies and practices in developed countries is of help to China in establishing a more mature
foreign development aid strategy. […]
Empirical Analysis Conclusions
The proportion of a country’s gross national income expended on foreign development assistance is
subject to different factors of influence. On the basis of data from the 21-member Development
Assistance Committee from 1990 to 2005, we used a quantitative model to estimate the effects of
different factors that determine the level of a country’s relative ODA. This analysis shows direct
relationships among ODA as a proportion of GNI and a country’s economic position, public social
expenditure as a proportion of GDP and level of economic openness, and an inverse relationship
between ODA and the level of GDP per capita and fiscal revenue. This means that a country’s
expenditure on foreign assistance increases as it becomes more prominent within the global economy,
and as the country’s electorate becomes more concerned with the objectives of welfare policies. But it
means at the same time that wealthy countries are not necessarily more predisposed towards
philanthropy than poor countries, and that countries with large fiscal revenues are not likely to provide
more assistance than countries with limited fiscal income. An extent of empirical support for the
explanations of both the realist theory of international politics and those based on domestic political
factors is thus found. This implies that principles guiding foreign development assistance policies since
the Cold War have become pluralized.
As regards interpreting the results of the model: as GDP per capita increases $1000, ODA as a proportion
of GNI decreases 0.0038 percentage points, and as a country’s GDP as a proportion of world GDP
increases 1 percentage point, ODA as a proportion of GNI increases 0.096 percentage points. As fiscal
revenue as a proportion of GDP increases 1 percentage point, ODA as a proportion of GNI decreases
0.013 percentage points; as expenditures on public welfare as a proportion of GDP increase 1
percentage point, ODA as a proportion of GNI increases 0.011 percentage points; as economic openness
increases 1 percentage point, ODA as a proportion of GNI increases 0.0045 percentage points.
Implications for China
Foreign development assistance is a main component of China’s strategy for sustainable, peaceful
development and a tool that can be used in its economic diplomacy. China must therefore determine an
appropriate set of principles and procedures for administering development assistance. The experience
of developed countries, especially the DAC Member States of the OECD, is valuable in this respect.
It follows from our preliminary analysis of development assistance provided by the DAC states that the
ideal level of development assistance any given state provides is determined on the basis of specific
domestic conditions. China, as a rapidly developing power whose economy accounts for an ever-larger
portion of the overall world economy, and which is relatively open, has a rising international
responsibility. Its expenditure on foreign development assistance, therefore, should increase accordingly.
Proposed objectives such as a harmonious society and a harmonious world should also bring about
simultaneous increases in domestic public social expenditure and overseas development assistance.
Such is the case because the precondition for a country’s concern about the welfare of people in other
nations is that of its concern for the welfare of its own citizens. As the Chinese people become more
concerned about welfare objectives, China’s political leaders should correspondingly become more
concerned about similar matters within the wider international arena.
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China’s assistance to other countries in recent years has risen steadily. As of the end of 2006, the
country had provided assistance to more than 100 countries, regions and organizations, and assisted aid
recipients in approximately 2000 different projects. China has provided more than 100 development
loans on preferential terms to more than 60 countries, and large-scale assistance in the form of goods
and food to more than 110 countries. It also provided technical and managerial training to more than
23000 people in over 100 countries. The Chinese government has moreover signed debt forgiveness
agreements with 46 countries in Asia, Africa, Latin America and the South Pacific, thereby erasing a
portion of what they owe China.26 But taking into consideration China’s level of openness to the rest of
the world and its rate of economic expansion, the international environment might degrade during the
process of China’s economic rise. This being the case, it is imperative that China increase its level of
foreign development aid.
First, China should consider streamlining its foreign assistance. At present, the forms of assistance China
provides include: donations, interest-free loans, development loans at preferential interest rates,
preferential export credit to purchasers of its goods and funds for the support of joint ventures. As many
types of aid are provided, its administration is disorganized and consequently difficult. Generally
speaking, China lacks a systematic programme with respect to foreign development assistance. This
article recommends that the various channels of foreign development assistance be streamlined, that
the former classification scheme be dropped, and that a new scheme comprising two types of aid:
monetary aid and assistance loans, be implemented, preferential rates for the latter computed
according to international standards.
Second, foreign development aid objectives should be set at each stage of China’s economic
development. As China continues to open up to the world and its economic position to improve, it may
be anticipated that its ODA will increase. The government, therefore, may make specific plans to
increase ODA in proportion to its growing gross national income.
Third, as development assistance is influenced by fiscal income as a proportion of GDP and public social
expenditure as a proportion of GDP, development aid should not be blindly expanded; increases should
be conditional upon national fiscal revenue and public social expenditure.
Headey, Derek (2005), Foreign Aid and Foreign Policy: How Donors Undermine the Effectiveness of
Overseas Development Assistance, CEPA Working Paper Series No. 05/2005, Australia: School of
Economics, University of Queensland.
This paper has presented evidence which supports the hypothesis that donors’ political motivations and not just recipient-side conditions such as good macroeconomic policies - also have a significant and
plausible impact on the effectiveness of foreign aid. We first showed that previous studies have
generally not used appropriate econometric methods, the two key elements of which are an improved
measure of foreign aid which roughly gauges “aid intended to promote growth”, and a dynamic growth
specification which simultaneously renders aid exogenous (without relying on untested assumptions
regarding the equal effectiveness of strategic and non-strategic aid) and identifies a plausible dynamic
relationship between the timing of aid inflows and the eventual returns to those flows. We then
considered one of the easiest and, in policy terms, the most important means by which one can
decompose aggregate aid flows into strategic and non-strategic (or less strategic) influences, the
multilateral-bilateral division. As expected, multilateral aid flows are not well explained by strategic aid
variables, whereas bilateral flows are, such that the latter constitutes a reasonable proxy for aid flows
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that are relatively strategic in orientation. Testing multilateral and bilateral flows produced the
predicted result that the multilateral aid produces growth effects roughly twice the size of bilateral
flows. Moreover, the construction of motivational indices and their interaction with both aggregate and
bilateral aid flows also suggests that a great deal of the variation in aid outcomes is explained by political
strategic factors. In fact, these results show that bilateral aid can be quite effective when it is not
politically motivated, while multilateral aid tends to be more effective on average.
In this final section we address some possible objections to these findings. The most important of these
is that the cross-country growth regression is a highly flawed means of testing the effects of a wide
range of potential determinants of growth. Testing the effects of foreign aid on growth is arguably an
especially hazardous exercise: aid is likely to be endogenous, it is difficult to measure accurately, and,
most importantly of all, it presumably affects growth through several quite distinctive transmission
mechanisms (Hudson and Mosley 2001; Gomanee, Girma et al. 2002): investment and consumption
levels, macroeconomic outcomes and policies, and institutions, to name the most important. We are
entirely in agreement with assessment. In our view, growth regressions cannot be used to make
statements such as “aid has been a success”. Their strength, of course, is their ability to control for so
many other determinants of growth so that researchers can make statements such as “controlling for
initial incomes, policies, geography, and institutions, aid has had a positive effect on growth when it has
not been used as a mere instrument of geopolitics”. But this strength is also a weakness: another way to
interpret these results is to conclude that “aid has increased growth net of its effects on other
determinants of growth”, especially policies and institutions. It is very difficult to look around the world
and find countries which have experienced aid-induced “miracles”, and likewise easy to find aid
dependent “disasters”.
But whether this is because aid does indeed worsen policies and/or institutions, however, is by no
means clear. Whether or not aid improves or deteriorates governance, for example, has been shown to
depend on which instruments one uses (Harms and Lutz 2004). Moreover, when we update Knack’s
(2001) regressions of governance change against aid, we find that lagging aid reverses Knack’s result
(see Appendix B). With regard to aid’s effects on policies, there is further ambiguity. While there is little
doubt that conditionalities have often failed and, even when they have worked, have worked extremely
sluggishly, the last twenty years also appears to have been a period of unprecedented reform. It
therefore seems difficult to reconcile statements by Dollar and colleagues (Burnside and Dollar 2000;
Collier and Dollar 2002) that “Aid has not systematically affected . . . policies during the 1970-93 period”
with statements by Rodrik (2003) that “countries such as Mexico, Argentina, Brazil, Colombia, Bolivia,
and Peru did more liberalization, deregulation and privatization in the course of a few years than East
Asian countries have done in four decades”. It seems hard to believe that donors – the Washington
institutions in particular - did not play any role in influencing these regimes. Moreover, several of the
most stubborn African reformers – Ethiopia, Madagascar, Malawi, Kenya, Tanzania – were finally
relenting to World Bank pressure at almost precisely at the time of Burnside and Dollar’s initial
publications.
Our view is that whether one regards aid as a success or a failure very much depends on what one
expects aid to achieve. If institutions are primal, is it reasonable to expect aid to be an engine of growth?
Probably not. If institutions are rigid and bad institutions are especially difficult to break down under the
best of circumstances, is it reasonably to expect aid and aid donors to substantially improve them? At
best, only very slowly. Aid operates in a Second (or Third or Fourth) Best universe. And while the
effectiveness of aid flows can doubtlessly be improved along a number of dimensions, it is unrealistic to
expect aid to easily produce the deep institutional changes necessary for growth. Foreign aid is
essentially a proximate determinant of growth, but the evidence here suggests that, measured against a
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more realistic institutionalist yardstick, it is a reasonably effective one, especially when its motivations
are, in a developmental sense, relatively pure. Moreover, donors can make aid substantially more
effective simply by reducing the strategic biases of their aid allocations.
Headey, Derek (2008), “Geopolitics and the Effect of Foreign Aid on Economic Growth: 1970-2001,” in
Journal of International Development, Vol. 20, No. 2, pp. 161-180.
While improving the techniques used to test aid effectiveness generally shows that aggregate aid is
more effective than was previously thought (by some, at least), these improvements also indicate that
multilateral aid has typically been more effective than bilateral aid in promoting growth. Moreover, a
potent explanation of bilateral aid’s ineffectiveness over the last 3 decades is an apparent Cold War
effect. In this section I address some possible objections to these conclusions, before touching on the
methodological and policy-related implications of the results.
In draft versions of this paper, some readers were sceptical of the idea that multilateral aid is really less
strategic than bilateral aid, pointing, for example, to a plethora of recent results which show that US
national interests seem to influence the allocation of IMF funds, World Bank aid and in one paper, even
Asian Development Bank aid.30 The typical approach in these studies is to first explain the aid allocations
of the IMF, The World Bank or the ADB in terms of purely developmental variables, and then test
whether indicators of US strategic motivations are significant, ceteris paribus. But whilst the general
conclusion that such strategic variables are significant does indeed suggest that multilateral aid is not
truly apolitical, the vast majority of World Bank aid flows are explained by developmental factors (the
IMF is a relatively small aid donor, accounting for just 2 per cent of total aid flows). In fact, the bilateral
aid allocations which share the closest similarity to World Bank aid are those of the ‘good’ but small
donors, such as Denmark and the Netherlands.31 So what these studies report are ‘t-value results’
(rather than ‘R-squared results’)32 which do not materially influence the conclusion that World Bank aid
as a whole is much less geopolitically motivated than the aid allocations of the larger bilateral donors.
On a more methodological front, this study has raised some interesting issues in the empirics used in aid
effectiveness studies. In particular, I conjectured that improving the techniques in aid-growth
regressions can significantly alter results, and Section 2 provided some evidence that this is the case.
Easterly et al. (2003) have already revealed that the significant and positive coefficient on Burnside and
Dollar’s aid-policy interaction term disappears with the updating of Burnside and Dollar’s sample. But in
a sense my results are more powerful, since I show that even if Burnside and Dollar had only changed
their specification in one dimension (lagging aid) then they ought to have concluded that aid does
typically have large unconditional marginal effects on growth. In addition, a recent IMF working paper
(Rajan and Subramanian, 2005) uses purely geopolitical factors to instrument for foreign aid. Since the
results reported here suggest that geopolitical aid may be less effective than developmental aid, Rajan
and Subramanian’s estimate of geopolitical aid is likely to give a more pessimistic appraisal of aid
effectiveness relative to other approaches in the literature.33 See Murray (2006) for a discussion of
instrumentation problems associated with heterogeneity in second stage effects.
Another contributing factor to the more pessimistic results of earlier studies—such as Burnside and
Dollar and Boone (1996)—is that their timeframes almost entirely encapsulated the Cold War era, when
bilateral aid appears to have been ineffective. Essentially, then, we have the ironic result that these
writers were very vocally concluding that aid was ineffective at precisely the time when the main culprit
in this conclusion— bilateral aid—was just starting to have a sizeable positive impact on growth rates.34
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Nevertheless, the results reported in this paper are not in entire disagreement with the main thrust of
Burnside and Dollar’s work, which also emphasises geopolitical biases as the principal reason for the
inefficient allocation of bilateral aid. The argument in this paper is somewhat broader in scope, and not
necessarily confined to the allocative inefficiencies associated with geopolitics, but both lines of
reasoning emphasise the importance of the aid allocation literature.35 By at least partially elucidating
the geopolitical motivations of donors, this literature can draw attention to the efficiency implications of
politically biased aid allocations as well as their ethical implications. Donors should not deceive
themselves with the assumption that aid flows intended to purchase geopolitical objectives will also
achieve substantial developmental outcomes, mutatis mutandis. The evidence presented here suggests
that assumptions such as these have been very costly in the past.
Heron, Tony (2008), “Aid for Trade: Towards a New Development Assistance Paradigm for Small
States?”, IPEG Papers in Global Political Economy, No. 37.
This paper has sought to sketch out a preliminary assessment of Aid for Trade, placing a particular
emphasis on the special circumstances on small states. To the extent that Aid for Trade is concerned
with compensating preference-dependent countries for the loss of income due to preference erosion, it
has argued that small states are particularly worthy of attention due to their high dependence on
international trade in general and preferential trade in particular. On the other hand, estimates of the
welfare losses associated with preference erosion remain disputed – as is the question of the overall
importance of compensating preference-dependent countries vis-à-vis other development priorities in
the DDA. In an important sense, much may depend on whether Aid for Trade in respect of the DDA is
conceived of in instrumental terms – that is, an attempt to ‘buy’ support for ambitious MFN tariffs cuts –
or more as a genuine attempt to integrate the world’s poorest countries into the world economy.
Ironically, it may actually serve the interests of small states better if the former is the case, since the fear
of the loss of preference margins is seen as one of the main obstacles in the way of securing a
meaningful round of tariff reductions (Francois et. al 2005). The other unknown factors which feed into
the above centre on how much money Aid for Trade will ultimately be worth and what the overall
significance of its inclusion inside of the DDA will turn out to be. From this perspective, we might
conclude that, at this stage at least, that the overall significance of Aid for Trade is as uncertain as the
outcome of the Doha Round as a whole.
Hjertholm, Peter and White, Howard (2000), “Foreign Aid in Historic Perspective: Background and
Trends,” in Tarp, Finn (ed.), Foreign Aid and Development: Lessons Learnt and Directions for the
Future, pp. 80-102, London and New York: Routledge.
Historically, foreign aid has served a multitude of objectives. For some of the smaller donors, the
allocation and quality of aid flows have been largely, but not wholly, shaped by a concern for the
development needs of the recipient community. By contrast, the foreign aid of several of the large
donors has been firmly established as a foreign and commercial policy tool, designed to achieve a range
of political, strategic, economic, but also genuinely humanitarian objectives. This assertion is born by
observing the historical origins of foreign aid and is supported by the empirical literature on aid
allocation. Indeed, it seems that donor self-interest has been an enduring feature of donor-recipient
relations since the 1950s, a relationship that has otherwise been characterized by many changes in
terms of volume, composition, types and objectives of aid flows. Yet, while this particular characteristic
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of aid flows may well have impaired the effectiveness of aid, by nature, there is no automatic
contradiction between donor and recipient objectives.
Perhaps the most important of recent changes in the aid picture is the clear reversal after 1992 of the
historic upward trend in aid volumes. This may not be a big problem when declining aid flows are
compensated by higher private flows, as has happened in several developing countries. Yet it may be a
considerable problem in low-income countries without access to private capital and which continue to
rely heavily on aid for financial resources. Clearly, the underlying premises of donor-recipient cooperation are very different when aid resources become more limited rather than more abundant,
especially when debt service is still a factor of significance. Indeed, this is one of the rationales behind
writing this book, and many of the themes touched upon in this chapter will be pursued in later chapters.
Hoadley, J. Stephen, (1980), “Small States as Aid Donors,” in International Organization, Vol. 34, No. 1,
pp. 121-147.
This brief deployment of data around propositions on small state donors’ foreign aid behavior lends
credence to the presumption that small states do indeed behave differently from large states. The data
confirm that small states give aid to a narrower range of recipients but give aid more generously; that
small states channel more of their aid through multilateral agencies and give more of their bilateral aid
to the poorest countries; and that small states conform more closely to international targets on aid
volume and ease of terms. There is also evidence to suggest that small states avoid giving aid to the
enemies of their large allies, with many exceptions, and that small states tend to give aid in a manner
less directly self-interested, politically or economically, and more oriented towards recipient need. And
it is confirmed that the decision to place Canada in the category of small state donors was a correct one,
for Canada is found to fit the small donor aid performance averages far better than the large donor
averages.
We end with a note of caution: size itself does not determine a state’s behavior directly; it is merely a
quality which must be taken into account by decision-makers along with many other qualities and
conditions of the international environment. There is no attempt in this essay to elevate size to the
status of a causal variable, for to do so would be misplaced concreteness. Rather, the attempt here has
been to demonstrate that size, measured by population, stands as a useful surrogate for a number of
qualities of a state which structure the perceptions and policies of international actors in consistent
ways and that it is especially useful in quantitative and comparative studies of patterns of policy
outcomes such as aid allocations.
Hook, Steven W. (1995), “Chapter 7: The Comparative Record,” in Hook, Steven W., National Interest
and Foreign Aid, Boulder, pp. 143-165, Colo.: Lynne Rienner.
As the previous four chapters have demonstrated, the French, Japanese, Swedish and US governments
have transferred large amounts of foreign aid to developing countries in pursuit of widely varying
objectives throughout the post-World War II period. The historical and political settings of their
development aid programs have been reviewed in detail, along with their relationships to the donor’s
broader foreign policies. The direction and assigned functions of each donor’s aid flows were also
examined along with their performance in relation to the ODA regime’s qualitative standards.
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This chapter contrasts the performances of these donors from a variety of perspectives: in the contrast
of the three potential foreign-policy interests outlined in previous chapters; in terms of the relationship
between the quantity and quality of aid flows; from the standpoint of state behavior within an
international regime; and from systemic and domestic levels of analysis. Each perspective provides
distinct insights into the foreign-aid policies of these donors; collectively, they strengthen our
understanding of the intimate relationship between national interest and foreign aid.
Donor Interests and ODA Patterns: A Summary
The basic needs of impoverished peoples ostensibly represent the basis of contemporary development
assistance, as reflected in the proclamations of donor states and multilateral aid organizations. These
aid providers most often emphasize the narrowing of economic disparities between the world’s rich and
poor, the alleviation of short-term suffering within LDCs, and the benefits derived from long-term
economic, social, and political development. Within the ODA regimes, aid flows have been commonly
characterized as a moral obligation of the world’s wealthy toward the less fortunate.
As previously observed, in an attempt to codify these humanitarian objectives, the Development
Assistance Committee of the OECD has established a series of qualitative standards for aid flows. These
standards involve minimum proportions of ODA flows relative to donor GNP, the appropriate recipients
of aid, the mode of aid delivery, and the terms upon which aid is extended. Although the OECD
members have not always embraced these standards and have often acted upon their own conceptions
of aid quality, the ODA norms continue to reflect widespread presumptions about the humanitarian
basis of development aid.
Among the four donor states under study, the Swedish government most closely adhered to these
qualitative standards during the 1980s. More so than the other three donors, Sweden distributed aid to
the poorest recipients and on the terms most favorable to them (often exclusively in the terms of
grants). The statistical analyses revealed a consistent emphasis on humanitarian interests in Swedish
ODA disbursements. France’s ODA flows, which were concentrated among its former colonies and
overseas territories, were also found to be related to the social welfare conditions of its recipients. In
the case of Japan, no significant relationship between ODA flows and social-welfare conditions within
recipient states was found. The United States’ aid program also lacked such a relationship when all
recipients were considered; when the two primary recipients (Israel and Egypt) were eliminated from
the analysis, U.S. ODA flows were found to be statistically related to humanitarian interests during five
of the final six years of the decade.
In challenging the OECD’s qualitative standards, leaders of major donor states often advanced
alternative conceptions of recipient humanitarian interests. The emphases of their ODA programs –
including regional economic development related to bilateral trade and military support in support of
geopolitical goals – were seen as compatible with the long-term human needs of LDCs. In the Japanese
case, for example, leaders argued that their own robust economic growth served as a model and as a
catalyst for development within neighboring LDCs, who thus improved their living standards more
effectively and more enduringly than they would have through the receipt of economic aid based
exclusively on their social welfare needs. And in the case of the United States, the protection of allies
and many LDCs from communist infiltration was expressed in humanitarian terms; the preservation of
political freedoms was viewed as a moral undertaking comparable to that of promoting socioeconomic
welfare in the Third World. Neither of these conceptions of humanitarian interest maintained by most
other donor states or by the ODA regime in general, which continued to emphasize more immediate
responses to basic human needs as the essential imperative of development aid.
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The preceding discussion relates directly to the linkages between ODA flows and donor economic
interests. Significant empirical relationships between the two existed in the case of Japan and, to a
lesser degree, in that of France; both countries’ ODA flows were disproportionately directed toward
recipients with which they maintained close bilateral trade ties. As Japanese leaders acknowledged, not
only did domestic economic growth stimulate that of neighboring countries, but the process of
sustained regional growth served Japan’s own long-term economic interests as well. France similarly
integrated its aid and trade relationships as part of an effort to enhance its own economic interests
through the growth of the regional economy in francophone Africa and among its overseas territories.
The trading networks were more important to LDC economies than to that of France, but collectively
they provided crucial sources of raw materials and destinations for finished products and investment
capital.
No such relationships were evident in the cases of Sweden or the United States. More so than other
donors Swedish officials framed aid policy in the context of transnational economic redistribution and of
reducing long-standing material inequalities between the affluent North and the impoverished South.
This focus could be readily observed in the concentration of Swedish ODA among a small number of
Third World recipients – most of them in sub-Saharan Africa and many of them among the poorest
developing countries – with little economic connection to Stockholm.1 U.S. leaders, meanwhile,
emphasized market-driven growth strategies as the best means for LDCs to achieve prosperity and close
the gap between North and South. Many influential observers of U.S. ODA (e.g., Eberstadt, 1988),
reflecting the conventional wisdom of government officials, believed U.S. technical assistance should
primarily be directed not toward addressing basic needs in the poorest LDCs, but instead toward
encouraging leaders of LDCs to stimulate private enterprise and attract foreign investment. As Baldwin
(1985: 324) observed,
American policy makers have repeatedly gone to great lengths to emphasize that economic
development is primarily a matter of domestic effort and that external assistance can merely
supplement such efforts. Both explicitly and implicitly American policy has reflected the belief
that development must come from within and cannot be imposed from outside.
The relationship between donor states’ economic interests and ODA may be illuminated further by
considering aid flows in the context of the economic systems maintained by recipient countries.2 In
Africa, the region with the largest number of recipients and the only one in which all four aid donors
maintained extensive bilateral ODA ties, France, Japan, and the United States directed more than 70
percent of their ODA flows to states with capitalist economies, whereas 80 percent of Swedish aid was
transferred to states with Marxist or socialist economies (see Table 7.1). Although U.S. aid flows were
not statistically related to trade ties with recipients, the United States distributed the highest
percentages of ODA (88 percent) among the four donors to capitalist states in Africa. This fact suggests
that economic interests may be expressed in various ways by donor states. In addition, it demonstrates
the tendency of donors to direct aid flows to recipient countries with economic systems similar to their
own.3
The relationship between development aid and donor states’ security interests has been rendered
increasingly ambiguous given the shifting bases of security in an era of “economic statecraft.” This study
relied on the traditional conception of security interests, which were related to recipients’ levels of
militarization on a relative and absolute level. Its underlying assumption has been that selective
economic support to militarized LDCs serves indirectly to project the security interests of aid donors.
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Most significant in this respect was the consistent correspondence between the flow of U.S. ODA and
both absolute and relative indicators of recipient militarization. This relationship was principally a byproduct of the concentration of U.S. assistance to Egypt and Israel. The security emphasis, consistent
with the nation’s broader approach to foreign policy as one of the two Cold War superpowers, was
magnified by the transfer of U.S. military assistance to many of the same LDCs that received annual
infusions of U.S. ODA.
In none of the other cases were security interests significantly related to bilateral ODA transfers.
France’s security agreements with most of its aid recipients in francophone Africa allowed for French
assistance in times of crisis but otherwise discouraged militarization within the region. Japanese
militarization was proscribed by the country’s U.S.-imposed constitution, and its military security was
assured by its bilateral defense treaty with the United States, factors that were reflected in the absence
of security considerations in its ODA policies. Finally, the Swedish government based its national security
on neutrality and the pursuit of pacific resolution of international conflicts; military considerations were
explicitly omitted from Swedish ODA calculations and were not evident in aid patterns during the 1980s.
Like Swedish leaders, those in France and Japan distanced traditional security objectives from their ODA
calculations but acknowledged that their aid relationships enhanced their own security, more broadly
defined. All three of these donors characterized themselves during the 1980s as “bridges” between the
Cold War superpowers and portrayed the economic and social development of their selected aid
recipients as a means to reduce the latters’ dependence on either superpower. Through the
development of LDCs, these donors presumed, their own security would be enhanced. As one of the
superpowers, however, the United States subsumed its aid flows within a broader security orientation.
It conceptions of national security was most congruent with traditional standards of military
preparedness, both at home and within its allies, and these norms were reflected in the flow of U.S. aid,
both military and economic, to supportive LDCs throughout the world.
ODA Performance: Quantity Versus Quality
As noted above, ODA programs are generally evaluated on the basis two criteria: first, the quantitative
or aggregate volume of aid outlays; and, second, their qualitative characteristics as defined by the
Development Assistance Committee. To many analysts of foreign aid, per capita aid flows, their
proportion to donor GNP, and the adherence of donors to other qualitative standards serve as better
reflections of commitment of donors to Third World development than do the absolute sums of aid
transferred overseas. It is for this reason that the U.S. aid program, although the largest in absolute
terms throughout the Cold War, was regularly criticized for its qualitative shortcomings.
An inverse relationship between quantity of aid flows and their quality was evident in the allocations of
France, Japan, Sweden and the United States during the 1980s and for all members of the OECD during
the final year of the analysis (see Table 7.2). The major donors of ODA on an absolute level, particularly
the United States and Japan, ranked among the sources of lowest-quality aid. Concurrently, those
transferring lesser net amounts, such as the Netherlands, Norway and Sweden, were among the leaders
in terms of quality. These negative relationships were strongest when the top ten ODA donors were
considered; the correlations were negative and significant in all four cases, particularly vis-à-vis aid to eh
poorest LDCs. When all eighteen members of the DAC were included the relationship between ODA
flows and the top two categories of aid quality were positive but insignificant, whereas the relationship
between aid and the final two categories was negative and of moderate significance. These patterns
demonstrate that the tension between ODA quantity and quality extends beyond the four categories
reviewed in this study and represents a general tendency among aid donors.
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The discrepancy has propelled an ongoing debate within the ODA regime regarding appropriate
standards of conduct in this issue area: Donors of relatively small volumes of aid routinely criticize major
donors, namely the United States and Japan, for contributing less on a proportionate or per capita basis
than they seemingly can afford and for violating the norms of aid quality as articulated by the DAC.
Major donors, conversely, emphasize their large aggregate volumes, dismiss certain DAC qualitative
standards as invalid, and point to their leadership in stimulating regional and global economic growth,
providing for the military security of overseas allies, and so forth. The debate, often conducted in public
forums, continued through the 1980s and into the 1990s as donor states large and small struggled with
sluggish domestic growth rates, growing domestic demands for fiscal austerity, and ongoing pressure
from LDCs for continued or growing amounts of development assistance.
In absolute terms, the United States consistently operated the largest DOA program during the postWorld War II period; its preponderant role in global foreign aid is magnified when US military assistance
is taken into account. This pattern continued throughout the two decades between 1970 and 1990,
during which annual U.S. ODA flows averaged about $8.5 billion (see Figure 7.1). The volume of
Japanese ODA increased threefold during the same twenty-year period, from about $3 billion to more
than $9 billion. Japanese ODA, which was not accompanied by military assistance, ultimately reached
and exceeded U.S. levels, although its higher levels were in part a reflection of a stronger yen during the
1980s. France and Sweden reported similar growth rates, but their aggregate flows were far smaller
than those of the other two donors. For the DAC as a whole, inflation-adjust aid outlays grew from $25.5
billion in 1970-1971 to $47.6 billion two decades later, an overall increase of nearly 90 percent. This
quantitative increase coincided with the expansion both of bilateral and multilateral sources of ODA and
of aid recipients.4
Among qualitative indicators of ODA performance, the ODA/GNP ratio is most widely considered to be
indicative of a donor state’s commitment to Third World social welfare and economic development. At
the 1968 UNCTAD meeting, members of the DAC pledged to dispense at least 0.7 percent of their GNPs
in the form of ODA. This became the accepted benchmark of aid quality. Sweden, the first country to
reach and exceed this level, frequently transferred a full 1 percent of its GNP in economic assistance; it
government was unable to maintain these levels in the early 1990s, however, amid continuing economic
austerity and growing dissensions over the direction and terms of aid flows.
In the French case, ongoing disputes over whether its overseas territories should be considered ODA
recipients were closely related to its performance in this category of aid quality. Excluding these
recipients, French ODA averaged about 0.55 percent of French GNP; if they were included, the average
approached 0.8 percent throughout the 1980s. In the same time span, the high absolute levels of ODA
from the United States and Japan contrasted with their relatively low levels of proportionate aid flows.
Although the share of national product allowed to ODA rose marginally in the Japanese case, it fell in
that of the United States, reflecting a long-range pattern that continued into the mid-1990s (see Figure
7.2).
Similarly, Japan and the United States contributed less ODA on a per capita basis than France or Sweden
(see Figure 7.3). Per capita outlays rose during the 1980s in every case except that of the United States
during the decade. The greatest proportionate increases were reported by Sweden, whose per capita
flows jumped from about $150 to $205, and by France, whose per capita flows grew from $98 to $135 in
1989 dollars. Japanese per capita ODA flows increased slightly from $50 to $74 during the decade,
where as U.S. flows declined slightly from $40 to $37. As previously observed, per capita ODA was one
of the few categories in which aid quality generally improved during the 1980s. Among the eighteen
DAC members, per capita aid flows increased in twelve cases, with the greatest proportional increase
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reported by Finland, which tripled per capita flows, from $43 to $143. Decreases were reported by
Australia, Belgium, New Zealand, and the United Kingdom, along with the United States.
Another closely watched indicator of ODA quality was the degree to which resources were offered in the
form of grants rather than concessional loans. Members of the contemporary ODA regime collectively
increased the relative grant element during the 1980s, responding to the emergent norm that LDC
recipients should not take on reciprocal burdens in exchange for ODA. Sweden, for example, adhered to
its standard of nearly 100 percent grants, and French and U.S. leaders gradually increased their grant
proportions (to 85 and 99 percent, respectively). Japan, however, maintained relatively greater levels of
concessional loans in the name of recipient “discipline.” But even in this case, the grant level grew
considerably during the decade.
Figure 7.4 further illustrates the effort by the Swedish government to conduct a high-quality ODA
program. The share of Swedish ODA directed to LLDCs, which measured 33 percent of outlays in 1990,
respectively, was nearly twice in the 1989 French and Japanese levels (18 percent) and nearly three
times the U.S. level (13 percent). Among the two major donors, the concentration of Japan’s flows to
newly industrialized countries along the Pacific Rim limited its contribution to LLDCs, and the
disproportionate share of U.S. ODA directed to Egypt and Israel had a similar effect. Overall, DAC
members reduced their relative disbursements of ODA to the poorest subset of recipients from 25 to 22
percent during the 1980s.Their performance in this regard reflected the general decrease in aid quality
over the decade.
These patterns have been reviewed collectively to illustrate the wide variations in aid behavior among
these donors. Further, they have reinforced the inverse relationship between the quantity and quality of
aid flows, the latter of which is monitored by the ODA regime in several categories.
Systemic Dimensions of ODA Behavior
The inverse relationship between ODA quantity and quality, which reflects the broader variation in the
absolute scale of donor economies, suggests that systemic factors are closely related to their behavior in
this area of foreign policy. More broadly, it calls attention to the general importance of systemic factors
in influencing state actions.
In contrast to unit-level factors (incorporating both societal and governmental characteristics), systemic
explanations “account for state behavior on the basis of attributes of the system as a whole” (Keohane,
1984a: 25). Such explanations are not intended to deny the importance of such unit-level factors, nor do
they presume a narrowly deterministic relationship between systemic factors and state behavior.
Instead, they suggest that analysis of foreign policy should begin with a look at the broader milieu of
state action and its impact on the calculations of foreign policy. As opposed to deterministic models,
environmental possibilism (Sprout and Sprout, 1969: 44) “postulates some set of limits that affect the
outcomes of any attempted course of action.”
Analysts of international relations have long argued that the distribution of state resources is a salient
determinant of military stability within the international system. They have disagreed as to whether a
bipolar (Waltz, 1964) or a multipolar (Deutsch and Singer, 1964) distribution of power is more warprone, but they have shared the underlying presumption that “outside-in” interpretations are
instructive in the study of world politics. By contrast, the systemic sources of states’ foreign economic
policies, in areas that include the transfer of foreign aid, have received less attention. As in the case of
security issues, however, economic policies are not created in a vacuum; they reflect the relative
capabilities and more general roles of each state in the international system. In this view, “the foreign
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economic policy of individual country is affected both by the international economic structure … and by
the state’s position within it” (Lake, 1983: 523-524).5
The importance of systemic factors in influencing the volume and direction of donor aid flows begs the
larger question of what systemic roles have been played by individual aid donors and how their roles
have been reflected in foreign-policy behavior in general and aid policy in particular. Among early
analysts of systemic roles and foreign policy, K. J. Holsti provided a typology of roles that may be usefully
applied to this important dimension of world politics (see Table 7.3). Holsti (1970: 307) defined the role
concept as an “analytical tool for explaining certain ranges or patterns of foreign policy decisions and
actions.” These systemic roles, as apprehended by political leaders and translated into political action,
shape the long-term objectives of nation-states and must be considered in any comprehensive effort to
understand comparative foreign-policy behavior (see Walker, 1987; and Wish, 1987).
Appling Holsti’s typology to the four donor states during the 1980s, the behavior of France was most
characteristic of a systemic “active independent,” which is prone to “emphasize at once independence,
self-determination, possible mediation functions, and active programs to extend diplomatic and
commercial relations to diverse areas of the world” (Holsti, 1970: 262). A consistent relationship was
evident between this systemic role and France’s overall approach toward foreign affairs as well as its
actions in transferring ODA. French leaders’ pursuit of autonomy in foreign affairs, their identification of
French interests with those of their francophone neighbors, and their active involvement in
international organizations reinforced this aspect of France’s systemic role. In the area of ODA, France
extended concessional financing as part of an orchestrated effort to serve as a bridge between North
and South and between East and West and to enhance its regional influence and prestige.
Meanwhile, Japan’s foreign-policy performance was most characteristic of a “regional-subsystem
collaborator,” which deliberately eschews a global role and undertakes “commitments to cooperative
efforts with other states to build wider communities” (Holsti, 1970: 265). As noted earlier, after World
War II Japanese military rearmament was precluded under its constitution, which limited its defense
spending to 1 percent of GNP, and its territorial security has been protected ever since through its
bilateral treaty with the United States. Japan’s narrow focus on tightening economic relations with the
Pacific Rim, extending beyond ODA policy to trade and private investment, was consistent with this
systemic role. Regional integration was complicated by Japan’s previous imperial ambitions in East Asia,
but it remained an explicit goal of Japan’s leadership into the 1990s and found expression in the
interrelationships between Japanese ODA flows, trade ties, and patterns of overseas private investment.
Sweden’s disavowal of political and security alignments, its preference for pacific means of conflict
resolution, and its promotion of like-minded LDCs exemplified the behavior of a systemic “mediator”
(Holsti, 1970: 255). Such a state characteristically ventures to create and “interposition into bloc
conflicts” and provides a forum for negotiated settlements and integration. Swedish leaders often
emphasized both the constraints and opportunities posed by their country’s role as a small power in the
midst of stronger states. In this respect, Prime Minister Palme often referred to the “small-state
doctrine” that guided Swedish foreign policy. This effort entailed support for other small powers,
particularly those sharing Sweden’s social and political values, along with the application of those
instruments of foreign policy that most “equalized” the influence of states: international organizations,
international law, and, if concentrated toward a few key recipients (“program countries”), development
assistance. Its neutralist foreign policy entailed a defensive military capability and the avoidance of
formal alliances. To Sundelius (1990: 122), these strategies exploited the natural advantages of a
“committed neutral”:
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By keeping a distance from both sides, the Swede indicates a commitment to impartiality in any
political conflict between these sets of values. Through such reasoning, the neutral position can
be justified in positive terms. It provides a foundation for a unique and valuable mediating role
between two alien antagonists. This stand is identified with a vital systemic function and is thus
transformed from a strategy of political necessity to a moral imperative. In such a perspective a
neutral democracy is clearly not morally compromised. On the contrary, it represents reason and
a concern for the overriding interests of the international community (emphasis added).
The United States, by contrast, assumed the role of “bloc leader” throughout this period, described by
Holsti (1970: 255) as one based on ideology, systemic predominance, active resistance to perceived
external threats, and the maintenance of “bloc cohesion.” The U.S. preoccupation with military security,
which was evident in its patterns of military and economic assistance, was typical of a great power,
which attempts to establish and retain global influence in the face of perceived threats from other great
powers.
These role profiles call attention to the importance of each state’s broader role within the international
system in shaping its foreign policies. In all four cases, the documented patterns of ODA behavior were
consistent with the expectations of Holsti’s analysis. The consideration of systemic roles as a source of
foreign-policy behavior focuses on the relative attributes of each state and their impact on shaping
policy. The question may be probed a step further by examining the relationship between a state’s
absolute resource base and its behavior in distributing ODA. As noted previously, states that provided
the most ODA were less likely to adhere to DAC standards of aid quality; of additional interest is
whether the wealthiest states, as measured by GNP, varied in their qualitative ODA behavior in a similar
manner. The evidence from the year 1989-1990 suggests that they do. When the ten largest OECD
economies are ranked for their performance in four areas of aid quality, the negative rank-order
correlations range from -.32 to -.72. This pattern is also evident when all eighteen members of the DAC
are considered, although the negative correlations are weaker in each case (see Table 7.4).
Collectively, these patterns demonstrate the relationship between the size of a donor state’s economy,
a key aspect of its systemic role, and its behavior in providing assistance to LDCs. These findings are
consistent with those advanced by Ruggie, who found that the amount of economic resources available
to aid donors was inversely proportionate to the extent to which they provided aid through multilateral
channels. Thus, “the condition of possessing a certain level of national resources seems to be related to
a state’s propensity to organize the performance of a task internationally” (Ruggie, 1972: 883). This
relationship has profound implications for the future volume, direction, and quality of aid flows under
the rapidly shifting systemic conditions of the 1990s. Observers of aid policy may wish to consider the
emerging roles of states, based on both relative and absolute standards, in attempting to understand
current aid strategies or anticipate future plans.
Donor Behavior Within the ODA Regime
Though systemic factors have most often been related to the international system’s propensity for
armed conflict and to the behavior of states in matters of war and peace, they have increasingly been
applied to other aspects of state behavior in economic affairs. Kindleberger (1973) and Gilpin (1975),
among others, have developed and refined the theory of hegemonic stability, which argues that the
preservation of a liberal international economic order is facilitated by the presence of a preponderant
economic power. In this view, the absence of a global hegemon during the period between the world
wars contributed to widening economic warfare and the collapse of many industrialized economies.
Conversely, post-World War II U.S. preponderance in both economic and security areas presumably
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sustained global economic stability. Current debates over hegemonic stability concern the prospects for
a viable monetary and trading system in the absence of a hegemon. The relative decline of the United
States (whose share of global GNP fell from about 50 percent in 1945 to about 22 percent in 1994) and
the concurrent ascension of Japan, NICs, and members of the European Union since the 1970s have
provided the impetus for these debates.
It is widely presumed that many of the economic regimes that emerged as part of the liberal
international economic order (LIEO) immediately after World War II were manifestations of U.S.
hegemony. Contrary to the expectations of hegemonic-stability theorists, the erosion of U.S. hegemony
has not been accompanied by the breakdown of most transnational economic regimes. Many middleincome states continue to violate principles of the LIEO, “free-riding” under the economic and security
protection of the United States, yet the postwar order has remained largely intact. Recent evidence for
this cohesion was the conclusion in early 1994, of the Uruguay Round of GATT talks, at which the
delegate agreed on many measures to further coordinate and liberalize their macroeconomic policies
and to institutionalize global trade within the World Trade Organization.6 To Keohane (1984a: 215) and
others, the persistence of many regimes is due to the endurance of the norms, principles, and
procedures that were established under conditions of hegemonic influence: “International regimes
perform functions demanded by states having shared interests; when the regimes already exist, they
can be maintained even after the original conditions for their creation have disappeared.”
The foundations of the ODA regime were established during the peak of U.S. hegemony and reflected
developmental principles of GATT, the World Bank, and the International Monetary Fund. Although the
current institutional framework did not take shape until after the process of decolonization had largely
concluded in the early 1960s (see Chapter 2), when the decline of the relative U.S. position was well
under way, the developmental models conceived in the 1940s and 1950s were largely adopted by the
OECD and its Development Assistance Committee. Like other transnational regimes, that which
coordinated ODA reflected the prerogatives of its most powerful members, including those providing
the greatest aggregate volumes of aid. DAC members agreed upon the collective interests and broad
objectives to be served by the ODA regime – to ease the suffering of the world’s poor and to promote
market-oriented economic growth – but their self-interests were accommodated and were evident in
both their bilateral and multilateral, aid flows.
In addition to being reflected in the deliberations of state leaders and their proclamations of shared
interests and collective actions, international regime behavior may further be demonstrated by the
coordinated activity of states in areas not immediately apparent. In distributing development assistance,
for example, donor states concentrated aid flows along geographical lines; they identified Third World
recipients of particular salience to their own national interests and distributed a disproportionate share
of aid flows to them. Recalling that the United States, Japan, and France represented the three top
donors of ODA during the 1980s, their geographical concentrations effectively amounted to a division of
labor in global ODA flows (see Appendix 2). France served annually as the primary source of aid to LDCs
in francophone Africa; Japan played that role for its Pacific Rim neighbors (and increasingly to East Africa
and South America); and the United States provided most concessional resources to Central American
recipients and those in the eastern Mediterranean, particularly Egypt and Israel (and to a far lesser
degree Oman and Cyprus).7 Shifts in geographical ODA concentration reflected broader changes in
donors’ foreign policies during the decade, particularly in recent years as the Cold War ended and the
international system experienced a fundamental transformation.8
Donor states coordinated the volume and direction of ODA flows in many other respects. During the
height of the Cold War, for example, the U.S. government urged Japan to supplement its own economic
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support for many Pacific states that were considered strategically important in the face of perceived
internal challenges. “Japan’s foreign aid has become inseparably incorporated into the world strategy of
the United States,” argued Shinsuke (1982: 32). Prominent examples of Japanese aid initiatives that
were at least partially driven by Cold War concerns included aid to Indonesia following the departure of
Achem Sukarno (1966), to Thailand during the Vietnam War (1968), and to the Philippines at the peak of
the Ferdinand Marcos dictatorship (1969). U.S. pressure on Japanese aid policies was widely
acknowledged. As Akira (1985: 141) put is, “Japan is responding to American wishes in its allocation of
ODA. And in this sense the Japanese motivation in giving foreign aid lacks the basic humanism that
animates most international aid organizations.”
The empirical patterns outlined above are largely consistent with theoretical expectations of regime
behavior under conditions of hegemony. Specifically, the security orientation of U.S. economic and
military aid reflected the country’s preponderant role in providing for the security of its allies
throughout the Cold War. The patterns of French and Japanese ODA flows, which were statistically
related to their own economic interests, were consistent with the anticipated behavior of smaller states,
which, in the area of trade policy, were given to “free-riding” within the LIEO. This patterned
crossnational behavior was consistent with that expected of an international economic regime, in which
persistent competition among states is regulated and coordinated policy behavior ensures each
participant some benefit. The global ODA division of labor thus adds empirical evidence of regime
behavior in foreign assistance, a fact that is of particular merit given the limited number of international
economic regimes available for study. Further, the coordination of ODA flows with broader aspects of
donor foreign policies reflected the cohesion of the ODA regime in its first three decades.9
Domestic Sources of ODA Behavior
Although the emphasis in this discussion has been on the influence of systemic factors in shaping donor
ODA policies, these policies must not be considered in isolation. In each case, internal social values
strongly influenced donor approaches to foreign aid and foreign policy in general, and the institutional
mechanisms by which aid policies were implemented also exerted a powerful impact. Systemic context
may be a useful starting point in cross-national analysis, but a comprehensive understanding of state
behavior requires an additional assessment of the role of unit-level characteristics that bridge the gap
between systemic context and observable behavior. A review of these domestic factors strengthens our
understanding of donor states’ behavior (see Table 7.5).
In the United States, the broad scope of its foreign-aid program led to the creation of a complex
bureaucracy, giving domestic politics a prevalent role in the shaping of U.S. aid policy. Within USAID,
administrators often clashed over the objectives of specific bilateral aid programs and the general
strategy of achieving U.S. national interests through bilateral and multilateral aid. These debates were
exacerbated by the concurrent flows of U.S. military assistance, coordinated by the Department of
Defense, to many of the same LDCs receiving ODA. The arena for domestic politics further involved
Congress, whose “power of the purse” provided it with strong leverage in directing the flow of foreign
assistance. Congress, of course, was far from a unitary actor in this regard; its members reflected the
interests of their disparate district and state constituents and advanced the prerogatives of a wide array
of committees and subcommittees. The continuity in many bilateral aid programs even spanned
successive presidential administrations pursuing widely varying foreign policies, reflecting the strong
roles of Congress and the aid bureaucracy, which collectively served to mitigate the fundamental shifts
in aid strategy proposed by the White House.
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The prevalence of domestic politics in the U.S. ODA program was in large part a by-product of the
absence of public support for foreign assistance. Overseas aid was consistently among the least popular
federal programs, and it was far less popular in the United States than in the other three countries
under review in this study. This fact was reflected in the relatively small amounts of per capita U.S. ODA,
the relatively small percentage of U.S. GNP devoted to ODA, and the low level of U.S. aid quality as
defined by DAC. Yet U.S. aid transfers, both economic and military continued to grow through the period
in absolute terms, and collectively they represented the largest flows of foreign aid by any single donor.
The impetus for U.S. aid, therefore, must be found outside the realm of public opinion – and inside the
institutional framework of the federal government.
As demonstrated in the statistical analysis, the aid programs were largely related to U.S. security
interests throughout the Cold War, serving as extension of the overall effort by the United States to
maintain its leadership role as “bloc leader.” When they did appeal to the general public for support,
influential political leaders justified aid programs on the basis of their contribution to the broader effort
of containing communism and preserving U.S. influence in overseas regions of “vital interest.” The large
volume of U.S. ODA transferred to Egypt and Israel, which served many domestic constituencies as well
as U.S. interest in Middle East stability, reflected this security orientation – one that was relatively
distinct from Cold War concerns.
The large Japanese ODA program was also driven by domestic politics but under very different
circumstances. In contrast to their U.S. counterparts, neither the chief executive nor the legislative
branch of the Japanese government played a stronger role in formulating and executing aid policy.
Instead, aid policy was largely driven by decentralized government ministries, many of which pursued
parochial foreign-policy interests. As Orr noted, “There exists a greater degree of delegation of authority
by the [Japanese] legislative branch to the administrative branch. Career government officials play a
larger role in making foreign policy than do their counterparts in the United States” (1990: 11-12). This
facet of Japanese politics helps to explain why successive prime ministers’ frequent pledges to diversify
the direction of Japanese aid flows and increase its DAC-defined quality were largely unfulfilled.
Though the general public widely supported Japanese ODA, its influence over the volume and direction
of aid flows was relatively modest. Instead, its general assent provided a mandate for the rapid growth
of the aid program, whose specific applications were determined within government ministries. These
bodies, particularly the Ministry of International Trade and Industry, comprised both political leaders
and powerful economic actors. In this environment, the economic basis of Japanese postwar national
interests found expression in bilateral aid packages to LDCs that maintained strong economic relations
with Tokyo in other areas, including foreign investment and the expansion of multinational corporations.
Japanese officials acknowledged the role of ODA flows in tightening their broader economic links to
regional LDCs along the Pacific Rim and in furthering their own economy, which was viewed as an engine
of regional growth. In this respect, they differed with OECD standards of aid quality and emphasized the
successful application of Japanese ODA in promoting the ascension of many aid recipients from LDC
status to that of NICs.
During the postwar period, French presidents and the general public held widely varying ideological
orientations and advocated disparate national objectives, reflecting the country’s conflictive political
culture. This discord existed to a lesser degree in the area of foreign policy, however; a general
consensus existed on France’s role within the “front rank” of major powers and, more specifically, on
the continuing concentration of French influence within the developing regions formerly under its
colonial control. French presidents, who maintained broad authority over foreign policy under the
political system designed by de Gaulle, shared these objectives and ensured the continuities in French
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foreign policy, including the distribution of development assistance. The French legislature, though
formally empowered to approve the president’s specific policy initiatives, generally deferred to the chief
executive as the “guarantor” of French national interests.
In this respect, France’s cultural tradition served as a strong and consistent impetus for its relations with
developing countries, which in turn served as a primary vehicle of the country’s overseas ambitions. As
Cerny put is, “French policy was always dominated by a cultural element which put cultural values …
before a search for either economic wealth or pure military power” (1980: 75). In aid policy, French
leaders declared their mission civilisatrice in maintain close relations with former African colonies that
were connected to Paris through monetary integration, trade ties, and ongoing ODA transfers. The
French government also maintained close security relationships with many of these states, but its
influence was generally limited to providing material and logistical support in times of crisis.
The Swedish aid program was also sustained by high levels of public support, which, in contrast to the
French case, extended to other aspects of Swedish public policy, both foreign and domestic. The
country’s consensus political culture was based upon widespread and enduring social values. In
domestic policy, these involved the promotion of socioeconomic equality and the observance of social
democratic principles; in foreign policy, they entailed the pursuit of geopolitical neutrality and active
support for peaceful conflict resolution among great powers.
As in the French case, the Swedish government endeavored to use foreign-aid relationships to project
these societal values, identifying and rewarding LDCs that emulated the Swedish system of social
democracy. In many cases, Sweden supported regimes that were emerging from wars of national
liberation – such as Cuba, Vietnam, Angola, and Nicaragua – and that had established socialist or Marxist
systems. Swedish leaders hoped their “third way” of economic and political development would provide
an alternative to the dependence of these LDCs on either of the Cold War superpowers.
Given the strong societal consensus that endured in Sweden through two world wars and within the
bipolar system of the late twentieth century, the executive and legislative branches played a relatively
modest role in affecting Swedish foreign policy in general and aid policy in particular. The country’s aid
strategy epitomized the “Nordic model,” founded upon explicitly humanitarian interests, support for
LLDCs, the transfer of funds exclusively in the form of grants, and relatively high per capita aid and
ODA/GNP ratios. The distinctive aspects of Swedish ODA policy were modified in the late 1980s,
however, in response to domestic economic strains and growing preferences for greater “realism” in
advancing Swedish economic interests through foreign-aid flows. These modifications were reflected in
the presence of economic interests in Swedish ODA during the final three years of the decade. But the
qualitative aspects of Swedish aid, and the overall thrust of Sweden’s foreign policy and approach to
North-South relations, were largely retained.
The relation of domestic politics to the development and pursuit of national interest is complex and, in
most cases, ambiguous. As the American Federalists (Madison, 1938 [1787]: 56) acknowledged,
domestic politics are invariably divisive based on the presence of contending economic factions: “a
landed interest, a manufacturing interest, a mercantile interest, a moneyed interest, with many lesser
interests, grow up of necessity in civilized nations.” In other respects, domestic divisions are sustained
along religious, linguistic, or ethnic lines. When these divisions become predominant and overwhelm the
ability of central governments to reconcile them, states fall prey to civil war and disintegration. More
often, and in the case of the four countries under study, a sense of holistic identity and purpose
transcends parochial concerns, thus providing the basis of national interest that is expressed in foreign
policy.
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In all of these ways, the national interests and foreign-aid policies of these donor states were influenced
by societal values and government practices. Despite their many internal differences and systemic roles,
these states were influential in creating and maintaining the ODA regime for more than three decades.
Their continuing involvement in transferring ODA in the 1990s – a period in which their relationships
with many LDCs were shaped by the end of the Cold War and in which economic strains placed limits on
their involvement in foreign affairs – presages the endurance of the regime well into the future.
Challenges to the ODA regime continue to be expressed by its members, and long-standing disputes
over aid quality and other issues remain unresolved. These tensions will be explored in the final chapter,
along with the future prospects of development aid. In addition, emerging conceptions of national
interest will be examined as world politics moves further away from the Cold War and toward an
uncertain new millennium.
Hook, Steven W. (1996), “Chapter 14: Foreign Aid and the Illogic of Collective Action,” in Hooks,
Steven W. (ed.), Foreign Aid Toward the Millennium, Boulder, pp. 227-237, CO: Lynne Rienner
Publishers.
According to a well-known African aphorism, “When elephants fight, the grass suffers.” These words
were often used to describe the Cold War’s pernicious effects on LDCs in Africa, Latin America, and
South Asia, many of which served as surrogate battlegrounds during the nearly half century of
superpower competition.
In the late 1990s, a corollary has gained widespread currency: “When elephants make love, the grass
suffers equally.”
Such is the ironic fate of many impoverished states that escaped from the shadow of the United States
and Soviet Union only to find themselves as financially distressed as ever in the mid-1990s. Ambitious
plans to implement the UN’s program for sustainable development have been scaled back in the face of
cutbacks in many aid budgets. The bulk of remaining aid flows has been concentrated among strategic
allies of the United States, trading partners of Japan, former colonies of France and Great Britain, heavily
indebted middle-income countries, and transition states in the former Soviet bloc. For the inhabitants of
the world’s poorest areas, still suffering from acute malnutrition, overcrowding, and political repression,
hegemonic meddling by the major powers has been replaced in many instances by indifference and
neglect.
The crest in worldwide aid flows took many by surprise, as the euphoria surrounding the Cold War’s
demise gave way to a new era of fiscal austerity and economic competition in the industrialized world.
Without influential domestic constituencies to promote aid on a humanitarian basis, and in the absence
of the geopolitical rationales that had driven U.S. and Soviet aid flows for decades, many long-standing
aid programs were reduced or eliminated outright. Those that survived were often those that most
benefited the donor countries – either directly, through the tying of aid funds to domestic purchases, or
indirectly, through the securing of export markets, sources of raw materials, or destinations for overseas
investments. As they became more selective in their aid relationships, donors imposed increasingly
stringent conditions upon recipients regarding their use of the aid funds.
The contributions to this volume have examined the many pieces of the foreign-aid puzzle and have
shed new light on the trends in aid flows between the Cold War and the new millennium. They have
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described these trends in the context of the volatile and rapidly changing international climate of the
1990s, which has witnessed tenuous political and economic transitions in Eastern Europe, the
resurgence of many regional conflicts, tightening economic integration, and a wave of democratization
that has swept across much of the developing world. Military assistance has given way to development
aid in the post-Cold War era, although arms transfers on market terms have accelerated in many
conflict-prone regions. Thus, the emphasis of this anthology has been on the shifting logic of
development-aid programs and their application to the broader policy goals of both rich and poor states.
Along the way, these contributors have illuminated the many ways in which developmental problems
and solutions are unique to each areas [sic] of study. This was the intended purpose of their collective
effort – to move beyond a generalized treatment of international development and to examine its
complexities in a wide variety of discrete functional and regional contexts.
Yet readers of this volume may have noticed commonalities across the chapters, both in terms of the
problems facing donors and recipients and in the solutions embraced to resolve them. Thus, without
minimizing the distinctive aspects of the individual contributions, we may profitably explore some
consistent themes and lessons.
Two-Level Games in Donor States
Among the recurring themes found in Part 2 of this volume is the coexistence of both domestic and
systemic pressures that pulled policymakers and aid administrators in often contradictory directions
during the post-Cold War period. To Putnam (1988), such “two-level games” often constrain the ability
of policymakers to pursue optimal solutions based upon objective evaluations of existing problems and
goals.
In the case of foreign aid, our contributors observed a pattern by which both donor and recipient
governments, having enunciated clear policy goals, were constrained by multiple and frequently
competing domestic actors. These included heads of state, legislative bodies, aid bureaucracies, foreign
ministries, nongovernmental organizations, and elites from the business sector, who exerted greater
leverage in an era of geoeconomics. The foreign-aid regime became more diffused, involving the OECD,
IMF, World Bank, United Nations, European Union, and a network of regional development banks, each
of which brought discrete institutional biases to the table. As a result, the proclaimed ends and the
executed means of foreign aid were increasingly disconnected, resulting in compromises that undercut
the efficacy of aid strategies.
Like other aspects of U.S. foreign relations, U.S. policy toward the Third World has lacked a common
orienting principle in the post-Cold War era, shifting spasmodically across regions and issue areas in an
ad hoc manner (see Spanier and Hook, 1995). President Clinton’s initial embrace of UN-sponsored
sustainable-development efforts was almost entirely suspended after the 1994 congressional elections,
and U.S. support for multilateral development efforts decreased considerably in their aftermath. The
new Republican majority in Congress opted instead for unilateral solutions, symbolized in 1995 by a
$262 billion defense budget for fiscal year 1996 that was $12 billion more than the Pentagon requested.
And a presidential campaign that dominated national attention was largely silent on foreign policy.
More generally, the executive-legislative impasse within the U.S. government, which forced the
repeated closing of the federal government in 1995, prevented a redefinition of U.S. “grand strategy” in
the post-Cold War era. Given his domestic preoccupations, Clinton largely abandoned his earlier attempt
to redefine U.S. policy based upon the enlargement of democratic rule. As a result, many aspects of U.S.
foreign policy – including foreign aid – were placed on automatic pilot, with little innovation or central
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coordination. The United State, though the world’s wealthiest and most powerful state by virtually any
measure, was unable to exploit its advantages and to lead the effort to address global problems in the
wake of the Cold War. Secretary of State Warren Christopher’s April 1996 proclamation that the global
environment had become a vital ingredient of U.S. national security consequently fell on deaf ears,
overshadowed by presidential politics.
During the early 1990s the Japanese government faced its own protracted internal crisis, which
overshadowed its expanding involvement in international development efforts. This political and
economic crisis left Japan’s inefficient system of disbursing economic aid largely intact. As a result, Japan
continued to lag behind other major donors in closely watched qualitative aspects of foreign aid, as
proclaimed reforms were undercut by domestic infighting. More broadly, Japan’s domestic difficulties
hindered its ability to exploit its stature as an economic superpower and to play a stronger role in the
United Nations and other multilateral fore.
As described in Chapter 6, Western European donors fell victim to the cross-pressures of national and
transnational concerns. As the Cold War receded into history, a wide range of domestic priorities
emerged, and these in turn elicited a revival of ethnic and nationalist tensions. The European Union
expanded its membership and pursued a Common Foreign and Security Policy as part of the 1992
Maastricht Treaty but persistent strains at the state level limited the prospects for collaboration in
important policy areas. And the EU’s failure to take concerted or coherent action in response to the
spreading Balkan crisis revealed fundamental shortcomings in its plan for foreign-policy integration.
Nordic donors, meanwhile, abandoned their recipient-oriented approach to international development
in the name of both domestic austerity and regional coalescence with the EU.
Meanwhile, OPEC was never able to reconcile the clashing interests of its member states with the
proclaimed collective objectives of the cartel. Within these states a small number of political elites
embarked upon lavish domestic projects in the name of modernization, but by the mid-1990s the living
conditions in most OPEC nations had improved only marginally from their levels of the early 1970s,
when OPEC exploded onto the international scene. The tangible contributions of OPEC donors to
international development fell below expectations from the outset, and the prolonged the slump in oil
prices eliminated their prospects to play a meaningful role North-South relations.
Domestic politics also plays a critical role within recipient governments, of course, as many chapters of
this volume have illustrated. Converting aid into effective development relies on credible administration
within LDCs along with adequate means to implement aid-funded programs. Frequently during the Cold
War, however, neither condition pertained; the mere presence of bilateral aid from either of the great
powers was seen as sufficient to serve its geopolitical, ideological, or neocolonial interest within
recipient states. Thus aid was often transferred to autocratic LDCs whose leaders exploited the funds for
personal gain or used them for cosmetic projects that did little to alleviate poverty or stimulate longterm development. By contrast, in the less ideologically charged climate of the post-Cold War period,
with democratic governments established in a growing number of LDCs, conditions are more favorable
for the effective implementation of development projects funded through foreign aid.
Taken together, these essays illustrate the precarious role of foreign aid as an instrument of statecraft,
which to some degree is understandable given the relative youth of the global aid regime. Most bilateral
aid programs will be less than forty years old at the turn of the century, and the organized and welldocumented aid behavior of OECD states is a product of the 1970s. The cross-national malaise may also
be understandable given the habitually slow adaptation of national governments to fundamental
systemic changes. Foreign-aid donors initiated most aid programs in the context of the superpower
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rivalry and in the midst of a decolonization process that tripled the number of nation-states and
introduced the pernicious term “Third World.” Many recipients, meanwhile, became accustomed to
annual infusions of concessional funding from several sources and were not prepared when the
rationales for them came under scrutiny after the Cold War.
Industrialized states outside of Japan, so long accustomed to utilizing foreign aid to pursue narrow Cold
War goals or to sustain postcolonial ties, have only in the 1990s turned to transnational concerns of
sustainable development. Although their leaders were loath to admit it, these donor governments faced
a continuing uphill battle to claim legitimacy for large-scale aid efforts only indirectly and ephemerally
connected to their perceived national interests. The problems outlined in the Earth Summit’s concluding
manifesto, Agenda 21, were arguably salient at the global level but difficult to prioritize domestically in
the context of more tangible and short-term concerns. Given that all twenty-one members of the
OECD’s Development Assistance Committee were representative democracies with multiple channels of
access, the subordination of abstract transnational initiatives to diffused subnational priorities was a
logical outcome. In this respect the level of support for sustainable development that remained after
strategic allies, trading partners, domestic interest groups, and debt-ridden NICs were accommodated is
somewhat surprising.
Members of the OECD (1995a: 73) remained optimistic that the leveling off of aid flows recorded in the
early and mid-1990s was “a bout of weakness, rather than an incipient collapse.” Most donors and
international development agencies were encouraged by the proliferations of private financial flows to
LDCs, even though such flows were largely restricted to states already liberated form the most
desperate living conditions. Future prospects for aid depended upon the performance of the remaining
recipients in utilizing the more limited funds they received. But, as always, their performance was
dependent upon wealth states’ political and economic conditions and their willingness to expend their
public resources in the form of foreign aid.
The development-aid regime appears to have attained a sufficiently broad base within the international
political economy to withstand their period of uncertainty. Leaders of industrialized countries have
found common cause with the OECD, IMF, and other multilateral conduits of aid and have clearly
recognized the growing dangers of rapid population growth in LDCs, mounting foreign debt, the
exhaustion of finite natural resources, and the unrest and regional conflict that so often springs from
socioeconomic distress. Of greater relevance for the longevity of the aid regime, developed nations have
apprehended the benefits they can realize when LDCs become viable actors in the global economy. All of
these motivations have assured the extension of foreign aid well into the new millennium, although
coherent collective action to preserve the global commons is still a long way off.
Prospects for AID Recipients
The contributors to Part 3 of this volume considered the experience of aid recipients, and their essays
demonstrated the variability of foreign aid processes and outcomes across regional boundaries.
Recipients of foreign aid must frequently align their political, economic, and security interests with those
of wealthy aid donors, a practice that preceded the Cold War and will remain a mainstay of the aid
regime far into the future. Thus, aid-recipient behavior must be viewed, in part, as refracting the policy
preferences of donor governments and multilateral development agencies.
For many LDCs struggling in the wake of the Cold War, the conditionalities of development aid
effectively structure their government and business sectors. Standards of good governance must be met
through tangible expenditures on police, court, and electoral systems; recipient transparency requires
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the presence of a sizable and professionally trained civil service; and liberal macroeconomic policies
reward and encourage private investors, often from overseas, along with a commercial class that
transforms indigenous cultures and mores. In the past, these same LDCs had to pass ideological litmus
tests to receive foreign aid. The substantive contours of aid conditionalities have changed in the postCold War period. But the aid relationship’s basic asymmetry, which transcends temporal and spatial
boundaries and reflects more basic material inequalities, is the central reality for the developing states
reviewed in this volume.
Recipients in Eastern Europe have utilized massive infusions of Western aid largely for purposes of
reindustrialization – to rebuild factories, electrical utilities, communications networks, and other
infrastructure that had become decrepit under Soviet control. Private investments were not far behind
in Poland, Hungary, and the Czech Republic, and these nations’ progress toward integrating with the
world economy has been considerable. By contrast, leaders in Bulgaria, Romania, Slovakia, and other
transition states have had a difficult time attracting both public and private capital, and across the
former Soviet Union the obstacles to economic and political reform remain daunting. A massive $10
billion IMF loan to Boris Yeltsin’s tottering regime in Moscow was seen as giving him a chance to stay in
power and save his reform efforts from collapse.
In South Asia, home to the largest segment of the world’s population and its largest networks of foreign
aid, LDCs have fragmented along numerous regional, ethnic, religious, and economic fault lines. The
Middle East remains a primary recipient of U.S. military and economic assistance; the Indian
subcontinent attracts development aid from most major donors; and LDCs along the Pacific Rim have
become accustomed to complementary aid and trade ties to Japan. Private investment, however, has
been largely limited to East Asia, where Japan and the Asian Tigers have become role models of statedriven, export-led industrialization. Given the continuing strategic interests of major donors – quite
apart from the degree of human need in South Asia – the concentration of global aid flows to this region
is likely to continue.
The peoples of sub-Saharan Africa, the most distressed region of the developing world, face a much
more uncertain future. Both the Cold War and decolonization rationales that once guided many bilateral
aid programs have dissolved, and private investors have been conspicuously absent. Leaders in subSaharan Africa have watched as the United States has closed several missions, reduced funding levels,
and redirected aid resources to Eastern Europe and the former Soviet Union. The Japanese government
failed to play a significant role in the region, further limiting the availability of development assistance.
As we found, however, the traditional involvement of France and Great Britain – former colonial rulers
in sub-Saharan Africa – and of Scandinavian donors has provided some relief. But in an era when public
aid is increasingly predicated upon private investment with tangible short-term returns, sub-Saharan
Africa well likely be further isolated within the international system in general and the developing world
in particular.
In Latin America, living conditions have improved in many areas, and democratically elected
governments have assumed power in virtually every state. But high levels of foreign debt continue to
soak up foreign aid, removing capital from more productive uses that might improve living conditions in
these largely impoverished states. As always, the foreign-policy priorities of the United States have
dominated the process; most recently, the drug war rendered Bolivia its primary Latin American
recipient in the early 1990s. The Japanese government has in some cases compensated for U.S. aid
cutbacks across South America, where Tokyo discovered fertile territory for corporate expansion and
commercial lending. In general, the terms of aid transfers to Latin America have improved in the postCold War era, now the era of the anticommunist dictator is behind us.
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In general, we have witnessed a paradoxical pattern among recipients of foreign assistance in the postCold War period. Foreign aid has increasingly been directed toward more affluent LDCs and middleincome countries that already have established a record of economic growth, internal political stability,
and pacific relations with their neighbors. On the one hand, this is an encouraging trend that promises
to hasten the economic ascension of these middle-income states. On the other hand, in a stagnant or
contracting global aid network, less support is available to those in greatest need. For these and other
reasons, the economic polarization of the developing world is likely to widen, as is the gap between rich
and poor, abetted both by the growing role of private capital transfers and by the tightening linkages
between private capital and foreign aid. In the short and medium terms this pattern likely will sustain
the aid regime, which since its inception has been based upon the convergence of donor and recipient
interests. In the long run, however, the worsening plight of marginalized societies will demand
international attention. As their needs continue to be neglected because of the domestic constraints of
donors and the new paradigm of development thought reviewed through this volume, the human costs
of this neglect will escalate. This problem will only be resolved after the incentives for collaboration
have improved or the costs of ignoring transnational problems have become prohibitive.
The Development Paradox
Most foreign-aid programs today encourage recipients to build foundations for market-driven, exportled industrial expansion. It is axiomatic that rapid industrialization and urbanization provide the best
hope for curbing global population growth, which has emerged as the most urgent problem facing
humankind. But what are the costs of this strategy?
The world’s population, which reached 1 billion in 1800, doubled to 2 billion in just 125 years and to 4
billion by 1976. It is generally assumed that today’s world population of 5.7 billion will reach 11 billion by
21000 before stabilizing at this level or turning downward (United Nations, 1990). Nearly all of this
growth will occur in the developing world, more specifically in the most impoverished societies, where
fertility rates are the highest. The population of Africa, for example, is expected to more than double
from its current 650 million, reaching 1.6 billion by 2025, whereas the populations of the United States
and Western Europe are expected to grow at a much smaller rate. As Kennedy (1993: 46) correctly
observed, “The issue of global demographic imbalances between richer and poorer societies forms the
backdrop to all the other important forces for change that are taking place.”
The linkage between industrialization and improved living standards – higher life expectancies, personal
incomes, and literacy rates – is also axiomatic. The causal chain then extends from economic structure
to regime type, following Kantian and Schumpeterian assumptions about the democratic correlates of
advanced industrial economies and their reliance upon stable, representative governments. Finally, the
model holds that these societies will be necessarily pacific toward one another, induced to cooperation
by mutual self-interest and pluralistic governments.
This is the basic logic of contemporary development thought, which has assumed widespread currency
in the absence of the Cold War’s geopolitical pressures and ideological polarization. Althogh
fundamental differences remain over the scope of state action in furthering economic growth and
distributing resources to its citizens, this model pervades the development manifestos of the United
Nations, World Bank, IMF, and OECD, providing a blueprint for developing countries hoping to attract
concessional funding as well as private investment.
This model, an outgrowth of demographic-transition theories that project a stabilizing world population
in the mid-twenty-first century, is unarguably supported by empirical evidence, although birth and death
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rates have varied widely even among states at similar levels of development (Kegley and Wittkopf, 1995:
301-305). More fundamentally, it raises vexing environmental issues which have yet to be resolved. I
shall refer to this as the “development paradox.”
The development paradox centers upon the ecological consequences of rapid industrialization:
accelerating habitat destruction, air and water pollution, and skyrocketing rates of consumption. It is
inevitable that in the short run greater ecological decay will be the correlate of accelerated
industrialization. If megacities such as Mexico City, São Paulo, and Jakarta are reproduced throughout
the developing world, their inhabitants will find the benefits of population control to be overshadowed
by the costs of ecological contamination. Further, the environmental damage they face will be felt far
beyond their borders.
The environmental maladies noted above, of course, all characterized U.S. industrial expansion in the
early decades of the twentieth century. With just 4 percent of the world’s population in the mid-1990s,
the United States accounted for approximately 25 percent of annual world oil consumption (Wald, 1990).
As other states experience their own industrial revolution in the next millennium, they likely will
replicate the U.S. penchant for national consumption on a global scale.
The Chinese government announced in 1994 that among its major economic priorities in the second half
of the decade would be the expansion of the PRC’s automotive industry. Not only would the PRC
produce more vehicles for export, in keeping with the Japanese mold, but government plans also called
for developing the vast interior of China and extending the network of modern highways across the
country. As a result the PRC, whose densely crowded population of 1.2 billion has largely retained
traditional modes of transportation and agriculture to the benefit of the country’s ecological balance,
will likely witness an ominous explosion of oil consumption and emissions, accentuated by the planned
expansion of coal-fired power plants. Other heavily populated LDCs have announced similar plans for
modernization and likely will repeat China’s reliance on coal-burning electrical utilities.
One need not proclaim that the sky is falling to recognize the precarious nature of the environment and
to demonstrate how disruptive these key demographic and ecological trends are for its ongoing stability.
The human race has shown an impressive ability both to overwhelm its natural environment and to
adapt to the fundamental changes in economic conditions, societal customs, and modes of governance
that ensue.
The central question is not so much when the world’s population will peak but how the corresponding
increases in fuel consumption, habitat and wildlife destruction, and air and water pollution can be held
in check. For development to be truly sustainable, it must not only utilize privatization and good
governance – both of which are essential components – but also make provision for limiting toxic
industrial emissions, preserving sufficient natural habitat, building adequate water-treatment facilities,
and requiring the use of fuel-efficient vehicles.
A related development paradox, unfortunately, calls this effort into question. Simply put, environmental
restraint violates the logic of collective action (Olson, 1971). Political and economic leaders today face
neither incentives nor the penalties sufficient to prevent from ignoring those aspects of sustainable
development whose short-term costs outweigh their potential long-term benefits. Immediate concerns
(such as preventing the demise of reform in Russia) do indeed warrant the attention they have received,
but as a result less pressing but equally vital concerns go unaddressed.
The demise of most military-aid programs is one of the most welcome developments of the post-Cold
War era, although continued large-scale transfers of weaponry on market terms are just as problematic
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as concessional military aid. It will be a colossal folly if the demise of the Soviet arms industry and the
post-Cold War relaxation of global tensions does not lead to demilitarization in many poor regions and a
tragedy if LDCs are compelled to follow the U.S. lead and consider military exports a viable source of
national income. But that is the probable outcome of current trends, and a natural consequence of free
riding by the world’s most affluent states.
The growing amalgamation of foreign aid and private investments has lessened the influence of the UN
and, to a lesser extent, the OECD in many development debates and expanded that of the World Bank,
IMF, and regional development banks. Though they rhetorically embrace the UN’s call for sustainable
development, the latter agents of foreign aid have been more preoccupied with global economic
emergences such as the Mexican peso crisis and the precarious reform effort in Russia. Such cases have
demonstrated both the fragility of the global economy and the potential for isolated economic crises to
overwhelm the concessional funding sources. In an era of belt-tightening within many governments and
of backlash against foreign aid, they have magnified the diversification of aid from long-term ecological
priorities to short-term economic ones. This may ultimately represent the least “sustainable” aspect of
the contemporary foreign-aid regime.
Despite these obstacles and the growing deficiencies of many aid policies, development assistance will
continue to play a crucial role in the international political economy, as demonstrated by the numerous
and diverse ways in which it has been applied to global relations since World War II. It has served as a
most malleable policy instrument – in the sheer quantity of aid, the selection of aid recipients, the
functions of aid-funded projects, and the terms upon which grants and concessional loads are disbursed.
As noted throughout this volume, foreign aid has contributed greatly to the improvement of living
conditions in many distressed parts of the world; there are many success stories of international
development. In the 1980s and 1990s aid programs have paid for many of the crucial costs of
democratization – supervising and certifying elections, creating effective and just police forces, and
establishing court systems that consistently enforce constitutional protections. The failure of UNsponsored peacekeeping missions in Somalia and Bosnia, furthermore, must not obscure successful
efforts in Southeast Asia, Central America, and southwest Africa.
For all of these reasons, foreign aid remains a vital issue in world politics at the end of the second
millennium. It has proven itself to be a force for constructive change, even while serving as an agent for
the perceived self-interests of wealthy states. As the contributors to this volume have argued, the
central and intractable tension between these two opposing forces will likely shape international
development long into the future.
Hook, Steven W. (1998) “‘Building Democracy’ through Foreign Aid: The Limitations of United States
Political Conditionalities, 1992-96, in Democratization, Vol. 5, No. 3, pp. 156-80.
The US government is not alone in facing such daunting obstacles to the promotion of political reforms
in developing countries through foreign aid. To varying degrees and for various reasons, ‘aid fatigue’
afflicted other industrialized countries in the mid-1990s, many of which joined the United States in
reducing annual aid appropriations.65 As in the US case, aid programmes associated with every aspect of
sustainable development clashed with domestic interests and other foreign-policy objectives pursued by
these donors, particularly those relating to fiscal austerity, trade, and foreign investment. In addition,
the limits of externally imposed pressure for internal reform, both political and economic, became
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increasingly evident as donors exposed their conditionality programmes to the test of practical
experience.66
For the United States, however, it may be argued that the obstacles are most acute and the lessons are
most sobering. As the leading source of foreign aid during the cold war, the United States assumed a
prominent position within the development regime even as its aid flows consistently ranked at the
bottom of the regime’s qualitative rankings. The intimate relationship between US strategic selfinterests and its aid programme was apparent to other donors and recipients alike, leaving a legacy of
distrust that endured long after the Soviet Union’s demise. In this regard, US behaviour during the cold
war made the prospects for ‘building democracy’ even more difficult. In equating democratization with
anti-communism, and in making dubious distinctions between authoritarian (pro-US states which were
acceptable and eligible for aid) and totalitarian (revolutionary and/or pro-Soviet regimes deemed
unacceptable and not eligible for aid) regimes, US leaders fueled the ideological polarization, the
entrenchment of antidemocratic forces, and the corruption of civil societies in many developing
countries that have constrained long-term reform. Further, these lapses in policy contributed greatly to
the widespread cynicism toward foreign aid that led to the sharp cutbacks in the 1990s.
If the cold war experience leads to even further reductions in US aid, the wrong lesson will have been
learned. Expectations regarding the utility of aid in inducing political reform must be modest, and all
donors must be more self-conscious in attempting to ‘export’ their own distinctive models of political
and economic development. Still, properly designed aid programmes serve vital functions in alleviating
poverty within developing countries, reducing ecological decay, stemming population growth, and
paving the way for private investment and economic growth – all of which foster democratic governance
more effectively than the imposition of political conditionalities. Furthermore, it is clear that the
problems facing the developing world in these areas have both immediate and long-term consequences
for industrialized nations. Thus if development in the world’s poorest areas is to be truly sustainable, so
should be the financial assistance provided by the world’s most prosperous governments, including the
United States.
The US government has by no means played a superfluous role in advancing global democratic reform
through ‘economic statecraft’.67 As noted previously, carefully applied sanctions achieved their stated
goals while electoral assistance facilitated historic democratic transitions in such diverse settings as
South Africa, Nicaragua, and Russia. The exclusion of aid to repressive regimes in China, Cuba, Myanmar,
and Zaire was also consistent with the policy, as was the growing empowerment of non-state actors as
conduits of aid. Nevertheless, the experience reviewed above serves as a reminder that the United
States, like all countries, pursues at once a vast range of objectives in foreign affairs, many of which
serve differing and often competing constituencies at home and abroad. In such a setting, the linkage
between principles and practice is tenuous and contradictions between transnational ideals and national
self-interest are inescapable.
Hook, Steven W. (2008), “Foreign Aid in Comparative Perspective: Regime Dynamics and Donor
Interest,” in Picard, Louis A., Groelsema, Robert and Buss, Terry F. (eds.), Foreign Aid and Foreign
Policy: Lessons for the Next Half Century, pp. 86-105, New York: M. E. Sharpe, Inc.
As this chapter has argued, sharp rises in foreign aid spending in recent years have not resolved the
long-standing debates about the utility of aid in eradicating extreme poverty or stimulating long-term
economic growth. In the view of advocates, aid reflects the generosity, compassion, and best intentions
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of governments and their people. Others defend aid on utilitarian grounds. They argue that aid serves
national self-interests by securing allies, promoting stable and democratic governments, fostering
export markets, and subsidizing domestic farmers and manufacturers through the tying of aid. Critics
charge that aid flows are wasted on bloated bureaucracies, reward corrupt dictators, and serve as an
agent of Northern hegemony. To many proponents of aid, governments can better advance
development by encouraging private investment rather than providing assistance. Such aid debates, and
the complex and subtle intermingling of national prerogatives and regime norms, will remain part of the
landscape of North-South economic relations throughout the new century.
Despite pledges to achieve the Millennium Development Goals by 2015, aid donors face severe
limitations in their ability to secure a larger share for development aid in their national economies and
budgets. This continuing uncertainty reflects the status of foreign aid as an “impure public good”
(Bobrow and Boyer 2005). In presuming a link between improved living standards, reduced population
growth, and environmentally sustainable development, on the one hand, and a more stable and
collectively beneficial international system, other the other [sic], foreign aid conforms to the standard of
public goods. Aid flows are “impure,” however, because they are selective in terms of recipients and in
the mix of benefits for the donor as well as for the recipient. Stated another way, global development is
a classic collective-action problem that rewards free riding and virtually assures the attainment of
suboptimal outcomes (see Ostrom et al. 2001).
The development aid regime is unlikely to achieve its goals under these conditions. The collective
resources of aid donors will continue to produce disappointing results so long as aid flows remain
fragmented among myriad sources – bilateral and multilateral, public and private. Even within many
donor governments, including the United States, the presence of multiple and often competing aid
agencies discourages the adoption of coherent development strategies, let alone the effective use of aid
transfers by recipients. Pledges to harmonize aid objectives and coordinate the direction and terms of
aid transfers remain rhetorical, and they are likely to remain so given the chronic and deeply entrenched
intrusion of donor self-interests in aid calculations.
Nonetheless, the increased attention paid to ODA since 2000 provides a basis for optimism that the aid
regime can overcome its inherent limitations. Success stories can be found in aid’s role in enhancing
food supplies in southern Asia during the 1960s, in stimulating economic growth in South Korea and
other East Asian states during the 1970s and 1980s, and in propelling political and economic reforms in
Eastern Europe after the collapse of the Soviet bloc. Progress has been made toward debt relief and in
the fight against HIV/AIDS in Africa.
Wealthy states took unprecedented steps forward in adopting specific targets for poverty reduction at
the Millennium Summit of 2000 and in agreeing upon a unified development strategy at the 2002
Monterrey conference. These efforts reflect a recognition that continued distress in the developing
world threatens global prosperity and security. The challenge in the years to come will be to convert this
consensus into sustained development cooperation, and the occasional sacrifice of short-term national
interests on behalf of enduring transnational concerns.
Hopkins, Raymond F. (2000), “Political Economy of Foreign Aid,” in Tarp, Finn (ed.) (2000), Foreign Aid
and Development: Lessons Learnt and Directions for the Future, pp. 423-449, London and New York:
Routledge.
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The three targets discussed above: (i) state strengthening, (ii) market management and (iii) poverty and
emergency safety net guarantees all relate to diffuse goals: global goods and economic justice. There is
no simple design for aid-use in pursuing these targets, as earlier chapters made clear. Aid channels and
modalities to impact these are necessarily context dependent, including emergency aid to protect
human capital. What does appear true is that such aid may be more intrusive of sovereignty than
previous aid.
Strengthening states appeals broadly to popular concern about threat from the international sphere.
Reilly (1999) found that international terrorism, for example, seen as out control in weak states, was the
most frequently cited threat to the United States according to the American public. Support for using aid
to improve markets can be found among development banks, private international financial and
corporate institutions, and their government allies in ministries of finance, trade, commerce and
legislative bodies. Support for the twin aid goals – sustainable reduction of poverty and emergency
responses – involves helping the most vulnerable and comes from the coalitions generally. It is the
poorest after all, who are most endangered by disasters (natural or man-made). Support for long-term
poverty reduction through institutions such as the Grameen Bank is popular with the same groups:
NGOs, political parties and foundations concerned about global inequities. These coalitions support
emergency humanitarian relief and are frequently the most effective advocates of poverty-oriented aid.
Even though emergency aid is criticized as a ‘Band-Aid’, unsustainable, and even counter to long-term
goals, it is supported by the same humanitarian sentiments that put poverty at the top of the aid policy
agenda.
Conclusions: Future Conditions
Development – economic, social, and sustainable – without effective state is impossible.
(World Bank 1997a: 18)
A major condition for sustainability of future aid is a belief in its efficacy. Such a belief rests on seeing
improvements linked to aid. And this, in turn, is affected by what donors and recipients want improved.
Complex social processes shape aid use, including the administrative management of donors and the
policies and state machinery of recipients. As noted throughout this volume, state institutions make a
big difference in development. Adelman emphasized that ‘a government with substantial autonomy,
capacity and credibility is required for successful long-term economic growth.’ (Chapter 2). North (1990)
shares this view, asserting that institution of formal rules, informal norms and enforcement probabilities
determine economic growth. He finds a pressing need to understand how third world and East European
polities operate in order to promote development though informal constraints. The focus on institutions
in this volume pushes future aid toward attention to informal rules that affect states, markets and
vulnerabilities of the poor.
Many aid receiving candidates are anarchical states. In Africa and the post-communist world, terms such
as patrimonial, shadow, rent-seeking, semi-sovereign, mafia-like and corrupt have been used to
characterize the policy. These two areas have been the major foci for aid in the 1990s. Most of the 50odd wars of this decade are internal and occur in these two areas. Thus the basic capacity of states to
deliver security is problematic. As noted in Chapter 17, aid can play a vital role in rescuing peoples from
the damage of conflict. It can also assist state formation, helping build administrative structure and
analytical or steering capacity. The vital role these play in development processes has been stressed in
earlier chapters (e.g. Chapter 2). Aid to these countries, aimed at state reform, may require
unconventional development assistance packages, state strengthening would focus on core functions:
legitimate force to uphold order, tax collection to finance public goods, technical assistance to enhance
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military and tax collections skills and controls to limit corruption, encourage civic norms and expand
accountability. These and other governance elements need deepening. Withholding aid has been the
major tool for political conditionality. This does not work very well because of pressures to release funds
already earmarked. Given this problem, and the desire to aid weak states, on goal of aid must be to
acknowledge ends that maximize its relation to political performance and minimize the ability of
predatory officials to hijack it for private purposes.
For both rich and poor countries, state failure promises to be the greatest threat in coming decades.
Openness and sound economic policies are largely irrelevant in situations where capital flight dominates
private market financial calculations. For states to ‘own’ a set of policies, including use of aid, there must
be first a state structure. Aid to provide a transition from anarchy must precede aid for a transition to a
stable development path. From the states of the former Soviet Union to the collapsed governments in
Africa, there is a growing vacuum of political order – a vacuum that aid undertakings are challenged to
fill. Aid for political construction requires delicate balancing in which the trade-off between
conditionality and ownership is acknowledged. This dilemma is still to be resolved, yet it must be, so
that countries with the greatest needs, often ones most troubled by political upheavals, will not
continue to be the ones least able to absorb aid efficiently. Resolutions of the dilemma relate to the
three targets for aid discussed earlier. To the extent these targets grow among donor motivations, they
will point directly to behavioral obstacles for aid effectiveness, such as corrupt or merely under-skilled
human capital. This theme is easier to observe than address. A major future task for research on aid
effectiveness is to explain how recipient governments can realize stronger capacity as well as some
authentic ‘ownership’ of their work as a result of aid. Reducing failures of political institutions in
recipients requires prescriptions with greater specificity. We need to know how aid can effect real
improvements in politics.
This chapter has looked at changing donor motivations and asked what can and should shape future aid.
With decay in recipient country institutions a problem, with a rise in support for global goods, such as
environmental protection, and with donors enjoying increased scope to demand concessions from aid
recipients, targeting aid to save failing political institutions commands and deserves broad support.
Hout, Wil (2007), The Politics of Aid Selectivity: Good Governance Criteria in World Bank, US and Dutch
Development Assistance, London: Routledge.
With the ending of the political dichotomy in world politics around 1990, the good governance principle
came to occupy an important position in judgements about political regimes in developing countries.
Good governance became an important objective in the policies of many aid-giving Western countries
and the main international financial institutions, such as the World Bank. Increasingly, however, good
governance and market-oriented economic reform came to be subsumed under one heading, leading to
what has been called a post-Washington Consensus.
This book describes in detail the policies of aid selectivity adopted by the World Bank, the Netherlands
and the United States since the end of the 1990s. The main assumptions underlying the policies, as well
as the key decisions related to the selection of developing countries, are analysed and critically
evaluated. A comparison is made between policy making in these three cases and different approaches
to selectivity in the United Kingdom. The book brings out the conflicts that may exist between foreign
assistance agendas and the desire of governments in developing countries to set priorities for their
national development policies.
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The Politics of Aid Selectivity is the first extended analysis of selectivity policies of important bilateral
and multilateral aid donors and combines a policyanalytical with a quantitative-empirical approach. The
book is relevant to students of various sub-fields of development studies and policy analysis, among
other areas, and also has international appeal to researchers and policy-makers working in the area of
foreign assistance. [book summary]
Huntington, Samuel P. (1970-71), “Foreign Aid for What and for Whom, Part 1,” in Foreign Policy, No.
1 (Winter 1970-71), pp. 161-89.
U.S. assistance to the economic development of poor countries has suffered from the tendencies of its
supporters to divorce economic development from over-all US foreign policy objectives and, more
generally, to make the case for U.S. economic development assistance in terms of the needs of the poor
countries rather than in terms of the interests of the United States. Economic development assistance
has been underfunded in part because it has been oversold. In this essay, we have attempted to escape
from the rhetoric and sentimentality which has so often been adduced on behalf of foreign aid and
instead to take a cold, hard look at the interest of the U.S. in the economic development of poor
countries. Three general conclusions seem to flow from this discussion:
1. As the wealthiest country in the world, the United States has a moral obligation to help alleviate the
sufferings of poor people in poor countries.
2. The United States has some real but not overriding interest, primarily economic and long-term, in the
economic development of poor countries generally; it also has some derived political interest in not
disappointing the expectations of other governments that it ought to be interested in the economic
development of poor countries.
3. The United States has special interests in the economic development of individual countries which are
of particular concern to the U.S. usually for noneconomic reasons and the promotion of whose
development is an integral part of over-all U.S. foreign policy towards those countries. Rarely, however,
is the economic development of a country the primary interest which the United States has in that
country.
In most countries, economic assistance probably helps economic development, but the relationship
between levels and types of aid, on the one hand, and economic growth, on the other, is by no means
clear. There may also be other policies, particularly in the areas of trade and encouragement of private
investment, by which rich governments can equally promote economic development of poor countries.
Finally but most importantly, the governments of poor countries have good reasons to prefer less aid
rather than more aid.
From this, one can conclude that the U.S. ought to maintain at least three different types of economic
assistance programs: humanitarian and related programs aimed primarily at alleviating immediate evils
to poor peoples’ general economic assistance grants channeled through the World Bank and other
multilateral agencies to assist in the over-all economic development of the Third World; and bilateral
programs which are an integral part of U.S. foreign policy toward countries where the U.S. has special
political, economic or security interests.
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Huntington, Samuel P. (1971), “Foreign Aid for What and for Whom, Part 2,” in Foreign Policy, No. 2
(Spring 1971), pp. 114-134.
Except for those who oppose all forms of “foreign aid” no matter what purpose it serves, little reason
exists to talk about foreign aid as an end in itself. The discussion of policy should be in terms of, first, the
desirability and importance of the goals which may be served by foreign aid, and, then, the relative
effectiveness of aid as against other means for achieving those goals. Given the multifarious purposes to
which aid may contribute, a “foreign aid act” and a “foreign aid agency” are clearly anachronisms.
Current aid programs need to be disaggregated in terms of their purposes and new programs
inaugurated to reflect emerging U.S. interests in global maintenance.
By focusing on these purposes, the supporters of foreign aid would shift the focus of attention from a
means which has politically negative connotations to ends which are more likely to have positive appeal.
In addition, they would transform the effort to develop a “constituency” for foreign aid (which is the
equivalent of developing a constituency for “subsidies”) into more meaningful and successful efforts to
develop special constituencies for the particular purposes which foreign aid may serve. The net result of
this disaggregation could be more or less foreign aid than there has been in the recent past, but happily
no one would know for sure which it was.
Focusing on the ends of aid should thus clarify both purpose and understanding. Above and beyond this,
however, there is the possibility that foreign aid even as a means may be in the process of becoming less
meaningful. Foreign aid, as it is commonly conceived and practiced, was a product of the emergence of
the Western state system in the sixteenth and seventeenth centuries. It has normally meant military,
economic, or political assistance from one government to another one.
In many areas of policy, however, the distinction between foreign and domestic programs has already
become blurred. Private organizations, international bodies, and “domestic” agencies of different
governments blithely pursue their objectives across international boundaries. As these transnational
operations expand, the identification of “aid flows” themselves becomes increasingly difficult, and trying
to pinpoint the net benefits and costs of any particular transaction to national territories practically
impossible. When an American-based multinational corporation uses profits from a plant it has
previously constructed in Brazil to build a new one in Peru, who is contributing to the development of
whom? When one government lends to another at less-than-commercial interest rates so that the
borrower can buy capital goods from the lending government's country, how much of the loan is aid,
how much of it is an export subsidy, and how much of it just a straight business deal? Such questions are
becoming more and more frequent and more and more difficult to answer. As such relationships
become increasingly complex and diversified, the entire concept of foreign aid could itself become
anomalous and irrelevant.
Imbeau, Louis-Marie (1988), “Aid and Ideology,” in European Journal of Political Research, Vol. 16, No.
1, pp. 3-28.
The substantive purpose of this paper was to find an explanation for the variation in aid allocations
among donors. A collective bounded rationality model was developed in order to include in the
explanation ideological factors and environmental factors as well. The empirical estimations have
confirmed that the model as a whole explained up to 96% of the variance in aid as a percentage of GNP.
The substantive results are summarized in Table 7.
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As far as the relationship between ideology and aid policy is concerned, the findings reported here
constitute a strong confirmation of the importance of ideological factors in explaining variations in aid
allocations as a percentage of GNP. Data reported in Table 7 suggest that ideology better explains levels
of aid than changes in aid allocations. Actually, ideology is the best explanation of aid giving in a model
including the Instrumental and Humanitarian explanations. This is consistently true for all four
estimations.
The idea that ideology is related to public policy is well documented in the empirical quantitative
literature. Indeed, one of the political factors most often related to public policy is ideological
orientation of government through the use of measures of party ideology. It has been shown, for
instance, that ideology was significantly related to variations in welfare expenditures (Cameron 1978;
Castles and McKinlay 1979, Hicks and Swank 1984), in fiscal and monetary policies of OECD countries
(Cameron 1984, Hibbs 1977, Hicks 1984), in public expenditures among American states (Nice 1982) as
well as among Canadian provinces (Lachapelle 1986).
The idea that ideology influenced aid policy has also been documented. Betz and Kreile (1982: 99), for
example, wrote that ‘free market ideology provides the prism through which German interests are
perceived’. For Holm (1982: 73), ‘the development of Danish society is seen as a result of solidarity,
state control and intervention to prevent too large differences to develop within the Danish society. In
relation to the Third World, the same type of intervention and solidarity is advocated by Danish
governments’. In the same vein, McKinlay and Naraine (1982: 47) argue that ‘in general, right-wing
parties . . . are more prone to spill-over into neomercantilism; left wing parties under the stronger
influence of state capitalism and an extensive commitment to social welfare . . . can even spill-over into
the interventionist stance urged by the NIEO demands’. In all these cases, ideology is put into relation
with levels of aid, not changes.
Ideology is an organized set of values and goals about the development of a society. These values and
goals structure or colour policy choices over the long run. Each society, to a certain extent, has its own
way of translating into policy choices its ideological structure. If the ideological orientation of
governments changes sensibly over time (with changes in party control over executives), the ideological
orientation of electorates is less prone to change (though changes can still be observed), as is the
ideological orientation of the public service as a whole (if only because of the relative stability of
public .service officers). Therefore, on the whole, ideology is more or less constant within a polity (at
least when we consider short 20-year periods). Because of this, the effect of ideology is more likely to
appear in a cross-national design than in a cross-sectional one.
Of course, the effect of ideology might vary from one policy type to another and from one policy
instrument to another. The redistributive dimension of development aid as well as the implicit solidarity
it supposes in international economic relations make this type of public policy an area where Left-Right
ideological differences may be expected to have an effect. The findings reported here constitute a
confirmation of this proposition and they are consistent with the growing body of comparable findings
documenting the relation between ideology and policy. Ideology, like attitudes and values, is part of
what has been called ‘political subjectivity’ (Brown 1980) and is to be related with ‘objective’ factors in
assessing its relation to aid - giving behaviour. It has been shown (Imbeau 1981), through a computer
simulation, that the relationship between objective and subjective factors on the one hand and foreign
policy behavior on the other hand, must be assessed simultaneously if one wants to get a reliable
picture of foreign policy decision-making. With this in mind, it would seem that, before engaging more in
empirical research on this question, the ideology-policy relation should be given attention at the
theoretical and the methodological levels, answering questions like: how does ideology influence policy
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choices, one type of policy instrument or another, one type of policy area or another?; how should we
measure the ideological orientation of policy actors?; are party-based measures satisfying?; are any
indicators of policy choices more efficient in expressing the effect of ideology? This paper is a
contribution to this general query.
Imbeau, Louis-Marie (1989), Donor Aid – The Determinants of Development Allocations to Third World
Countries: A Comparative Analysis, New York: Peter Lang.
Irwin, Lewis G. (2000), “Dancing the Foreign Aid Appropriations Dance: Recurring Themes in the
Modern Congresses,” in Public Budgeting & Finance, Vol. 20, No. 2, pp. 30-48.
These findings emerged from the comparison of the two cases and from the comments of the legislators
and other key actors interviewed as part of this research:
(1) The foreign aid appropriations process is a routinely choreographed public and private dance. In both
of the cases, the foreign aid process was marked by an elaborate public and private dance between the
administration, the respective chamber leadership, and the committee and subcommittee leadership.
The president and his executive agency administrators would articulate their policy goals, in the process
setting the legislative agenda that served as the basic blueprint for the eventual public policy. The bulk
of the presidential program, aside from the specified funding levels which would inevitably be reduced
as part of the dance, would then remain as good as intact, despite the loud and often bitter rhetoric that
followed. While the administration got 95 percent of what it wanted in proposing the foreign aid
legislation, the Foreign Operations Appropriations Subcommittee leadership would seize and define the
terms of the political debate. In the foreign aid appropriations process, like most legislative initiatives,
this management of the terms of debate meant that the legislators would generally be able to decide
upon the “hot button” top-tier political issues that would drive the negotiations between chambers and
the administration. In the end, the administration would generally get the level of funding it really
sought, though that figure would be considerably less than the target publicly stated at the outset. In
sum, there was no evidence of significant change in the relationship between the president and the
Congress in this issue area, in spite of persuasive arguments to the contrary in the literature.
(2) The foreign aid appropriation legislation remains a natural “soapbox” issue. Foreign aid receives a
disproportionate amount of attention given that it routinely involves less than 2 percent of the federal
budget. In part, this is true because foreign aid has no natural congressional constituency in a macro
sense, and thus foreign aid is an easy target for the average legislator seeking to make a splash back
home with “fiscally conservative” remarks. Furthermore, in an election year, it is difficult for any
member to vote his or her conscience on this issue because any challenger can make the charge that the
incumbent is “taking care of foreigners before taking care of us.” Realizing this inherent difficulty in
cultivating support, the administration and proponents of foreign aid within the Congress have adapted
to this constraint by constructing the legislative votes such that any member can go home and claim to
have voted to reduce foreign aid.
(3) Success in the foreign aid appropriations process, like other legislative initiatives, comes only through
the deliberate construction of an ad hoc issue coalition. Otto Passman’s ad hoc issue coalition was based
within his Foreign Operations Appropriations Subcommittee, in which he was able to get every member,
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regardless of policy predisposition or party affiliation, to stand in public support of the compromise
crafted within the subcommittee. David Obey, on the other hand, constructed his ad hoc issue coalition
around the ranking minority member on the subcommittee, Robert Livingston (R-LA), as well as
administration officials who were willing to work hard to inform the members and solicit support
throughout passage. Both leaders crossed party lines to forge bipartisan coalitions that were able to
deliver success, though the lesson here is broader than just the efficacy of bipartisanship. Strategic
management of the issue is necessary to deliver the legislation, and the commonly offered partisan
interpretations of a bill’s success or failure are usually shallow at best. Again, these cases offered no
evidence of major changes in the elements of legislative success in the two periods.
Furthermore, while the majority of respondents from the early 1960s were quick to give credit to their
parties for electoral assistance, none discussed the parties in terms of serious legislative voting
commitments. Willful agents, rationally pursuing self-determined and sometimes personal goals were
much in evidence in both periods of the study, and the issue coalitions of actors are not described
accurately by party or interest group simplifications, even in the early 1960s. An important aspect of this
analysis is that the parties could not deliver on policy changes by themselves.
(4) Member-to-member contact and a rough consensus among the leadership remain the most critical
elements of legislative success. It was clear from my study of the pursuit of legislative success in the
foreign aid appropriation process in both the early 1960s and 1990s that there was and is no substitute
for consensus-building as an ingredient of success. While both chamber and executive branch leadership
could stymie a measure when so inclined, their powers were often “negative” in nature and neither
could deliver legislation alone. Success came only after subject matter experts at the committee and
subcommittee levels had done the heavy lifting of building support for a measure one legislator at a
time. While there is no routine recipe for legislative success in the foreign aid policy area, foreign aid
proponents have settled on a variety of time-tested means and recorded dance steps that they believe
will lead directly to that success.
(5) The methods of legislator-to-legislator persuasion have remained constant over time and include
arm-twisting, bartering, personal appeals, public policy logic, and public service appeals. In both periods,
the respondents and the background research gave evidence of all five of these techniques of
persuasion. Legislators were not afraid to use leverage at their disposal, and both proponents and
opponents of a particular measure were likely to offer something in return for fellow-member support
of their position on the issue. Additionally, members seeking support for an issue position would
routinely ask their colleagues for personal favors, and it was common for proponents of a position to
couch their requests in the language of public service. Lastly, despite a clear increase in issue complexity
from the 1960s to the 1990s in the realm of the foreign aid program, the leaders on both sides of the
issue still did their homework, rationally determining advantages and disadvantages of the policy
positions. The techniques used to garner member support have essentially remained constant since the
1960s and probably before. Likewise, legislators’ personal reputation, perceived integrity, interpersonal
skills, personal relationships, and legislative initiative factor heavily into the prospects for success,
contrary to recent perceptions.
(6) Members alone deal in the first-tier issues, and the staffs deal with the increased issue and
procedural complexity. The number of committee staffers on the Appropriations Committee increased
from 59 to 227 over the period from 1962 to 1993. A commonality between the two periods is the fact
that staff members were not generally authorized to deal in what the members describe as “first-tier
issues,” or politically charged or higher-profile issues of controversy. The key party or chamber staff
negotiators were given guidance from the chairmen as to what topics were permitted. Heightened issue
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and procedural complexity has played out primarily within the greatly increased staff on the committees.
Essentially, the politics of the process have remained the same for the members, while the institution
adapted to increased complexity through the expanded staff. It is also noteworthy that while the
staffers in each case had important negotiating and coordinating roles at various junctures of the
process, the member respondents did not list the staff actions as a significant cause for concern in the
pursuit of legislative success.
(7) From the legislative actors’ perspective, the underlying continuities that define the legislative process
are more important to the process than the documented changes. The evidence from the case histories
and the respondents’ perspectives confirmed that while the often-documented changes in the
legislative process matter, the participants view the underlying continuities of the process over the years
as most important to the realization of legislative success. The portraits of the process that emerge are
remarkably similar between the periods.
(8) The actors view people, rather than procedure, as the most important determinant of success or
failure. Finally, it was clear from the respondents as well as the other case evidence that it was the key
legislative actors who determined success and failure in legislative outcomes. While the names and
political agendas of the principal actors change over the years, the form and functions of the foreign aid
appropriations process have remained similar over time, with the actors playing out their respective
self-selected parts in the drama. In an age of quantification and ready qualification, we should not lose
sight of the “personal” aspects of the legislative process.
Isenman, Paul (1976), “Biases in Aid Allocation Against Poorer and Large Countries,” in World
Development, Vol. 4, No. 8, pp. 631–641.
We have seen that aid allocations from a variety of donors and for a variety of time periods, samples
and definitions of aid show surprisingly consistent biases against poorer and larger recipients. While
much of the cause of these biases is political per se, there are a surprising number of non-political
factors which appear to contribute substantially to the biases. From the perspective of those who feel
that a poor person living in a larger country is no less worthy of assistance than a poor person in a
smaller country and that poorer countries should receive more rather than less aid, it would be
desirable if the ‘development community’ were more conscious of these biases and their causes, and of
what might be done to mitigate, if not eliminate them.18 In this connection, the recent emphasis on
countries ‘Most Seriously Affected’ by the oil situation and on the (terms as well as volume for the)
‘Least Developed’ countries is fairly encouraging for prospects for further initiatives of this type.
It should be noted that mitigation or elimination of these biases does not require that other, otherwise
desirable criteria be dropped. For example, a medium-term shortage of foreign exchange, taking
account of increased needs from accelerated growth, should be a necessary condition for concessional
foreign resource transfers. Donors should still be quite concerned about the quality of projects, but
should consciously bias their own project development activities to favour the lower-income countries
which have serious human resource and institutional constraints on project development. Similarly,
donors could take account of ‘self-help’ or ‘performance’ (although it should be recalled that the
measure of self-help used in this study turned out not to be significant in explaining past allocations).
Such self-help ratings would, of course, be quite different from conventional past ratings which focused
almost entirely on factors relating to GNP growth per se, and would include commitment to, and steps
to meet, the needs of the poor. There is a danger, though, of inadvertently reintroducing the middle-
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income bias. For example, given the five criteria used to measure performance in Cline and Sargen
(1975) – savings, inflation, exports, taxes, and capital-output ratio – it is not surprising that the four
countries in their 19-country sample which would have their aid increased as a result of good
performance were Taiwan, Korea, Iran and Malaysia, in that order. This inadvertent apparent middleincome bias occurs in an article which, otherwise, comes out strongly against the middle-income and
country-size biases. Similarly, some of the poverty-focused criteria which have recently been suggested
to measure performance, such as infant mortality (uncorrected for level of development), would also
strengthen the middle-income bias; many such ‘social indicators’ are highly correlated with per capita
income, and would in effect allocate aid as a reward for past performance, to those who need it the
least.
While the quantitative anlaysis here has been on the basis of DAC assistance, it follows from the
behavioural arguments for the middle-income bias and from the trade-related behavioural argument for
the country-size bias, that the distribution of non-aid economic benefits, as from trade preference or
commodity agreements, are likely to suffer from these biases even more than aid allocations do; if
sufficient care is not taken by rich and poor countries, measures undertaken as a part of the ‘New
International Economic Order’ may leave poorer and larger countries relatively worse off.
The analysis here is also likely to be relevant to allocations made by OPEC donors. While oil-exporting
nations obviously have their own political uses of aid, one can hope that with the advantage of being
‘late-comers’ they can avoid at least some of the more inadvertent biases of past allocations. For
example, some among the new donors may have an understandable preference for financing ‘bankable’
projects but limited project-development staffs, which would thus introduce a bias toward the middleincome countries best able to generate a large volume of bankable projects.
In conclusion, there is a need now for development economists and others with an interest in the ways
in which the rich nations can assist the poor to focus specifically on the desirable inter-country
allocation of such assistance and the political and practical issues of the transition to the allocation
desired.
Johansson, Pernilla (2011), “Grants to Needy Countries? A Study of Aid Composition between 1975
and 2005,” in Development Policy Review, Vol. 29, No. 2, pp. 185-209.
The grant component of bilateral aid has increased considerably over the last decades, reaching 97% in
2005. Although bilateral donors in general provide aid in the form of grants, the grant ratio varies
greatly across recipient countries. Recipient need explains this variation of aid composition to a certain
extent, as poorer countries appear to receive a higher grant component of aid between 1975 and 2005.
However, the study finds no evidence that recipient-country indebtedness explains the variation.
The latter finding is surprising as the recent grant-versus-loan debate focuses on debt sustainability in
recipient countries. While the debt-sustainability problems in developing countries have called for the
initiation of wide debt-relief programmes, this study fails to provide evidence that the allocation of the
bilateral grant–loan mix has been tailored to avoid future debt problems. In addition, the recent debate
focuses on the shift from loans to grants for multilateral organisations such as the International
Development Association of the World Bank (see, for example, the Meltzer Commission report). This
study shows, however, the importance of focusing not only on increasing grants but also on the
allocation of the grant–loan mix.
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Recipient need in terms of income level is nevertheless a significant determinant of the grant
component of aid. Poorer countries receive a higher grant component in all three periods. This finding is
in line with the suggestion of Radelet (2005) who argues that the income level of recipient countries
should be the crucial factor in determining the allocation of the grant–loan mix, as it avoids perverse
incentives and provides a simple allocation rule. Although a significant determinant, the analysis shows
that the effect of recipient-country income level is quite limited. At most, a decrease in GDP per capita
of 10% increases the grant component of aid by about one percentage point.
In all, the results suggest that the recent grant-versus-loan debate should focus not only on a total
increase in the grant component of aid but also on the actual allocation of the grant–loan mix to
recipient countries. By allocating a higher share of grants to already indebted countries and a higher
share of loans to countries able to absorb loans, donors could scale up development assistance and at
the same time probably reduce future debt problems in recipient countries. The policy recommendation
is thus not to scale up grants on a general level, but for donors to be more selective in allocating grants
and loans with respect to recipient needs and characteristics.
Jolly, Curtis M. and Gadbois, M. A. (1989), “Foreign Aid as a Promotional Strategy,” in The Review of
Black Political Economy, Vol. 18, No. 1, pp. 59-74, New York: Springer.
The study has shown that the commercial and economic interests of aid can be modelled if trade is
expressed as a function of aid. An advertisement model can then be used to examine the response
function. If such an approach is adhered to, and donors are more open about their real motives for aidgiving, more information will be made available for long-term distribution planning. Long-term plans will
result in a constant flow of external aid investment in recipient countries and thus will have a greater
effect on both donor and recipient countries.
The results of the study showed that aid flows and per capita income of the recipient countries have
positive effects on trade flows. Hence, it is in the self-interest of the donor country to stimulate
economic growth in the developing economies, and therefore, contribute to a healthy international
trade market. Another conclusion from the study was that the aid donors studied have been efficiently
allocating their aid budgets to the recipient countries, and that donors will be willing to increase
allocations only if they see that it is to their best interest. The use of an advertisement model in
measuring the economic and commercial interest of aid shows promise.
Kang, Seonjou (2007), “Agree to Reform? The Political Economy of Conditionality Variation in
International Monetary Fund Lending, 1983-1997,” in European Journal of Political Research, Vol. 46,
pp. 685-720.
IMF conditionality has been criticized for its inflexibility and insensitivity. However, a close look at
conditionality agreements reveals that conditions attached to loans from the IMF have varied
qualitatively and quantitatively. This study attempted to explain the thus-far-overlooked variation in IMF
conditionality. Understanding conditions attached to IMF loans is important because it paves the way to
assessing not only the appropriateness of IMF programs for addressing economic problems in borrowing
countries, but also compliance with the programs. With this study, the whole spectrum of IMF
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conditionality is covered, from borrowing countries’ decisions to participate in IMF programs to the
outcomes of those programs.
This study used a political economic framework to examine the variation in IMF conditionality. Although
the IMF has its official economic rules to determine conditionality, its institutional arrangements steer it
away from those rules. The five countries that fund most IMF operations exert influence to determine
IMF conditionality outside the official rules in order to advance their strategic interests vis-à-vis
developing countries and, as a result, IMF conditionality comes to vary across programs. Thus, between
1983 and 1997, such influence from the five countries made IMF conditionality easier for borrowing
countries that showed national attributes important to the five countries than those that did not. The
five countries and borrowing countries have a common interest in promoting goals with IMF
conditionality beyond economic reform, and this is why, despite the poor compliance and disappointing
results, conditionality agreements do not disappear, but continue to be contracted even today.
These findings have significant implications for how to improve IMF conditionality. Critics have ascribed
the disappointing results of IMF conditionality only to the IMF’s economic model from which specific
conditions are shaped, and they have recommended that the IMF modify its economic model for
successful structural adjustment. However, we now know that the political economic influences were as
responsible as the economic model for the failed structural adjustment in developing countries. Loaded
with a necessity for compromise from the complementary strategic interests between the five countries
and borrowing countries, conditions were not properly formed to address economic problems in
developing countries. The seeds of failure were planted by the political economic process of IMF
conditionality as well. Therefore, the solution is ‘let the IMF do what it does best with autonomy’.
Improving IMF conditionality should incorporate chances for the IMF to design macroeconomic reforms
that truly address economic problems in developing countries. To do so, the IMF has to enhance its
institutional capacity to counter internal and external factors that will pervert its program design.
However, there should be no illusion that this can be expeditiously achieved.
Kärre, Bo and Svensson, Bengt (1989), “The Determinants of Swedish Aid Policy,” in Stokke, Olav (ed.),
Western Middle Powers and Global Poverty: The Determinants of the Aid Policies of Canada, Denmark,
the Netherlands, Norway and Sweden, pp. 231-274, Uppsala, Sweden: The Scandinavian Institute of
African Studies.
In this part of the paper, we shall sum up the topics treated in the foregoing pages with special
reference to the attitudes of the political parties. Further on, we shall try to identify the forces
underlying these attitudes and finally we shall give our conclusions regarding the alleged trend
described as a change from the ‘traditional Swedish system of development assistance’ towards the
‘general OECD model’.
It is fairly easy to describe the policies of the political parties. It is far more difficult to discuss and
analyze the determinants of these policies. No research has been undertaken on these questions. What
we shall say here is based to a large extent on our own experience and judgments.
First, the volume of development co-operation. Among the political parties, the Moderate (Conservative)
Party has proposed at least a temporary abandonment of the one per cent target. This position is logical,
bearing in mind that the party is the only Parliamentary group advocating a substantial reduction of
taxes and consequently in the role of the public sector in the economy. Taking into account the fact that
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the Moderates also argue in favor of increased defense spending, almost no other public-sector activity
can, in their view, be spared reduced spending if budgetary equilibrium is to be reached and maintained.
In Moderate Party thinking, foreign borrowing plays an important role in the back ground to such
proposals. Since the oil crisis, Sweden has resorted to foreign borrowing and, so the argument goes, it is
irrational and almost immoral to finance development aid with borrowed money. Bearing in mind the
existence of unused carry-overs in the aid appropriations, the Moderate Party argument goes on, a
decrease of the share of development assistance in the GNP would have limited, if any material
consequences.
The Moderates have had only a limited and temporary success in obtaining a reduction of the share of
development assistance in the GNP. On one occasion, a Parliamentary majority consisting of Moderates
and Social Democrats succeeded in decreasing the share of development aid, but only temporarily.
Violent opposition from the Liberals, the Centre Party and the Communists and – probably more
importantly – from groups within the Social Democratic Party forced the government to return to the
one per cent target.
The one per cent target has been considered to be a first stage. If and when economic conditions allow,
the appropriations should be increased over and above that target. However, only the Liberals and the
Communists are now talking about a two per cent target, though they do not mention a timetable for its
attainment.
It seems reasonable to assume that there will also be in future a strong majority in Parliament in favor of
maintaining the one per cent target. Whether there will be a majority for a higher target in the
foreseeable future is very doubtful.
Now the quality of the development co-operation programme. To those who favor a lessening of the aid
burden on the Swedish economy, an increased share of Swedish-oriented allocation is a measure to be
considered, bearing in mind the near impossibility of abandoning the one per cent target. Logically, the
Moderates have advocated increased tying and also a kind of tying of local-cost-financing. Such
financing means in practice that convertible Swedish kronor are placed at the disposal of the recipient
country, which uses the corresponding sum in its own, non-convertible currency. Thus, the recipient
country will receive convertible currency, which can be used for purchases in countries other than the
donor country. This problem, however, has not been of major importance in the debate, as the other
parties accept local-cost-financing as an efficient means in the aid programme. The Social Democrats
have been very responsive when in government to demands for aid which will produce increasing return
flows to Swedish industry. This attitude can largely be explained by the Party’s giving priority to creating
employment and by the strong connections between the Party and the blue-collar trade unions.
It would be tempting to explain the Moderate Party’s attitude as a result of the Party’s links with
industry. No doubt such links exist, but to attribute the Party’s policies to them only would be oversimplistic. As an example, the Moderates have criticized the alleged concentration of the aid programme
on so-called Socialist countries, in spite of the fact that the return flows from such countries are
comparatively high. A special case in point is the development co-operation with Vietnam, in which the
Party advocates an immediate cessation of the aid programme because of the Vietnamese military
presence in Kampuchea and, as they see it, the Vietnamese Government’s lack of respect for human
rights. One of the biggest projects supported by Sweden is the Vinh Phu pulp and paper mill in Vietnam,
which is being built in close co-operation with Swedish industry. The immediate abandonment of that
project would result in the loss of a good showpiece in the region for Swedish industry and, worse, in
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the probably failure of the project, with possibly negative consequences for Sweden’s industrial
reputation in the region.
The introduction of balance-of-payments support among the instruments of the aid programmes has
also been greeted with much skepticism by all the non-Socialist parties, in spite of the fact that the
support has hitherto been largely tied to procurements in Sweden.
Another important quality aspect has been the country-programming system. The system undoubtedly
decreases the flexibility of the donor country, preventing it from easily switching aid funds from one
country to another at short notice. All the non-Socialist parties have argued that donor flexibility should
be increased and consequently that the country-programming system should be considerably modified
or in practice abandoned. Lately, however, at least the Liberal Party seems to have accepted the system,
which has already been slightly modified without changing its main characteristics.
Generally speaking, among the parties represented in Parliament, the Liberal and the Communist Parties
have the best records with regard to the ‘purity’ and the ‘recipient flexibility’ of aid. The Centre Party
has normally adapted itself to the Liberals’ views. At the other extreme is the Moderate Party. The Social
Democratic Party has a rather mixed record. It was only with some hesitation that the Social Democrats
accepted a fixed timetable for the attainment of the one per cent target. They have been very ready to
listen to demands to increase the share of Swedish-oriented appropriations. With regard to the countryprogramming system, the Party has successfully defended ‘recipient flexibility’ ad coherent planning
against their critics.
Against this background, it may seem rather astonishing that the non-Socialist governments between
1976 and 1983 did not substantially change the aid policy. The explanation is that during the whole
period the Liberal Party was in command of development-aid questions. Another essential explanation is
that development co-operation is not a very important item in Moderate Party policy, other aspects
having a much higher priority, for example, the level and design of the tax system and the national
defense. The Moderates thus seem to be able to accept the maintenance of both the quantity and the
quality of aid, provided that they can have an influence on other matters which are of greater
importance to them.
In this context, it is worth mentioning that the LDCs play a comparatively modest role as regards the
Swedish economy. Sweden is greatly dependent on foreign trade – about 30 per cent of Sweden’s GNP
is exported. The recipients of aid through SIDA have almost exclusively been chosen from among the
poorest LDCs, which – with the exception of India – are not very important in the world’s foreign trade.
Consequently, the actual ‘return flow’ of about 40 per cent of total ODA is probably very satisfactory
from the point of view of export industry. A substantially higher rate of return flows would only be
possible if the aid programme was considerably restructured with less regard for the recipients’ own
needs. Such a restructuring is not likely to occur at any foreseeable political juncture.
What must be considered more important from the point of view of industry is the absolute and relative
growth of Swedish-oriented appropriations. Industrial and trade-unionist pressure groups will probably
try to influence the Moderate and Social Democratic Parties to maintain the present level of return
flows and also to increase the share of Swedish-oriented appropriations. Another aspect mentioned in
international discussions is the so-call in-effect tying, meaning that the donor tries to influence the use
of non-tied aid in favor of industry in the donor country. As regards the Swedish attitude in this respect,
it seems likely that a recipient who wishes to use Swedish funds for purchases outside Sweden, in cases
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in which Swedish industry is normally competitive and interested, must have rather strong arguments
for doing so.
The importance of Swedish-oriented appropriations, as regards the attitudes of different actors, is also
illustrated by the fact that discussions on projects and recipients are practically limited to aid through
SIDA. BITS and SWEDFUND seem to be protected bodies in this respect. In principle, this is rather
astonishing, as it has been underlined that the guiding principles of Swedish development aid are
equally valid for all types of aid, that is not only aid through SIDA and SAREC but also aid channeled
through BITS and SWEDFUND.
The Swedish administrative system and tradition normally afford vast spheres of action to the central
government agencies. Bearing in mind the composition of their boards, it is obvious that a directorgeneral – normally the president of the board – has a potentially powerful political base at his disposal,
which can be used to exert considerable influence on political decisions. Being responsible for the dayto-day operations of the agency, the director-general can choose the ways in which proposals will be
presented to the board. The system thus provides ample opportunities too for the bureaucracy to
influence political decisions. It should also be mentioned that a director-general may be a person with a
distinguished career in the civil service but also wholly or partly a politician.
In this context, it is interesting to note that the government has reserved for itself a comparatively
strong position on the boards of the institutions responsible for the use of ‘Swedish-oriented
appropriations’, that is BITS and SWEDFUND, and also seems prepared to envisage measures which will
enable it to control better the management of the central agencies. There is no reliable information
available with regard to the role of the bureaucracy in this context. Experience seems to show, however,
that the influence of the bureaucracy is limited or virtually nil when it comes to very important political
questions, such as the choice of recipient countries. There are indications that the bureaucracy has
played some part in such issues as the quality and quantity of the total aid appropriations.
It is obvious that no political party can successfully operate without regard to public opinion within or
outside the party’s constituency. Swedish public opinion over the years has had and still has a positive
attitude to development co-operation and the 1986 opinion poll shows an increase in this positive
attitude. It may seem surprising that the desire to cut the appropriation to development assistance is
less than the willingness to decrease defense spending. It is also interesting to observe that
environmental deterioration is the first concern expressed by participants in the opinion poll, followed
by poverty and starvation in the world. Concern about unemployment risks has increased considerably
in comparison with the 1985 poll. This has evidently not negatively influenced the willingness to give
development aid. Furthermore, positive attitude towards the effectiveness of aid showed a marked
increase in 1986.
It is difficult to determine whether these positive changes in public opinion represent a lasting trend or
whether something has happened to influence it temporarily. It might well be argued that media
reporting on, for example, the drought catastrophes in Africa and conspicuous relief activities, such as
Band Aid, have had a spill-over effect on development aid as such, including government aid.
It is quite clear, however, that young people, women, older age-groups, members of religious
organizations and other NGOs for an aid constituency sufficiently large to prevent serious qualitative
and quantitative decreases in the aid programmes. Groups who in principle would be prepared to argue
in favor of such changes probably find themselves in a reasonably satisfactory position, bearing in mind
the political situation.
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The aid constituency has a considerable influence within the Liberal Party, the Social Democratic Party,
the Centre Party and probably also the Communist Party. The small Christian Democratic Party is also
heavily influenced by such groups, while the Moderate Party seems to be more influenced by groups
which are not particularly interested in development aid or have accepted the present structure and
volume of development assistance as a fact of political life.
The Government’s information policy has greatly increased the opportunities for pro-aid NGOs to argue
their case. Two-thirds of the SIDA appropriation for information on developing countries and
development aid is given to NGOs to be used as they see fit.
Questions may also be raised regarding the relationship between development of aid policies and that
of public opinion on aid. The trend towards an increasing use of aid appropriations for Sweden-oriented
programmes has no doubt shocked many of the most fervent adherents of development co-operation in
its pure form. On the other hand, Sweden-oriented activities, including not only those mentioned above
but also other forms of exchange, no doubt contributed to opening up Third World countries to new
groups of Swedes.
In it January 1987 bill on development co-operation concerning the programme for the fiscal year
1987/88, the government, under the heading of ‘mutually beneficial aid’, refers to the changes which
have taken place since the mid-seventies in the following terms:
Within the aid programme new instruments have been added implying an increased emphasis on
extended economic, technical and scientific co-operation and personal contacts. … This also
contributes to a growing understanding of the needs of developing countries and the often
difficult conditions of development as well as to an improved awareness of the know-how and the
resources that Sweden is able to provide. This helps, together with the engagement of NGOs in
aid activities, to maintain and strengthen the will to give aid in Sweden.
Has there in reality been a drift of Swedish development co-operation from the ‘traditional Swedish
system’ towards the ‘general OECD model’? This question has more to do with the quality of the aid
programmes. An answer to the question must take into account the fact that the ‘general OECD model’
has also changed over the years. There is also a greater willingness among donors other than
Scandinavians to make long-term commitments, sometimes on longer terms than, for example, Sweden
is willing to do. A good example is the European Community. A greater willingness to provide nonproject assistance and sometimes also assistance with local costs may be discernible. It would be
interesting to analyze to what extent the discussions within the DAC have influenced donors in these
respects.
This being said, it is our conclusion that Swedish development assistance has drifted towards the
‘general OECD model’ during the period dealt with in this paper. Nevertheless, the aid constituency in
Sweden has been comparatively successful in defending genuine development co-operation. There is
still a ‘Swedish model’, and this model is being shared and sometimes bettered by some other donors.
Kegley, Charles W. and Hook, Steven W. (1991), “US Foreign Aid and UN Voting: Did Reagan's Linkage
Strategy Buy Deference or Defiance?” in International Studies Quarterly, Vol. 35, No. 3, pp. 295-312,
Blackwell Publishing.
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The conclusions, drawn from our various statistical analyses of the data, point collectively to the
absence of an empirical association between aid and voting coincidence before and after enactment of
the 1986 linkage strategy. The consistency of the findings across these various treatments is much too
great to be attributed to chance. In conjunction with the U.S. government's legislatively mandated
accounting that showed that the voting agreement of U.S. aid recipients declined after the linkage
strategy was implemented, the statistical results of the evaluation identify a policy that failed.
Why did the 1986 linkage strategy fail to produce the effects it sought? We will advance several
complementary interpretations. But first a caveat is in order.
On the surface it might appear that the linkage strategy is not amenable to evaluation because the
Reagan administration never fully exercised its discretionary authority granted by Congress and thus did
not follow through with its threat to link aid allocations tightly to recipients’ diplomatic conduct. But
that lack of attention to implementation does not render the policy initiative nonexistent, nor policy
evaluation moot. The declared initiative comprised a prominent policy. Indeed, the U.S. government
spent considerable energy and resources promoting its intentions to punish defiant states and reward
deferential ones in the hope that its actions would induce support within the United Nations. This threat
was representative of what may be classified a tangible “foreign policy undertaking” (Rosenau, 1980:6 1).
Accordingly, we can safely assume that the targeted state leaders took seriously a policy
pronouncement that was stated so vociferously and repeatedly, even if they could not estimate the
threat's credibility. Consequently, a policy proclamation of this sort, embedded in public law, is not a
random act; it is a bold one whose consequences virtually cry out for analysis.
If words mean anything in diplomatic discourse – as assuredly they do – then the impact (or lack thereof)
of these verbal communications requires analysis if the study of interstate relations is to advance. The
linkage strategy is a paragon of a formal diplomatic effort to exercise influence through a series of
pronouncements that attempted to extract political deference through economic threats. Hence the
case is relevant to and holds implications for a wide spectrum of theoretical questions concerning
foreign policy compliance, sanctions, economic statecraft, and bargaining. For in this case we have an
unusual example of government officials who explicitly enunciated a problem, identified the solution
they sought to remedy this problem, postulated the results that initiative was expected to produce, and
identified the criteria by which the success of the initiative was to be assessed (as calculated by the
government's own measures). What followed as a result of the effort tells us much about the practice of
statecraft in the contemporary system and the limits of the system's wealthiest power.
The results clearly illustrate that the solution to the problem was inadequate to reverse the unfavorable
conditions in the United Nations that so concerned the Reagan administration. It is therefore pertinent
to ask why.
First, our findings add evidence to the discourse on economic sanctions, which posits that such
pressures, whether threatened or imposed, are likely to confront stiff resistance from target states. The
resilience of aid recipients clearly demonstrates that their policies were driven more powerfully by
interests other than by the economic threat of a hegemon. Even though the bilateral relationship
between donor and recipients was highly asymmetrical, the limits to the exercise of influence by a
dominant state over weak states were revealed. This conforms to other evidence (for example, see
Singer, 1972, and Menkhaus and Kegley, 1988) that subordinate states often do not act compliantly
toward core states on which they are economically dependent.
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The pattern illustrated – that poorer states respond with indifference toward economic threats – is also
consistent with most previous research on sanctions. As Hufbauer and Schott with Elliott (1983:76)
found from their 70-year survey of sanction “episodes,” “At most, there is a weak correlation between
economic deprivation and political willingness to change . . . The economic impact of sanctions may be
pronounced . . . but other factors in the situational context almost always overshadow the impact of
sanctions in determining the political outcome.”
The history of international economic sanctions and reprisals attests to the unusual conditions in which
they have proven effective (Wallensteen, 1968; Daoudi and Dajani, 1988). Such measures have rarely
succeeded, even under favorable circumstances; under conditions of aid and trade dependence, political
compliance rarely emerges – these ties fail to bind (see Roeder, 1985). Auspicious conditions clearly
were not present in 1986 when the U.S. undertook its effort to extract compliance with its economic
leverage. And the setting – the United Nations – was an inhospitable environment of cross-cutting
alignments in which to overcome the inertia of voting practices. 16
The inability of the policy to achieve its intended goals may also be attributable in part to the
assumptions the Reagan administration embraced about the motives of aid recipients and the incentives
to which they would respond. American officials appeared to operate from the assumption that
countries in need of foreign assistance would sacrifice their interests and freedom of choice to avert
economic sanctions. That belief may have been unwarranted (see Richardson and Kegley, 1980) in that it
overlooked the probability that Third World countries would not interpret aid as requiring political
concessions. This conclusion is reinforced by the evidence showing that the countries responding most
deferentially after 1987 were the states least in need of assistance; this suggests that recipients acted
primarily in terms of their strategic interests rather than their economic needs.
Moreover, many recipients not only look askance at the equation of gifts for deference but regard the
linkage as exploitative (Krasner, 1985). Instead of viewing foreign aid as a benevolent form of global
welfare, some observers assail it as a seductive means for the powerful to coopt the powerless. Past
studies are rife with denunciations of Aid as Imperialism (Hayter, 1971) that is Zapping the Third World
(Linear, 1985). Initiatives such as America's aid-for-support linkage strategy are often cited as evidence
that extraordinary costs are attached to foreign aid transfers. Overlooked, perhaps, were realistic
assessments of How Foreign Policy Decisions are Made in the Third World (Korany, 1986) – a subject that
this study recommends exploring.
As Harsanyi (1962) has shown, to predict the successful exercise of influence, it is important to consider
both the costs to a dominant country of extracting foreign policy compliance and the costs to the
dependent country of defying the other’s attempt at coercion. For many recipients of U.S. assistance,
the costs of deference to a powerful donor presumably exceeded the benefits.
The U.S. government was equally constrained by its own economic limitations. Because net levels of U.S.
foreign aid declined even before the threats and the linkage strategy were enunciated (as large budget
and trade deficits mounted), the “carrot” of foreign aid that U.S. leaders dangled before aid recipients
was insufficient to be taken seriously; it is unlikely that many recipients perceived meaningful rewards
to be available. A “reverse political effect” (Renwick, 1981:86) could have been operative that
undermined U.S. credibility while emboldening recalcitrant aid recipients. In this political climate, the
U.S. aid program was increasingly dominated by major recipients representing its established security
interests.17 This restricted the flexibility of the entire program and reduced the salience of nonmilitary
criteria in funding decisions which, while providing further ammunition to critics of foreign aid,
illustrated the subservience of foreign assistance to geostrategic considerations.
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It is also evident that a cohesive plan of action was not implemented by the United States to pressure
recipient states for the cooperation that was sought. Such an effort requires not only heated rhetoric on
the floor of the General Assembly but concerted interagency coordination extending to the embassy and
bureau levels. That institutional coordination was not forthcoming, for reasons well explained by the
“bureaucratic politics” paradigm as it applies to the making of American foreign policy (see Hilsman,
1990). Instead, largely due to their role and mission, U.S. diplomats at the United Nations quickly shifted
to other aspects of behavior within that multilateral forum.18 They did not receive support from other
agencies responsible for the implementation of American foreign policy, including the White House itself.
In his legislatively mandated report on the 1988 session (which featured an all-time low aggregate
coincidence rate of 15.4 percent), U.N. Ambassador Vernon Walters sought to defuse criticism with his
praise of what he termed “a productive session” by arguing, “The statistics do not tell the complete
story. We need to look beyond them” (U.S. Department of State, 1989:1-4).
Instead of the aggregate record, Ambassador Walters explained that increased improvement in “key
votes” was more salient to the United States,19 as was an effort to resolve issues by consensus and to
silence anti-American “name-calling” on the floor of the General Assembly. At issue was whether this
was a diplomatic way of departing from an ineffective strategy without taking the embarrassing step of
acknowledging that the original linkage strategy had been jettisoned.
In the apparent absence of ongoing U.S. efforts toward pursuing an aid-for-agreement linkage, and
given the limited economic resources available to back the strategy, the aid program was consistently
driven more by bureaucratic momentum and security considerations than by case-by-case evaluations
of recipients’ diplomatic conduct. This clear pattern should caution current and future policymakers
against presuming that the entrenched political dynamics governing the distribution of American foreign
aid can be easily modified through an effort to make such ancillary concerns as recipients' voting
behavior in the United Nations a primary consideration.
For subsequent research, this pattern also adds empirical evidence to support the thesis that
bureaucratic momentum powerfully drives U.S. budget policy and that other factors are often more
potent than economic threats in influencing the degree to which U.S. policy positions receive support
from the recipients of American foreign assistance. More generally, the inability of the Reagan
administration to sustain interest in and effectively carry out its strategy suggests the need for more
penetrating empirical and theoretical analysis of the obstacles to a democracy's conduct of foreign
affairs. No account of the allocation of American foreign aid programs and its consequences can be
complete without attention to the domestic and institutional influences on changes in that relationship.
James Barber (1979:379) underscored this when he advised that “sanctions cannot be isolated from
other international and domestic issues. They may clash with other interests, or be given a lower priority
than other goals of the imposing states.” The subsequent attempt by the U.S. government to link U.N.
support and foreign aid apparently overlooked this principle; as a consequence, the threats intrinsic to
the bargaining strategy lacked credibility.
The Reagan administration’s effort failed ultimately because it applied the American foreign aid program
to uses for which it was never designed. To exercise influence, aid allocations must consider the
interests, values, and perceptions of those whom the United States wishes to influence. It is neither
realistic nor consistent with realpolitik logic to expect others to conform to pressures by adopting
policies that run counter to their national interests.
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Kilby, Christopher (2009), “The Political Economy of Conditionality: An Empirical Analysis of World
Bank Loan Disbursements,” in Journal of Development Economics, Vol. 89, pp. 51-61.
This paper presents indirect evidence that pressure from the U.S. has undermined World Bank
imposition of structural adjustment conditionality. For countries not friendly with the U.S. (countries
that do not make concessions to the U.S. position in important UN votes), there does appear to be a
significant degree of enforcement. When these countries have active World Bank structural adjustment
loans, poor macroeconomic policy is associated with lower disbursements and the effect can be
substantial. For countries that are friendly with the U.S., there is little evidence of enforced
conditionality. For this second group, there is no substantial link between macroeconomic policy and
disbursements. This pattern reoccurs in a range of specifications, across geographic regions, and over
different time periods and is robust to a number of estimation methods. In contrast, no similar pattern is
found when SALs are not active, again indicating that the pattern is driven by selective imposition of
structural adjustment conditionality.
These results highlight donor pressure as an important alternate explanation for the failure of
conditionality, one that merits more attention from researchers and reformers. This issue has been
explored empirically in the context of the IMF (Stone, 2002, 2004; Vreeland, 2005) but not previously for
the World Bank.
Why does it matter what is the cause of conditionality slippage? Efforts to reform structural adjustment
have focused increasingly on selectivity to change bureaucratic incentives, reduce problems of
information and commitment, and promote ownership of programs (largely through the PRSP process).
These reforms may have significant merit but do not address the issue of donor pressure that can, as
before, undermine borrower incentives and World Bank credibility. Other more fundamental reforms
that aim to reduce donor influence – changes in World Bank governance, ending the tradition of
allowing the U.S. to select the World Bank president, developing alternative sources or methods of
funding – also need to be explored.
Garnering sufficient donor support for such fundamental reforms is not straightforward but may be
aided by more research to better understand the impact of international politics on World Bank
programs and the costs associated with resulting distortions. Do case studies and other direct evidence
(e.g., new data sources that give World Bank disbursements and tranche release conditions by loan)
support the indirect evidence presented here? Does international politics also influence which countries
get World Bank SALs and the tightness of the conditions spelled out in loan agreements? Are eventual
outcomes worse in cases where conditionality was not enforced? The literature on the IMF has explored
many of these questions and may provide important guidance.
Ultimately, donors like the U.S. have many bilateral instruments they can use to pursue foreign policy
objectives. These include bilateral economic aid, military aid and trade policy. Part of the calculus they
engage in when deciding how to reward friends (or punish enemies) is to compare the costs of
delivering rewards directly via bilateral instruments with the costs of exerting pressure on IFIs like the
World Bank. If donors can be convinced that the cost of using IFIs is too high because of deleterious
effects on the unique functions of those institutions, then fundamental reforms may be possible.
Kilby, Christopher (2006), “Donor Influence in Multilateral Development Banks: The Case of the Asian
Development Bank,” in The Review of International Organizations, Vol. 1, No. 2, pp. 173-195.
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This paper examines the influence of Japan and the United States over the geographic distribution of
Asian Development Bank lending. Using panel data from 1968 to 2002 for less developed Asian
countries, a two part model points to significant donor influence. The exclusion of China and India (75%
of the region’s population) from ADB lending prior to the mid-1980s and their restricted level of
borrowing thereafter overshadows other, positive humanitarian dimensions of ADB lending. Even
setting aside the cases of China and India, donor trade interests and proxies for geopolitical interests
appear to play a larger role than do humanitarian factors.
The two part model includes a selection equation and an allocation equation. The selection equation
examines the probability that a country will receive funds (eligibility). The allocation equation examines
the level of funding among countries that did receive ADB funds. In line with humanitarian principles,
the selection equation indicates that poorer and (especially more recently) democratic countries are
more likely to receive ADB funds. However, more populous countries are less likely to receive ADB funds
and, ceteris paribus, eligibility for ADB funding does not mirror the distribution of bilateral aid from a
group of small donors known for their relatively humanitarian aid programs. Japanese trading partners
and countries favored by Japanese bilateral aid are more likely to receive ADB funds, suggesting
Japanese influence. The link between U.S. variables and selection is more complex: countries favored by
U.S. bilateral aid are more likely to receive ADB funds but countries with strong U.S. trade ties are less
likely to receive ADB funds. Overall, the estimated effects of Japanese and U.S. interest variables are
larger than the estimated effects of humanitarian variables in the selection of countries to receive ADB
funds.
Conditional on being selected to receive ADB funds, a country’s level of funding increases with its
population—up to a point. Holding other characteristics constant, funding increases with population
except for the largest countries (notably Bangladesh and Indonesia before 1987 and China and India
since then) which generally receive dramatically less in comparison to their populations. Of the
countries receiving funds, poorer countries receive more, ceteris paribus. In the allocation equation,
democracy appears to have played a role earlier in the sample period. However, as with the selection
equation, after controlling for other factors, the level of ADB funding does not mirror the distribution of
bilateral aid from a group of small donors known for their relatively humanitarian aid programs. In
contrast, World Bank loan allocation does, both within Asia and globally. Donor interest variables,
particularly those intended to reflect geopolitics, are significant in the allocation equation primarily in
the latter half of the sample period. During that period, higher Japanese bilateral aid and higher U.S.
bilateral aid are both associated with more ADB funding, with the link three times larger for Japanese
bilateral aid. Voting alignment with Japan in the UN is associated with less ADB funding in the first half
of the estimation period and with more ADB funding in the second half, the latter result driven by China
and India.
Overall, the evidence suggests that both Japan and the U.S. have systematic influence over the
distribution of ADB funds. Whether examining selection or allocation, discrimination against China
(attributed to U.S. Cold War politics) and India (driven by Japanese concerns) overshadows other
potentially humanitarian aspects of ADB lending. In a similar study of the World Bank, Fleck and Kilby
(2006) find that the single largest factor is population with more funds going to larger countries. The
influence of U.S. interests is roughly on par with that of humanitarian factors other than population. The
ADB case differs in that humanitarian considerations play a less apparent role. In this sense, donor
interests more heavily influence the allocation of resources in the ADB than in the World Bank.
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Kilby, Christopher Dreher, Axel (2009), “The Impact of Aid on Growth Revisited: Do Donor Motives
Matter?”, in Economic Letters, Vol. 107, No. 3, pp. 338-340.
Research on foreign aid identifies aid allocated both based on recipient need (RN) and donor interests
(DI). Following Boone (1995), most aid effectiveness studies capitalize on this by using political
instruments to identify the impact of aid on growth (Burnside and Dollar, 2000; Rajan and Subramanian,
2008). However, interpreting estimation results as the general impact of aid on growth requires the
strong homogeneity assumption that donor motives do not influence aid effectiveness. Only a handful
of studies consider the impact of donor behavior on aid effectiveness in detail (Bobba and Powell, 2007;
Headey, 2008; Bearce and Tirone, 2009; Minoiu and Reddy, 2010).
In this paper, we call this homogeneity assumption into question by developing an aid allocation model
in which recipient government policy choices link donor motives to the impact of aid. We test the
assumption by including an estimate of need-based aid in a crosscountry time-series growth regression.
The test rejects the homogeneity assumption, suggesting a more cautious interpretation of past
research results. […]
Starting with a model of aid allocation, policy choice and growth, we illustrate how donor motives can
influence the effectiveness of aid, undermining the homogeneity assumption implicit in the geopolitical
instrumentation strategy used in many aid and growth regressions. We also test and reject this
assumption empirically. This complicates interpretation of results in much of the aid effectiveness
literature and poses a dilemma about how to deal with potential endogeneity.
Kim, Soo Yeon and Russett, Bruce (1996), “The New Politics of Voting Alignments in the United
Nations General Assembly,” in International Organization, Vol. 50, No. 4, pp. 629-652.
We have addressed several questions regarding the voting patterns of the UN General Assembly: What
are the underlying issue-dimensions reflected in the resolutions put to roll-call vote? How do member
states align themselves with respect to these dimensions? How can we characterize those states, and
what implications do the characterizations have for political processes in the UN? Our analysis focused
primarily on three post-cold war sessions of the General Assembly, but we were also able to compare
those voting patterns with patterns characteristic of earlier years.
With the end of the cold war, voting patterns in the General Assembly reflect the erosion of the EastWest division that had dominated many UN activities. Left behind as major foci are many issues relating
to the self-determination of colonized peoples and, to a lesser extent, questions of political rights within
states. During the cold war era, when many “nonaligned” states voted regularly with the Soviet bloc, the
modal point of the General Assembly often was found in the southeast quadrant. It is now somewhat to
the southwest. Four of the five permanent members of the Security Council, however, are toward the
northwest, suggesting their current ability to hold that body on a very different course from the General
Assembly.
The North-South split now characterizes voting positions as much as the East-West split once did. The
importance of North-South issues is not new, but during the cold war years it tended to be conflated
with and be overshadowed by East-West issues as a source of division.17 The resurgence of North-South
voting renews and strengthens a long-standing alignment, one now likely to dominate the UN for a
substantial period in its future. Voting alignments are likely to be shaped by state preferences along
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developmental lines, and views of self-determination and economic development will reflect the
continuing great differences between rich and poor nations.
Kolbe, Jim (2003), “Lessons and New Directions for Foreign Assistance,” in Washington Quarterly. Vol.
26, No.2, pp. 189-198.
Foreign Assistance: One Leg of a Three-Legged Stool
With those four lessons [learned in development assistance] in mind [namely: 1. It is not the quantity of
foreign assistance that is integral to successful development. 2. It’s all about economic growth. 3. Good
governance matters. 4. We need to remain focused.], we should evaluate carefully what we think the
role of our development assistance should be. But before addressing that question, it is important to
articulate how U.S. foreign assistance is an integral component of our overall foreign and national
security policy. I often relate our total foreign assistance—the entire foreign operations bill—as one leg
of a three-legged stool providing a sturdy U.S. foreign policy. Each leg is essential for the stool to carry
the weight of the policies projected and coming together at the top. One leg is that of our diplomatic
corps and intelligence services; another relates to national defense and security strategy; and the third
has, as its core, our foreign assistance.
Our foreign assistance in a macro sense plays multiple roles within our foreign policy process. At its first
level, the foreign assistance leg can be used as a vital tool to ease the suffering of people around the
world. At a more nuanced level, it can enhance health, education, and national infrastructure. In light of
security challenges to the United States, we can also link the foreign assistance leg of the stool to the
national security leg by using it in the form of Foreign Military Financing. Of even more importance, it
can and should nurture the structures of capitalism and the rule of law, making it possible for the poor
to participate in market economies and for poor countries to participate in the global economy.
I believe this is the role we should want development assistance to play. If experience shows that
successful development is driven by a country’s ability to access and use all its available resources for
economic growth—particularly those that relate to integration in the global economy—then we must
strategically align development assistance to that end. Our development assistance should serve as a
catalyst to help countries prepare for greater participation in the global economy.
Where Do We Go from Here?
It is time to move beyond the debate on the quantity of foreign assistance to a focus on economic
growth and helping countries maximize the benefits of participating in the global economy.
We must be sure that our expectations and definition of success are aligned with our development
experience. All too often, advocates for development assistance argue that success is only a matter of
additional resources. Experience tells us otherwise. Decades of development experience have
demonstrated that resource transfers—without the environment of an effective political economy—will
generate poor results. Our policy development and our advocacy must place an emphasis on those
policies that will generate success—not simply the addition of more resources.
The United States must generate a development policy that is more holistic in outlook. Two pillars must
be elevated in importance. First, U.S. policy must recognize trade and foreign direct investment as
development tools. Second, economic growth must become its own objective and be strongly integrated
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into the fabric of our development programs. This is particularly true for many African countries where
HIV/AIDS is actually projected to reduce GDP growth rates, making the situation of responding to the
pandemic even more challenging.
Historically, we have focused exclusively on increases in foreign assistance and debt relief as the chief
drivers of development. I would argue that giving developing countries access to the markets of the
United States, Europe, and Japan creates a self-reliant path while aid is a donor-development path. For
instance, if sub-Saharan Africa had an additional 1 percent of international markets in the form of
exports, the region would have $60 billion more in resources derived from revenue earned through
international trade.12
Our domestic discussion on development must consider the potential cost of failure in the new round of
trade talks that were launched in Doha, Qatar, in November 2001 or of failure in negotiations for U.S.
free-trade agreements (FTAs) with Central America or the countries of southern Africa. The World Bank
has calculated that a successful round of global trade negotiations, coupled with related market reforms,
could add a whopping $2.8 trillion to global income by 2015—much of it in developing countries.13
Knowing that we have a tendency to ask developing countries to accomplish all of our bilateral
objectives at the same time, it is imperative that we remain focused. That should result from a reflection
on our need to break out of the trap of “do-everything development.”
These messages of trade and focus are not ones that we—and many in the development or advocacy
communities—are accustomed to hearing. In fact, some do not wish to hear it. We have become so
devoted to the assistance programs or causes we each represent. Moreover, if we are serious about
development, we have to be serious about trade. As a representative of Oxfam International has said,
however, the “playing field is not level.”14 It slopes downhill from developed countries.
As the Bush administration continues to work on the Millennium Challenge Account (MCA), I would offer
these suggestions. It should consider offering MCA recipient countries special consideration for
expedited bilateral trade preferences (such as those offered in conjunction with the African Growth and
Opportunity Act or the Andean Trade Preferences Act) or the option of negotiating an FTA with the
United States. The administration should offer developing countries the prospect of ownership of their
development strategies with U.S. assistance. In exchange for ownership, developing countries should be
willing to accept the fact that MCA resources may be withdrawn if criteria for eligibility are not
maintained or results not achieved. The MCA should aim to build and reinforce the governmental
capacity of recipient countries to manage their own development. In establishing the MCA, we must
minimize the administrative bureaucracy and bureaucratic requirements in assistance delivery. Once
countries qualify, the MCA should complement current assistance efforts but, most importantly,
generate a focus on economic growth and self-sufficiency.
Finally, the administration should aim to make sure development and economic opportunity is extended
to those currently outside the formal economy. By this, I mean that the rule of law, property rights, and
the ideas of Hernando DeSoto should be incorporated into our programs as a development goal.15 The
promise of capitalism as a tool for economic development and poverty reduction can never fully be
achieved as long as large populations have no stake in the capitalist mode of development.
In conclusion, I firmly believe that we are going to have to think outside the box in our developmentassistance programs. The reality is that what we have tried in the past has not worked. We must learn
from our prior experiences, and in light of the challenges we face, we must be open to new ideas and
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tools that will help us prioritize our efforts when helping countries achieve broad-based economic
growth and integration into the global economy.
Korany, Bahgat (1986), “Coming of Age Against Global Odds: The Third World and Its Collective
Decision-Making,” in Korany, Bahgat (ed), How Foreign Policy Decisions are Made in the Third World,
pp. 1-38, Boulder: Westview Press Inc.
Integrative tendencies among Third World member nations form the basis of both the Third World’s
emergence and its collective decision-making. Concerning the latter issue, three characteristics should
be emphasized:
1. The Third World’s self-assertion and the manifestation of its collective identity have come of age
as a function, above all, of the common position of its countries in the global hierarchy. No
longer formally integrated into colonial empires, these countries are vulnerable, suffer from an
acute sense of threat, face serious economic problems, and feel that the “system” is somehow
rigged against them.
2. Notwithstanding the presence of common characteristics and interests with the Third World,
the analyst should avoid any overhomogenization (i.e., glossing over of differences) among its
different countries and clusters. Although Third Worldism is equated with NAM, the groping
toward expression of collective identity at the global level has had a multigroup involvement
from the very beginning. These groups can be general (Bandung) or specific (G-77), ideological
(radical versus moderates) or geographical (African, Latin American).
3. To keep these groups together, the Third World – while becoming increasingly institutionalized
– has emphasized consensus building in its collective decision-making processes.
Korany, Bahgat (1986), “Foreign Policy Decision-Making Theory and the Third World,” in Korany,
Bahgat (ed), How Foreign Policy Decisions are Made in the Third World, pp. 39-60, Boulder: Westview
Press Inc.
To counter the serious deficiencies plaguing the established model, analysts of Third World foreign
policy decision-making must turn to other schools of social analysis for inspiration. They must also be
frankly innovative and attempt to adapt available frameworks to maximize potential payoffs. Thus, if the
analyst is not to be dazzled by the psychological filter, the approach emphasized in this book can be
used. It calls attention to the significance of the operational environment (i.e., the “real life” or objective
factors as distinct from subjective ones), especially those factors characteristic of developing counties. It
seems that the best way out of the present conceptual cul-de-sac is to turn to the field of decisionmaking activity itself and see what the data say. Through a dialectical process of interaction between
existing theory and rigorous empirical research we can advance both. With the passage of time, it is
hoped, data-based generalizations will be numerous and cumulative enough to achieve a more credible
theory of foreign policy decisions in the Third World.
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Korbe, Lawrence (2008), “Foreign Aid and Security: A Renewed Debate?”, in Picard, Louis A.,
Groelsema, Robert and Buss, Terry F. (eds.), Foreign Aid and Foreign Policy: Lessons for the Next Half
Century, pp. 27-38, New York: M. E. Sharpe, Inc.
To prevail in the war on terrorism, the United States must remember that aid is a national security issue.
As former Secretary of State Colin Powell noted, “the United States cannot win the war on terrorism
unless it confronts the social and political roots of poverty,” and to win this war it needs poor countries
as well as rich ones to support the values it champions and to believe that they too can climb out of
poverty and achieve economic and political freedom (Radelet 2005, 6). But they need help to do it, and
the assistance the United States currently provides is not enough.
Kuziemko, Ilyana and Werker, Eric (2006), “How Much is a Seat on the Security Council Worth?
Foreign Aid and Bribery at the United Nations,” in Journal of Political Economy, Vol. 114, No. 5, pp.
905-930.
Thus far, we have argued that nonpermanent members of the U.N. Security Council receive extra
foreign aid from the United States and the United Nations, especially during years in which the attention
focused on the council is greatest. Our results suggest that council membership itself, and not simply
some omitted variable, drives the aid increases. On average, the typical developing country serving on
the council can anticipate an additional $16 million from the United States and $1 million from the
United Nations. During important years, these numbers rise to $45 million from the United States and
$8 million from the United Nations. Finally, the U.N. finding may actually be further evidence of U.S.
influence: UNICEF, an organization over which the United States has historically had great control,
seems to be driving the increase in U.N. aid.
Ideally, a study of vote buying in the United Nations would test for the ability of Security Council aid to
influence actual voting. Unfortunately, this is difficult for two reasons. First, we cannot observe the
counterfactual: how the country would have voted in the absence of vote-buying activity. Second, votes
themselves are strategic. Agenda setters typically know, before putting a resolution up for a vote, the
preferences of each member. Perhaps this is why most Security Council resolutions are passed
unanimously and why failed resolutions are rare; recall that the 2003 resolution to authorize the
invasion of Iraq never actually came to a vote. As a result of these identification problems, we believe
that actual outlays of aid are the most trustworthy way to measure the presence of vote buying in the
Security Council. By providing extra aid to nonpermanent members of the council, especially during
years in which council votes are especially important, agenda setters have implicitly revealed their faith
in the Security Council’s relevance in world affairs.
Lai, Brian (2003), “Examining the Goals of U.S. Foreign Assistance in the Post-Cold War Period, 19911996,” in Journal of Peace Research, Vol. 40, No. 1, pp. 103-128.
This study has resulted in two broad conclusions. First, the method used to measure economic variables
and to address the associated problem of autocorrelation inherent in these types of data has a large
effect on the results that are likely to be produced. Previous studies suffer from both of these problems.
First, these studies do not deal with the large variance in economic indicators that can skew the results
of statistical analysis. This study improves upon this design by using the logged values of these variables.
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Second, many studies use inappropriate methods to control for time, such as the inclusion of yearly
dummy variables. This article addresses this problem by using a more appropriate and original research
design, as well as more sophisticated methods to deal with autocorrelation. Second, this article has
developed some interesting findings in regard to the goals of US foreign aid policy. First, security
considerations play just as important a role, if not more so, in who gets aid in the post-Cold War period
as in the Cold War period. In all the empirical tests, security factors were significant in determining who
got aid in the post-Cold War period, while they generally were not significant in the Cold War period.
This demonstrates that when threats to US security change, the USA similarly changes its foreign policy
to match the new threats. Also, the conundrum found in other articles that the USA aids democracies
and abusers of human rights appears to be driven by the methodological problems discussed above.
This study found that for new aid recipients in the post-Cold War period, the USA provides more aid to
states that respect the human rights of its citizens. However, the USA in the post-Cold War period also
provides more initial aid to non-democracies. This result is likely to be due to the analysis of first-time
aid receivers in the post-Cold War period.
Lancaster, Carol (2000), “Redesigning Foreign Aid,” in Foreign Affairs, Vol. 79, No. 5, pp. 74-88.
In sum, foreign aid will continue to be an essential foreign policy tool to promote U.S. interests and
values abroad. Its major purposes will include peacemaking, addressing transnational issues and other
challenges arising from globalization, providing humanitarian relief, and promoting “humane concerns”
abroad. The first two purposes relate primarily to U.S. interests; the second two reflect U.S. values.
Support for development and democracy abroad will not disappear, but they will not be among the
major priorities for foreign aid spending in the decades to come.
Lancaster, Carol (2007a), “Chapter 8: Conclusions and Conjectures,” in Lancaster, Carol, Foreign Aid:
Diplomacy, Development, Domestic Politics, pp. 212-226, Chicago: The University of Chicago Press.
This book has addressed the question “Why aid?” It has attacked the question at two levels – one
describes the multiple and evolving purposes of aid giving over the past half-century or so; the other
digs into the political forces within five aid-giving countries that have shaped those purposes. It is the
task of this final chapter to pull together the answers provided by the history of aid and five case studies.
It will do two additional things in this chapter: draw out the policy implications of my conclusions and,
finally, peer into the future of foreign aid.
Aid’s Origins and Evolution
Foreign aid began as one thing and became another. It began as a realist response to the deepening
Cold War between East and West. While continuing to be deployed in the service of national interests,
aid eventually created the basis for a new norm in relations between states – that better-off states had
an obligation to provide aid to less-well-off states to better the human conditions of the latter. That
norm did not exist in the middle of the twentieth century. It was widely accepted and unchallenged by
the end of the century. For those of a theoretical bent, foreign aid must be understood through the
lenses of both realism and constructivism. No one theory can adequately explain this twentieth century
innovation in relations between states.
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Looking back, there is a political logic to the evolution of aid’s purposes. Aid (apart from aid for relief)
began in the United States in 1947 as a response to an external threat – it was a temporary expedient to
bolster the economies of Greece and Turkey in the face of communist pressures. Without those
pressures and the broader threat to security in Southwest Asia and the Middle East and later in Western
Europe, the United States would an aid program then and, given the fiscal conservatism and isolationist
tendencies in Washington, might not have begun one at all. Later, as the Cold War spread to the
developing world, the US government put pressure on governments of Western Europe, Canada, and
Japan to create their own aid programs. These pressures played an important role – though not the only
role – in persuading governments in Western Europe and Japan to establish or expand their own aid
programs and to create government aid agencies to manage them in the 1960s. Most of these
governments also had nation interest reasons and, in some cases (like Denmark), domestic pressures for
creating aid programs – managing decolonization, gaining access to strategic raw materials and export
markets, reintegrating with the world community of states. The United States was pushing on an open
door.
By the 1970s, aid had become a common element in relations between rich and poor countries. And
during that decade and the one that followed, aid for development became increasingly prominent
among aid’s multiple purposes. For example, the portion of aid given to the least developed countries
more than doubled between 1970 and the mid-1980s, the terms of aid giving softened significantly, and
the uses of aid shifted from funding economic infrastructure to social services and the more challenging
problems of institutional and policy change. Further, during the 1990s and early years of the new
century, aid-giving governments signed agreements to limit the commercial uses of aid, reducing the
prominence of that purpose in aid-giving.
What led to the increase in priority for aid’s development purpose? A key factor was the establishment
within most donor countries of a political constituency for development aid. This constituency existed
both inside and outside governments. Outside government, NGOs supporting aid grew in numbers and
influence in most major aid-giving countries, at times acting in an informal alliance with government aid
agencies. Inside government, aid agencies were set up, expanded their budgets and their staffs,
strengthened their professional capacities, and increased their “development education” programs with
their own publics. The importance of constituencies for development aid inside and outside government
in influencing aid’s purposes is underlined by the experience of those countries – Japan and France –
where such constituencies were weak or lacked access and where, as a result, the development purpose
of aid was the weakest.
Aid giving governments also had pressures on them from outside their countries to elevate the amount
of their aid and its development orientation. Some of these pressures came from other governments.
Many emanated from a group of international development aid agencies, including the Development
Assistance Committee of the OECD, the World Bank, the regional development banks, and the many UN
agencies and organizations involved with aid issues (the UN Development Program, the Food and
Agriculture Organization, other UN specialized agencies, the Economic and Social council, and even the
UN General Assembly), which, through a variety of means pressed rich governments to increase the
amount and quality of their development assistance. External pressures appear to have been most
effective where they resonated with internal constituencies for development aid (e.g., in the Nordic
countries)) or, over the longer run, when they stimulated changes in those constituencies (e.g., urging
the creation and strengthening of NGOs, as in Japan). But at a minimum, they succeeded in keeping
development aid on the international agenda of all aid-giving governments and before the public and
elites in those countries. External events, such as the two major famines in Africa in the 1970s and 1980s,
raised the visibility in aid-giving countries of human suffering abroad – including problems of hunger as
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well as starvation and the role of aid in addressing those problems. They led both to an expansion of the
constituency for development aid (that is, by stimulating the establishment of NGOs, which advocates
for development aid) and to strengthening the norm among publics and elites that governments had a
responsibility to respond to human suffering abroad. (Humanitarian relief was highly motivating for the
public in aid-giving countries, but humanitarian crises also often led into increased support for
development aid – at least for several years in the aftermath of such crises – to deal with the underlying
problems of human suffering.) The HIV/AIDS pandemic appears to have had a similar effect by the
beginning of the new century. Thus, over a period of a half century, publics and elites in rich countries
came to accept the appropriateness and even the obligation of governments of rich countries to provide
aid to governments and peoples in less-well-off ones.
Development-oriented NGOs and international organizations helped not only to promote an aid-fordevelopment norm but sought to hold governments to account in fulfilling it. This does not mean that
aid was not used for other purposes – such as Cold War containment, fighting terrorism, fortifying
spheres of influence, or expanding markets for exports. These other purposes, tied to national security
or economic interests, remained important and even essential to sustain high volumes of aid during the
period of this study. But the development purpose of aid was no longer challenged as inappropriate, and,
indeed, governments were increasingly forced to justify nondevelopment uses of their aid.
In the wake of the end of the Cold War in the 1990s, foreign aid fell in many donor countries, and the
proportion of aid provided the poorest countries also fell, while the purposes for which aid was provided
expanded to include promoting democracy, supporting economic and social transitions, addressing
global issues, and mitigating conflict. The termination of the Cold War made foreign aid vulnerable to
cuts in some counties, but two other factors played even more prominent roles in the drop in aid levels:
economic and budgetary problems in donor countries and deepening doubts about the effectiveness of
aid in spurring development, especially in sub-Saharan Africa.
The decrease in aid in the 1990s energized the constituency for development aid in many aid-giving
countries to campaign for an increase in aid levels and a greater focus on development. Undoubtedly in
part because of these efforts, public support in Europe and the United States for helping people in poor
countries began to increase at the end of the twentieth and the beginning of the twenty-first centuries,
as polls in the United States and European countries show.1
In the late 1990s and early years of the twenty-first century, governments in a number of aid-giving
counties sough to reorganize their assistance to align it more closely with DAC development aid
standards. These changes may have been hastened by the tragic events of September 11, 2001, and
other terrorist attacks in Europe and elsewhere, which called the world’s attention to problems of
poverty, despair, and conflict in poor countries, but plans for aid increases and aid reforms preceded the
terrorist attacks. Something more fundamental was at work – an embedded aid-for-development norm,
supported by a growing domestic constituency. However, experience also suggests that an aid-fordevelopment norm is not unconditional – it assumes that such aid is relatively effective and that
economic conditions in aid-giving countries are sufficiently buoyant so that aid abroad is not seen as
taking badly needed assistance away from people in distress at home. Within this broad historical
pattern, each of this book’s country case studies shows significant differences in the domestic political
forces affecting the purposes of their aid – above all in the ideas and institutions shaping those purposes.
Findings from Country Case Studies
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It is often thought that the main purpose of US aid is diplomatic – for most of the period of this study,
fighting the Cold War. That impression is mistaken on two counts. Important among the diplomatic
purposes of US aid has been peace-making, primarily in the Middle East. But more basically, roughly half
of total US aid has been used for development and associated purposes. What has, in fact, marked US
aid is its continuing dualism – the mix of diplomatic and development purposes. One reason for the
dualism is found in the ideas shaping that aid, specifically the debate in the United States between
libertarians, or classical liberals, on the political right, who argue that the role of the state in the
economy should be limited and that foreign aid is an inappropriate or ineffective use of public resources,
and the “humanitarians” on the political left, who argue that the United States should, as one of the
richest countries, use its public resources generously to help the poor abroad. These arguments on the
rightness of aid – not nearly so evident in other aid-giving countries – have been amplified by the
adversarial nature of the US political system. They go a long way in explaining why aid has been so
controversial in the United States, why support for foreign aid among the US public has been
consistently lower than in any other major aid-giving country, and why, to garner enough support for
annual aid appropriations, both diplomatic purposes (to gain the support or acquiescence of the
conservative right or influential foreign affinity lobbies, especially that supporting the state of Israel) and
development purposes (to obtain the support of the humanitarian left) have been essential. What will
be interesting to watch in the future of US aid is whether the growing support of aid for humanitarian
and development purposes from the Christian right will bring about a fundamental shift in the domestic
politics and, ultimately, strengthen the development purpose of US foreign aid.
Japanese aid is often regarded as motivated primarily by commercial purposes – as a vehicle for
expanding Japan’s exports. Commercial interests were important in the first two decades of Japanese
aid-giving, but even then they were nested in broader diplomatic purposes of the Japanese government.
What was missing in Japan’s aid was a major development focus, even after commercial purposes
declined. Why was this so? Because Japanese traditions, in contrast to much of the West, put a low
priority on public charity (families were supposed to take care of their needy), and the emphasis on a
strong state and family left little room for civil society and, by implication, the nongovernmental
organizations that populate the political landscape of aid-giving in the United States and Europe. As a
result, the values and political constituencies sustaining public resources for development in other
countries were weak in Japan (though over time and with international pressures, this began to change).
The thing to watch in the future of Japanese aid is whether an emerging constituency for development
outside government will eventually prove influential enough to strengthen the development focus of
Japan’s aid, overcoming, or forcing reform in, the fragmented organization of Japanese aid within
government.
France presents yet another combination of domestic political factors affecting its aid. French aid is
often interpreted as primarily driven by colonial policies of maintaining a sphere of predominant
influence, primarily in sub-Saharan Africa. This is true as far as it goes. But why did France choose to use
its aid for so long in this way, even in the face of rising domestic criticisms that its aid was being wasted
or helping corrupt dictators stay in power? Much of the answer has to do with widely shared ideas
about France’s rightful role in world politics, together with a highly centralized and not very transparent
government (the National Assembly had little involvement in or even knowledge of the details of French
aid, and development-oriented NGOs had little access to government decision-making) with an internal
organization, reinforced by informal private networks, that privileged the use of French aid for
diplomatic purposes. This system is beginning to break down with the passing of the Gaullist generation
of politicians in Paris and the criticisms of younger political elites not tied to Françafrique. Whether
reforms in the organization of French aid – highly fragmented like that of Japan – will lead to a more
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coherent, accountable, development-oriented program of aid is still in question and is the key thing to
watch for in the future.
German aid shows a trend of diminishing diplomatic and commercial influences and an increasing
concentration of responsibilities for aid policies in its Ministry of Development. Set up as a result of
coalition politics 1961, the ministry was initially a shell with few responsibilities for aid. But over time, its
existence provided a political logic for successive ministers to argue successfully for greater control over
German aid. That aid decreased dramatically during the economic stresses of the 1990s – especially the
costs of absorbing East Germany – but it rebounded at the beginning of the new century, supported by a
sizable and active NGO constituency for development aid and an activist minister of development who
was also vice chairman of the Social Democratic Party – the leading party in the government coalition.
Germany is committed to a substantial increase in its aid in coming years. The thing to watch is whether
aid is of sufficient priority to the government for it to fulfill this commitment.
Denmark offers yet another contrast in the domestic politics of aid. Its embrace of social democratic
ideas that the rich should assist the poor and that government was an appropriate vehicle for that
assistance at home translated relatively easily to acceptance of development aid abroad. Its
parliamentary system based on proportional representation reinforced the prominence of development
aid as successive governments had to bargain with small political parties – some of which put
development aid at the top of their political priorities – to create governing coalitions that raised the
amount and development orientation of Denmark’s aid. The government’s need to create an adequate
“resource base” (i.e., domestic constituency) for aid led it to allocate a significant portion of its aid
initially to promote Danish commercial interests abroad, but this use was gradually limited over time as
development criteria increasingly governed the allocation and use of this aid.
Denmark illustrates yet other interesting aspect of the domestic politics of aid. That country’s growing
backlash against immigration and heavy government taxes led to the election in 2001 of a center-right
coalition that reframed foreign aid – portraying it not as an extension of social democratic values abroad
but as an expenditure abroad that traded off against needed health expenditures at home. The new
government cut Danish aid by 10 percent, dropping that country to second place in relative generosity.
But the government did not attempt to cut Danish aid further, possibly because such a move would have
collided with considerable domestic resistance. Public support for aid, although declining after the
election in 2001 (reflecting the reframing of aid in terms of domestic norms and preferences), was still
strong. The thing to watch in Denmark is the extent to which the reelected center-right government will
try to reorient Danish aid toward reducing the number of immigrants in the country and keeping others
at home. Two elements in Danish identity appear in conflict when it comes to Denmark’s aid: its long
tradition of caring for the poor at home and abroad versus guarding an ethnically and culturally
homogenous country that seems to many Danes to be threatened by a sizable number of immigrants
and refugees from very different cultures and countries. Given the sensitivities in many European
countries to sizable immigrant populations within their borders, Denmark may show us one of the
future faces of aid in that part of the world.
Further Insights from the Conceptual Framework
The conceptual framework of this study – including ideas, institutions, interests, and organization – was
intended to provide a basis for analyzing the politics of aid in five countries. But the framework itself
invites us to consider more general insights regarding the domestic politics of aid-giving.
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First, norms are important in shaping and sustaining aid-giving. But how aid is framed in terms of those
norms is also important. The impact of norms and framing is evident in a number of my cases –
especially in the United States, where prominent members of the Christian right, previously skeptical
about foreign aid, have begun to reframe certain kinds of aid as “Christian duty.” (This view of aid has
long been held by Christian Democratic parties in Europe but not so prominently in the United States,
perhaps because of the prevalence there of classical liberal views on the political right, which in general
strongly favor a minimal role of government in society and oppose public welfare programs.) What has
led to this reframing of aid in the United States? It seems likely that the emergence of a more educated,
activist, and internationalist Christian right, led by elements of the evangelical community (which has
increasing numbers of missionaries in developing countries), together with the rapid growth of local
evangelical movement in Latin America and sub-Saharan African [sic], have fed this trend, both through
learning and the experience of poverty and deprivation abroad. The support for increased aid from the
evangelicals and the Christian right facilitated passage through the US Congress of significant increases
in US aid proposed by the Bush administration (though this was not the only factor supporting the
increase in US aid).
The case of Denmark provides another illustration of the power of the way aid is framed – in this case,
by center-right parties linking it directly to the contentious issues of immigration, high taxes, and
inadequate expenditures on domestic health services. Support for aid in Denmark fell when the centerright parties made these links in their electoral campaign, preparing the ground for a cut in Danish aid
when the center-right took power in 2001. Both of these cases illustrate that aid can be framed and
reframed in terms of number of domestic norms, and effective framing can have significant and
immediate consequences for the amount and orientation of foreign aid and, over time, for the purposes
of aid. The case of Denmark also suggests, however, that there may be limits, based on widely shared
societal values extended over a considerable period, on how much change in aid levels and possibly aid’s
purposes can be implemented through reframing. The center-right coalition refrained from cutting aid
below the initial 10 percent, anticipating significant resistance to further cuts from the public and the
Danish aid lobby.
The case studies confirm the argument, suggested at the beginning of the book, that the structure of
governments, combined with electoral rules, can influence the purpose of aid. The need to create
governing coalitions led to enhanced aid for development as a price of coalition building and
maintenance, affecting the organization of aid in Germany and the amount of aid and aid’s purposes in
Denmark up to 2001.2 This dynamic does not work in the winner-take-all presidential system of the
United States, which discourages the formation of small political parties favoring niche issues (even
though there might well be an adequate constituency base for such parties in the United States if
electoral rules were based on proportional representation and the system were a parliamentary vote).
The case of Denmark illustrates the proposition that informed and engaged legislatures can affect aid’s
purposes. The Folketing often debated aid issues and was long a vehicle for education and consensusbuilding among political elites and the public on Danish development aid. The opposite case is found in
France and Japan, where the legislatures played no role in aid – they were mostly uninformed and
seldom debated aid issues, leaving aid policies and decisions opaque and not subject to public scrutiny
or influence. Where legislatures do not hold the executive branch to account, the public may strongly
support aid, but it may be little informed about the actual uses of aid and have little impact on them.
The public and political elites can also turn sharply against aid when scandals erupt involving the use of
aid for commercial or political purposes, as they have in the less transparent aid systems of Japan and
France.
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The importance of a constituency for development aid and its degree of access to government is well
confirmed by my cases. Where the constituency is weak or lacking in access – as in Japan and France,
respectively – the development purposes of aid were weak. Where that constituency was strong and
well connected to government decision-makers, as in the case of Denmark, aid’s development purposes
were much more prominent. However, the cases of the United States and Denmark suggest an
amendment to this proposition. A constituency with access to government may ensure that aid’s
development purpose is prominent, but it is not usually adequate to ensure that development is aid’s
only purpose. In both countries, other interests influence the purposes of aid – in Denmark, commercial
interests, and in the United States, diplomatic ones. And these other interests proved essential to
carrying sizable budgets forward year after year in these political systems.
Fifth, the case studies also demonstrate a relationship between the way a government organizes its aid
and the priority of development in aid’s purposes. Development has gradually become a more
prominent purpose in German aid as the Ministry of Development has increasingly gained
responsibilities over Germany’s aid programs. The fragmented aid organizations in France and Japan
have contributed to the weak development purpose in those government’s aid programs, and the
stickiness of these systems has impeded efforts to elevate that purpose through government
reorganization.
The bureaucratic location of aid also matters, though the relationship between location and aid’s
development purposes is not as simple or straightforward as aid practitioners have often assumed. One
would expect that a ministerial level development aid agency would carry more influence in government
than a subcabinet-level aid agency. The case of Germany, compared to that of the United States, would
seem to validate this prediction. But the case of Denmark – where aid has been fully merged into the
Ministry of Foreign Affairs – suggests a caveat. The development purpose of Danish aid has not been
overwhelmed by Denmark’s diplomatic policies, because those policies regarding developing countries
are consistent with furthering development. In contrast, for the United States, in a position of world
leadership, diplomatic goals (e.g., peace-making in the Middle East, containing communism, fighting
terrorism) have a high priority in the mission of the Department of State and can collide with
development purposes when aid is needed to reward regimes, even corrupt and incompetent ones,
which support US policies. The potential inconsistency between development and diplomatic goals was
at the heart of the conflict on the issue of merging USAID into the Department of State in the 1990s and
remains alive at the time of this writing.
One further lesson on aid organization is suggested from the case studies. Even though aid systems are
difficult to reform where such reforms involve major changes in government bureaucracies, change can
occur through the creation of entirely new agencies – as in the case of the Millennium Challenge
Corporation in the United States. This approach avoids costly confrontations with existing agencies and
the interests they represent but has the downside of further fragmenting the overall organization of aid.
A final comment needs to be made about the interaction of domestic and international factors in
shaping aid’s purposes. If domestic political forces are so important in influencing foreign aid, why has
there been an obvious convergence in the purposes of aid over the past decade and a half among
different aid-giving governments? Part of the answer is that external pressures, sustained over time, can
change the fundamental determinants of aid’s purposes. Prolonged external pressures on governments
of rich countries to provide more and better aid for development have affected the way publics, and
particularly political elites within aid-giving governments, think about what purposes of aid should be
and how their government measures up. They have, as in the case of Japan, encouraged governments to
support the establishment and strengthening of development-oriented NGOs that, in turn, become
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lobbies for aid for development. External pressures have put development issues on the political
agendas in many aid-giving countries over a period of time, helping to inform their publics on aid-giving
and development needs abroad. In some cases, where governments have claimed a major world role in
development aid – as in Japan, France, and Denmark – criticisms from abroad have provoked criticisms
at home and have eventually motivated governments to bring their policies more into alignment with
international norms for development aid.
Many of the factors leading to a convergence in aid’s purposes in the 1990s and early years of the
twenty-first century relates to events within aid-giving countries rather than external pressure or events:
the passing of a generation in France that cleared the way for new approaches to aid-giving; the
beginning of greater accountability in Japanese political institutions; the resistance to immigration in
Denmark; the rise of the evangelicals in US political life. International events, trends, and pressures are
important sources of change, but they often work through domestic political forces, and those forces
also produce change, independent of what is going on beyond their borders.
Implications for Policy
It was not the purpose of this book to generate policy recommendations. But there are two implications
of this study that stand out as obvious, compelling, and little addressed by policy-makers. “Aid
effectiveness” has almost always been defined as “developmental effectiveness,” and assessments of
aid’s impact on growth have often found aid to be ineffective. Yet one of the lessons from this study is
that aid’s purposes have always been mixed, related in significant part to the domestic political forces
influencing the amount, allocation, and use of aid. And it seems likely that, despite an aid-fordevelopment norm, aid’s purposes will continue to be mixed in the future. It is, therefore, irrational and
potentially highly misleading to evaluate all aid according to only one of its purposes. What has long
been missing is an effort to identify in detail and evaluate those other purposes of aid and to apply
development criteria only to that aid that is primarily directed at development purposes.3 Roughly half
of US bilateral aid might fall into the category of “aid primarily for nondevelopment purposes” – much of
it tied to diplomatic purposes of various kinds – which should be evaluated as to whether it achieved
those purposes. For example, was US aid for peace-making in the Middle East effective in helping to
further peace between Israel and its neighbors? To what extent was aid successful in resisting the
expansion of communism in Europe in the 1940s and 1950s and Central America in the 1980s? How
effective has French aid been in fortifying a sphere of influence in Africa? To my knowledge, there has
been no effort on the part of any aid donor at any time to provide a rigorous evaluation of its aid
programs for purposes other than development.
This lack of a comprehensive effort to evaluate aid effectiveness in terms of its various purposes is not
just a problem of bureaucratic untidiness. It is highly relevant to the future of development aid. The
increases in aid during the early years of the twenty-first century have been justified in part on the
promise that aid will be more effective in the future than it has been in the past, based on greater
selectivity of recipients, better “ownership” on the part of recipients, and improved aid management
through an emphasis on results. Yet aid is still provided for mixed purposes. If evaluations of aid’s
impact in the future continue to apply development criteria indiscriminately to all aid rather than
distinguish among aid’s different purposes and if future evaluations find that aid’s impact on
development is still disappointing, there could well be an unjustified backlash against aid in general
among the public and political elites in aid-giving countries. It is important to take the full range of aid’s
purposes into account in making our evaluations, and we are not there yet.
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A second policy implication involves aid effectiveness. All the donor governments in this study have
committed themselves to increase their aid for development substantially throughout the remainder of
the first decade of the twenty-first century. If they should seek to fulfill that commitment (which is not
guaranteed), most of them lack the organizational capacity to manage dramatic increases in aid. The
fragmented systems of the United States, Japan, France, and even Germany will make policy
coordination within aid-giving governments, the design and implementation of greatly expanded
development-aid programs and projects, and their monitoring and evaluation very challenging. Yet
major increases in aid will have to be allocated and disbursed quickly; large and growing pipelines will
lead legislatures to go slowly on approving increases in aid, as the US Congress has done with the
Millennium Challenge Account. But moving large amounts of aid quickly, especially in fragmented donor
aid systems, risks using it poorly, compelling donor governments to transfer the bulk of it to the
governments of poor countries (rather than using NGOs and other intermediaries, for example, for small,
community-based activities), which themselves lack the capacity to use aid well and the systems to
ensure it is used for the purposes intended. If rapidly rising amounts of aid are wasted or fuel corruption
in recipient countries, public support for aid in donor countries could erode and lead to a drop in aid in
the future. Organization – and capacity – matters more than ever, both among donor and recipient
governments.
Lancaster, Carol (2008a), George Bush’s Foreign Aid: Transformation or Chaos?, Baltimore: Brookings
Institution Press.
Introduction (pp. 1-9)
Over the past seven years, the Bush administration has launched a transformation of U.S. foreign aid. No
time since the administration of President John F. Kenney has seen more changes in the volume of aid,
in aid’s purposes and policies, in its organization, and in its overall status in U.S. foreign policy. If
“transformation” in politics is taken to mean fundamentally changing existing systems, President Bush
has initiated one.
But the notion of “transformation” also implies radical change in pursuit of a broad new vision. Such a
vision has been absent from the numerous changes in aid implemented by the Bush administration,
leaving an aid system – already in considerable disarray – in chaos. However, the policy and
organizational chaos characterizing U.S. aid offers the next administration an important and compelling
opportunity to reshape U.S. economic assistance while engaging the emerging world of the twenty-first
century.1
The view that U.S. aid in 2008 is badly in need of policy and organizational reform is reflected in the
veritable blizzard of books, study commission statements, and congressional reports on aid published in
recent years, especially in 2007 (see box 1-1). These efforts share a number of common concerns though
the specifics of their policy recommendations are quite different.
These reports and studies reflect the extraordinary interest combined with considerable disquiet about
foreign aid in the foreign policy and development communities. They mostly examine foreign aid from a
particular policy perspective – for example, its relation to security or broader foreign policy issues or
fragile states. This study adds to the aid discussion by examining U.S. economic assistance as a whole,
analyzing in detail the array of recent reforms and the difficult issues they raise, and placing these
changes and the manner of their implementation in a historical and political context. It agrees with
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many of the reports and commission that a major reform in U.S. foreign aid is urgently required,
including elevating “development” in U.S. foreign policy in reality as well as in rhetoric. It considers the
creation of a Department for Development has much to recommend it. But is also recognizes that a
Department for Development is controversial, especially in the foreign policy community, and could be
politically costly and time consuming to plan and implement for a new administration. It thus offers a
“Plan B” that would improve the existing system but imply fewer political costs for a new administration,
which will inherit a large number of urgent and difficult problems, domestic and foreign, that it will have
to confront once in office.
Elements of a Transformation: Changes in U.S. Foreign Aid
Foreign aid is an instrument of U.S. foreign policy and sometimes of U.S. domestic policy. It is used to
pursue a variety of national purposes, including providing humanitarian relief, furthering diplomatic
goals, promoting development and democracy abroad, addressing global issues, supporting economic
and political transitions, expanding export markets, preventing and mitigating conflict, and
strengthening the weak states. Of all of these, promoting diplomacy and development have long been
the most prominent purposes of U.S. aid, reflecting U.S. interests and values abroad and sustaining an
often uneasy coalition of domestic support for aid-giving from the political right and left within the
United States.
It is worth considering what I mean here by “diplomacy” and “development” as purposes of U.S.
economic assistance. Strictly speaking, diplomacy includes the tools and tactics used to shape relations
between countries. In this study, I shall take the liberty of using the term somewhat differently – to refer
to the issues in U.S. relations with other countries that relate to U.S. national interests (primarily
security and political interests) and U.S. leadership abroad. The specific diplomatic goals for which U.S.
economic assistance has been used include containing the spread of communism, promoting peace (for
example, in the Middle East and the Balkans) and fighting the global war on terror. In addressing these
issues, U.S. aid has been used to strengthen friendly governments and their economies, to reward
desirable behavior (for example, the provision of base rights, vote in the United Nations, support of U.S.
policies generally) and to secure the U.S. presence, access, and influence worldwide. I shall use
development to refer to rising levels of per capita income and reductions in poverty with all the complex
changes, including improved health and education, robust political institutions, high levels of savings,
investment and trade, and other social, political, and economic changes that are both causes and
consequences of development.2
Aid for development has been used to expand the capacity of developing country governments to
manage their economies (for example, through technical assistance and training), to increase assets
supportive of development (for example, through funding increased infrastructure, health, education,
credit, agricultural support), and to act as an incentive for governments to adopt economic and political
reforms regarded as essential to foster investment, growth, and poverty reduction.
In the 1990s, with the end of the cold war, the value of aid as an instrument of diplomacy diminished,
and with growing doubts about its effectiveness in furthering development (especially in Africa), the
importance of aid and of promoting development abroad declined, along with the volume of that aid.
President Bush dramatically reversed both of these trends. In his two major statements on the national
security strategy of the United States, he dedicated one or more sections to development, signally that
it is in the first tier of U.S. foreign policy priorities, along with defense and diplomacy.3 This is the first
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time for many decades that a U.S. president has declared that promoting development abroad is a key
priority in U.S. foreign policy. And the major instrument of that policy was inevitably foreign aid.4
Following these statements, the volume of U.S. aid has grown dramatically during the Bush
administration – faster than at any time since the Marshall Plan. In current dollars, U.S. aid was higher in
2005 (and slightly down in 2006, the last year for which data are available, see figures 1-1, 1-2) than at
any time in U.S. history, even deducting the monies for reconstruction in Iraq and Afghanistan and aid to
Pakistan (figure 1-3).5 (The light bars – series 2 in figure 1-3 – represent aid to Pakistan, Iraq and
Afghanistan.)
The increase has lifted the United States out of the bottom place on the list of governments providing
aid as a percentage of Gross National Income (GNI) – a position it occupied for many years. (However, it
is still only one rung from the bottom.)6
The purposes governing U.S. aid also changed during the Bush administration. Aid for diplomatic
purposes now includes fighting the global war on terror.7 And there has been a dramatic increase in aid
for global health, especially fighting HIV/AIDS – a use of aid that is aimed at addressing a global issue but
has great relevance for development in poor countries as well.
Changes in aid in the Bush administration have involved the way the U.S. government organizes itself to
manage its aid. An entirely new aid agency has been established – the Millennium Challenge
Corporation (MCC). There has been an integration of planning and budgeting by the U.S. Agency for
International Development (USAID) and the Department of State. The President’s Emergency Program
for AIDS Relief (PEPFAR) – a new aid program to fight HIV/AIDS – is up and running. And the Department
of Defense (DoD) has become increasingly prominent in providing economic assistance, with every sign
that that prominences will continue to grow.
Two new approaches to delivering aid have been implemented. One, led by the MCC, involves
performance-based aid – providing relatively large amounts of aid to countries that are deemed “good
performers” to spur their economic growth. And to ensure ownership of aid-funded activities, the
recipients must take an active role in deciding how the aid is to be spent. A second approach, led by
PEPFAR, involves applying very large amounts of aid ($30 billion for the coming five years) to tackle a
single major problem: the scourge of HIV/AIDS. Aid monies have been used to address a variety of
functional or global problems in the past, but never has the amount of aid allocated to PEPFAR been
used against a single world problem in the space of a relatively short period of time.
Each of these changes in U.S. aid giving has much to recommend it. Elevating the promotion of
development abroad is a priority in U.S. foreign policy reflects the realities of the twenty-first century in
which massive disparities in wealth and opportunity in a rapidly integrating world can generate serious
threats to U.S. interests abroad and the well-being of Americans at home. Addressing the problems of
poverty abroad as a priority of U.S. foreign policy also reflects the values and views of many Americans
that they, being among the most blessed and wealthy of peoples in human history, should act to help
bring those blessings to the 2 billion of the world’s population living in severe deprivation. Further,
giving development a central place in foreign policy strengthens U.S. leadership in the world combining
“soft power” – the ability to attract and persuade others to do what you want (often through
demonstrating that you have their interests at heart as well as yours) – with “hard power” – threats,
sometimes involving the use of force, to compel compliance from others. And expanding the volume of
U.S. aid dramatically brings it to a level more consistent with international needs, with the U.S. role as
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the world’s sole superpower, and with the ability of the United States to provide international economic
assistance.
With regard to the aid policy and programmatic initiatives of the Bush administration, the approach of
the MCC to aid giving – preferring those countries whose governments performed well in promoting
democracy and development – has been welcomed with its promise of more effective aid in support of
more rapid development. The large increase in U.S. aid to fight HIV/AIDS – one of the worst plagues to
afflict humanity for many centuries – has been very well received by groups and individuals from all
points on the political spectrum. The State Department-USAID integration of aid budget and policy
planning was seen by many as a useful reform that would enhance the coherence of U.S. aid giving and
align it more closely with U.S. foreign policy. The rise of DoD as an aid-giving agency and, in particular,
the creation of AFRICOM (a new military command for Africa) have been regarded as innovations
justified by the problems of fighting terrorism generally as well as the difficulties of managing
community relations during U.S. military occupations.
At the same time, a number of these changes have raised serious concerns. The MCC has been
extraordinarily slow in disbursing the sizeable amount of funding appropriated to it, raising questions
about the efficacy of this new model of performance and ownership-based aid giving. There is some
evidence that large amounts of funding for HIV/AIDS have begun to have negative effects of other
efforts to address health conditions abroad and may simply be too large for recipients to absorb quickly
and effectively. More basically, the massive increase in aid for HIV/AIDS skews overall U.S. bilateral aid
away from development, which requires addressing many obstacles impeding economic progress in
poor countries, including limited health care. The integration of USAID and Department of State
planning and budgeting has sowed confusion and discontent in both agencies and raises fear in the
development community that aid programs will eventually focus more on short-term diplomatic goals,
and not the longer-term development mission of USAID. The increasing engagement of the DoD in aid
giving adds yet another big player to a cluttered landscape aid organizations in the U.S. government, a
player with, as yet, no professional capacity to manage aid for stabilization and development and that
can give the impression of a militarization of U.S. foreign aid.
Finally, in addition to the substance of the changes, there has been considerable controversy about the
ideas behind some of them (such as the “failing states” paradigm), their organizational implications, and
the manner in which some of them have been implemented.
This book offers a stocktaking and analysis of U.S. foreign aid as it has changed since 2000 and offers
recommendations for its future. It examines the principal changes in four chapters: first, it describes the
individual changes themselves, including their origins, their promise, and their potential problems;
second, it analyzes several major policy issues raised by the changes; third, it examines the
organizational issues raised by the reforms and the problems in the implementation, including changes
management in the public sector; fourth, the book concludes with a look at the evolving context of aid
giving in the twenty-first century and recommends a set of changes in U.S. aid to meet the opportunities
and challenges of the new world of aid giving.
The message of this study is simple: first, foreign aid is an essential instrument of U.S. foreign policy,
broadly defined, and will remain so for the foreseeable future; second, initiatives over the past seven
years have produced both a transformation and chaos in an aid system that was already in disarray and
ripe for change. The next administration must address the challenge and opportunity of keeping what is
valuable in these changes, discarding what is not working, and melding these initiatives into a coherent
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vision of the role of foreign aid and U.S. foreign policy. In short, it has the chance to complete a
transformation of U.S. aid.
Lancaster, Carol (2008b), “Foreign Aid in the Twenty-First Century: What Purposes?”, in Picard, Louis
A., Groelsema, Robert and Buss, Terry F. (eds.), Foreign Aid and Foreign Policy: Lessons for the Next
Half Century, pp. 39-50, New York: M. E. Sharpe, Inc.
Development aid is alive and well and resurgent. Development appears set to be the major purpose of
aid in the future. But not all the signs point in the same direction, suggesting that major domestic
economic problems, international crises involving terrorism or political conflicts among states, major
global issues like the spread of infectious disease (e.g., avian flu), or other incidents and trends can draw
off aid to address these purposes.
The international norm that rich countries should help poor countries to emerge from poverty appears
well established and influential in supporting development aid. But other needs can and will influence
aid’s purposes in the future. And should the current increases in aid for development fail to make a
visible impact on growth and poverty in poor countries, especially in Africa, in coming years, aid for
development could again be challenged in the future.
Lavergne, Réal P. (1989), “Determinants of Canadian Aid Policy,” in Stokke, Olav (ed.), Western Middle
Powers and Global Poverty: The Determinants of the Aid Policies of Canada, Denmark, the
Netherlands, Norway and Sweden, pp. 33-90, Uppsala, Sweden: The Scandinavian Institute of African
Studies.
What, then, of the ‘determinants’ of Canadian aid policy? What can we say, in particular, about the true
objectives of the aid program as described above? Consider first the commercial dimension.
One may ask what the aid program would resemble if it were, as some have suggested, designed
primarily to satisfy commercial objectives. This is not a difficult question to answer since a Canadian
program of that sort does in fact exist in the guise of the Export Development Corporation (EDC). An aid
program which was primarily commercial in focus would behave essentially like the EDC, except that it
would concentrate its attention on Third World countries. It would provide mostly loans; and any grants
or soft loans which were provided would be ‘mixed’ with loans at commercial rates in order to maximize
the sales impact of the aid. That aid would be directed exclusively through commercially-oriented
channels and it would probably be directed mainly to the dynamic markets of higher-income and highergrowth LDCs. The Agency would maintain close links with the export community, and it would be
responsive mainly to initiatives identified by that community, with special attention to possibilities for
long-term market penetration.
It should be more than obvious from the previous section that the Canadian aid program is nothing of
the sort. Canadian aid is provided on the softest terms, and mixed credits account even in recent years
for only 3 per cent of Canadian ODA. Less than half of Canadian aid is provided through channels
capable of generating very much at all in the way of commercial benefits for Canada: 43.7 per cent
through the government-to-government channel, 2.6 per cent through Petro-Canada International and
1.9 per cent through the Industrial Cooperation program in 1984. And it goes predominantly to the
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poorest and slowest-growing Third World countries. The Agency is as a rule responsive not to Canadian
business initiatives but to requests received from recipient countries and it operates quite
independently on a day-to-day basis from the Department of International Trade. It should be obvious
that the primary motivation of Canadian aid policy is not a commercial one.
Commercial interests do intrude upon the aid program, however. The main instrument for this is aid
tying, and over half of Canadian ODA remains tied even today. Support for Canadian commercial
interests is also provided through the Industrial Cooperation, through the use of mixed credit
arrangements and through occasional political intervention in support of favored projects or in contract
allocations. CIDA documents make it clear that commercial considerations are a criterion in the choice of
recipient countries, although that influence is not, as we have seen, statistically apparent. One can
nonetheless identify several recipient countries whose choice has probably been influenced to some
extent by commercial considerations. At the risk of error in the absence of detailed case studies, one
could probably include here Algeria, Indonesia, Ivory Coast, Zaire, Cameroon and perhaps a number of
others whose needs are for large infrastructure projects of interest to Canadian business.
Procurement tying is by far the principal instrument of export promotion associated with the aid
program, and it is this policy above all which has influenced academic thinking about the nature of
Canadian aid. As the North-South Institute points out,
Critic of aid programmes point to tying probably more than to any other factor as an example of
the self-interestedness of ‘donors’, and for many it has become a cause of deep cynicism about
aid in general (North-South Institute, 1977, p. 125).
Tying is indeed difficult to understand in rational terms. As many observers have pointed out, it provides
little real benefit to the Canadian economy, while imposing substantial costs on the ability of Canadian
aid to deliver cost-effective development assistance (Economic Council of Canada, 1978; Lavergne, forth.;
North-South Institute, 1977, p. 126; Treasury Board, 1976; Triantis; and Wyse, p. 1-12). Unable to
understand aid tying in terms of the stated objectives of the aid program, critics have thus tended to
question the integrity of those objectives themselves.
But governments are not necessarily rational, and governments do not necessarily believe the critics on
such matters as aid-tying. Canadian politicians are subjected to a barrage of conflicting and biased
sources of information on such matters, and they are quite capable, like individuals, of believing what
they want to believe. Canadian politicians are naturally predisposed to believe that more than one
objective can be satisfied at once – hence the concept of ‘mutual’ benefits and never that of ‘conflicting’
benefits. Such an approach is also the easiest one to maintain politically, and there is substantial
advantage in pretending that everyone’s objectives for the aid program can be satisfied simultaneously.
One of the remarkable facts about tying in Canada is that very little effort has been made by the
government to assess its costs. Those costs are conveniently ignored, and the issue is rarely addressed
even in project documents within the Agency.
Tying can also be understood as the aid program’s sop to influential business interests and to others, in
and out of the government, who would otherwise not support the aid program. The role of tying in this
regard is to achieve a degree of consensus on the aid program as a whole. Other ways of achieving such
consensus could no doubt be found, but they would require more leadership on the issue than the
government has been willing to provide in recent years.
An important question is whether the Canadian aid program has in fact become more commercially
oriented over time. There is evidence that it has, but any statement in this regard must be a qualified
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one. Policymakers have become more actively conscious of commercial objectives, and they have
sought out new ways of effectively satisfying these objectives in recent years by the use of mixed credits
and the Industrial Cooperation program; but the trends in other respects are more ambiguous. Aid to
multilateral agencies has declined as a share of ODA relative to the peak which was reached in 1976, but
it remains much higher than in the 1960s and early 1970s, and it would be higher yet if the IDA
replenishment negotiations had been more successful. At the same time, increasing recourse has also
been made to such development institutions as the NGOs and IDRC, and the share of ODA being
allocated through more ‘commercial’ channels such as government-to-government aid, Petro-Canada
International and Industrial Cooperation actually declined slightly from 55.8 per cent to 48.2 per cent
between 1975 and 1984. Turning to the allocation of aid among countries, one does find that the share
going to higher income LDCs has increased, but this is a long-term trend associated with the reduction of
aid to India, and the trend does not seem to have accelerated in recent years. At the same time, the
share of aid going to the poorest developing countries has also tended to increase, as has the share
going to low growth countries other than India.
The suggestion that Canadian aid has become increasingly commercialized must be interpreted in
relative terms. It is certainly more commercialized today than one would have believed after reading the
1975 Strategy which promised that government-to-government aid was to be partially untied and which
paid almost no attention to Canadian commercial interests. One [sic] the other hand, commercial
objectives do not appear to be all that much more ‘primary’ than before in the actual practice of
Canadian aid policy. There appears to be a feeling that any new efforts in a commercial direction should
not be achieved at the expense of what Canada is already doing in the way of development. The
abandonment of the Trade and Development facility in response to cutbacks in the growth targets for
aid was a clear manifestation of this policy approach.
The political dimension of Canadian aid is more difficult to assess than the commercial one. Canadian aid
is without doubt an arm of Canadian foreign policy, and this is hardly surprising in view of the fact that
for many recipient countries the aid link is by far the most important aspect of their relationship with
Canada. But aid can be political without being self-interested, and even self-interest may be interpreted
in terms of fostering ‘harmonious and fruitful relationships between nations’ (CIDA, Strategy, p. 17). In
neither case need a political orientation be inconsistent with a generous and humanitarian aid policy.
Canadian political interests have of course influenced Canadian aid policy in some respects. They help to
explain the neat division of aid between francophone and Anglophone Africa and the extraordinary
dispersal of Canadian aid to 125 recipient countries between 1980 and 1984. They also help to explain
the ‘responsive’ approach to project selection and design. And they help to explain the territorial
conflicts between CIDA and External Affairs with regard to representation in the field. Yet Canada does
not use its aid in a heavy-handed way as ‘leverage’ to obtain favors from recipient countries, and most
observers suggest that there are few political gains to be gotten from foreign aid anyway, particularly for
small donors (Bird, 1981; Lyon and Tareq, p. xxxix; Wyse, pp. 19-22). The limited importance of selfserving foreign policy objectives in Canadian aid is suggested also by the decreasing use which is being
made of government-to-government aid as opposed to other channels and by the concentration of aid
on low-income and low-growth recipients who are unlikely to have much to offer Canada in terms of any
quid pro quo arrangements. Such countries may at best be able to offer their votes in the United Nations
on issues which are of importance to Canada, but any donor trading for UN votes would do best to
concentrate its aid among a large number of small countries. Statistical analyses have not been able to
uncover any significant Canadian bias in favor of small countries.
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These observations, combined with those made earlier about the limited commercial orientation of the
aid program, suggest that Canadian aid objectives are, as the rhetoric suggests, primarily developmental
and humanitarian in orientation.
The willingness of Canadians to contribute as a nation to the alleviation of world poverty is not so
difficult to understand. In a world where the role of the state in redressing income inequalities has
assumed axiomatic legitimacy – barely dented by Thatcherism and Reaganomics – it requires little
imagination to extend the same concept beyond the borders of the nation-state. Willingness to do so is
limited by two factors: the reduced sense of community which exists between people of distant places,
and the weakness of institutional mechanisms for ensuring that all members of the world community
share equally the burden of redistribution. With modern telecommunications and air transport
continuing to make the world a smaller place, the sense of community which exists between Canadians
and the poor of the Third World has no doubt increased in recent decades and can be expected to
continue increasing in the future.
Too much can be made of the importance of Canadian humanitarian sentiment regarding the Third
World. The amount contributed by Canadians to the Third World on a voluntary basis is niggling when
computed on a per capita basis: USD 5.30 per Canadian in 1983!27 The amount redistributed through the
government is more substantial, amounting to USD 57.41 per capita, but it is little by comparison to the
amount redistributed internally to support the poor in Canada. The latter was in the order of USD 1,622
per capita in 1983.28 Such discrepancies can be explained in large part by the public good nature of
income redistribution,29 and the availability or non-availability of appropriate institutions to supply such
a good. Income redistribution at the national level is a national public good (to some extent even a
municipal or provincial one30 for which collective action can be mobilized through existing government
institutions. The benefits of foreign aid are mostly international in scope, however, and at this level
there are no institutions comparable in power and authority to domestic governments.
The public good dimension of world poverty reduction explains why Canadian behavior in the aid field is
not normally determined independently but rather through negotiation with other donor countries.
Such negotiations and the resulting international agreements are, after all, the only available
mechanism for securing international cooperation in such matter. As a middle power, Canada has a
particular interest in seeking and supporting international solutions to world problems. It is too small to
have much impact on such problems when acting alone, yet large enough to have an impact when
speaking or acting in support of international measures.
Canada has in fact tended to take internationally-set targets seriously, though certainly not as seriously
as many would like. Although paying lip service to UN targets as a long-run objective, the government
did not establish a timetable for meeting the 0.7 per cent target until the early 1980s. Since then, the
timetable has been repeatedly reneged upon, and the ODA/GNP ratio has not risen at anything like the
promised rate. Some limited progress has been made in the direction of the UN target, however, and it
can be argued that Canada’s ODA would have grown more slowly, if at all, as a function of GNP in the
absence of this target. By committing itself to meeting the UN target, the Canadian government has
been better placed to resist pressure to cut back on the growth of foreign aid in times of sluggish
economic growth and acute budget deficits.
Canadian aid to multilateral agencies has also been influenced by commitments made in collaboration
with other donors. The discussion of IDA-6 and IDA-7 in the third section of this chapter showed that
Canada, along with other donor countries, has given substantial importance to traditional burden-
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sharing arrangements in the area of multilateral finance, to the point where this was allowed
substantially to erode Canadian contributions to IDA in the 1980s.
A third area of international agreement which may be mentioned is that concerning aid to the least
developed countries (LLDCs). This category was established by the United Nations in 1971 in a resolution
asking that special measures be taken to assist these countries, and the matter was studied by the DAC
in 1972. The increased attention thus being brought to LLDCs seems to have had a strong impact on
Canadian aid to this group of countries, which shot up dramatically in 1971 and continued to increase
through the 1970s. Over 39 per cent of Canada’s bilateral aid now goes to this group of countries (see
Figure 11).
One dimension of international negotiations which appears not to have had much effect on Canadian
practices relates to the tying of bilateral aid. The possibility of donors untying aid on a reciprocal
multilateral basis was the subject of difficult negotiations in the DAC in the early and mid-1970s, but
Canada was among the most hard-line of countries resisting untying agreements (North-South Institute,
1977, p. 126). Canada has not applied a 1974 Memorandum of Understanding by the Majority of DAC
members to untie bilateral development loans in favor of procurement in developing countries. As
noted above, only Austria performs worse than Canada on the percentage of its aid which remains tied.
The reasons behind Canada’s tying policy have already been discussed. That Canada should be more
reluctant to untie than other donors is possibly explained by the particular weakness of Canadian
manufacturing in Third World markets. Canadian officials are particularly touchy on the subject of aid
tying. The feeling seems to be that Canada is justified to use aid as a form of subsidy for infant
manufactured-export industries, and that Canada cannot, as an underdog, afford to let aid contracts fall
to its competitors.
Overall, however, the concept of foreign aid as an international public good seems to have substantial
explanatory power, both for understanding the limited nature of Canada’s contribution to reducing
world poverty, and for appreciating the importance of international efforts to coordinate donor country
policies. It is evident that Canadian aid policy has in fact been influenced by these efforts.
Lebovic, James H. (1988), “National Interests and U.S. Foreign Aid: The Carter and Reagan Years,” in
Journal of Peace Research, Vol. 25, No. 2, pp. 115-35, Sage Publications, Ltd.
The analysis has contributed to an understanding of foreign assistance allocations. Donor interests are
shown to account for the largest portion of assistance allocations even while the means and ends of
foreign policy are shown to vary: The interests that guide policy change with time as do the instruments
by which they are pursued.
The analysis also permits specific insights into the factors behind US allocations: First, and perhaps
foremost, political-military considerations are shown to have predominated in the foreign assistance
policy of both the Carter and Reagan Administrations. Military inducements were the primary
determinants of US aid in the Carter years, and country alignment was most important in the Reagan
period. But economic interests play a significant role in US assistance policy, and they appear critical to
US relations with the least-developed countries. In these countries, foreign aid may be aimed at
fostering market expansion, resource acquisition, and economic penetration. Human needs played a
secondary role in both Administrations. This is shown in the more limited capacity of human needs
variables to explain foreign assistance, and in the limited circumstances under which these explanatory
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variables are important. The US has been most sensitive to the development needs of countries that are
aligned with the US, and even the Carter Administration apparently denied aid most consistently to
rights violators that were not aligned with the US. Though human needs explain some of Reagan's
assistance allocations, the evidence is that the allocations involved followed from Carter Administration
policy. In all, then, it can be said that a clear hierarchy among US foreign policy goals exists in the area of
foreign assistance.
Second, this study has demonstrated the importance of disaggregating foreign assistance for analysis.
Mistaken inferences follow from the combination of unrelated programs or the ad hoc partitioning of
complementary ones. A distinction between military and economic assistance was appropriate in the
Carter years, but it was unsound in the Reagan years where economic and military assistance programs
appeared to substitute for one another. Moreover, economic and military assistance should not be
thought to be, respectively, intrinsically ‘development’ or ‘security’ assistance. Just as the US does not
measure its security only in military terms, it does not provide for its security solely in these terms. In
sum, this study belies the analytical separation of political and military interests from development
policies, and economic from military assistance.
Finally, this study has addressed the question of whether US foreign policy is primarily marked by
continuity or change. Unfortunately, the answer evokes the notion of a cup that can be viewed as either
half full or half empty. A great portion of Reagan policy can be explained by that of Carter, and even
though aid amounts and recipients changed, some of the same interests prevailed in both
Administrations. Changes between these Administrations are unquestionably apparent, but they can be
considered to be largely changes in emphasis rather than in kind. The Carter and Reagan
Administrations differed dramatically in their rhetoric and professed concerns, and the composition of
the Congress changed as well. But the results of this analysis could be taken to suggest that policy
resides less in the elected leadership than within the forces impinging on it. Despite claims that the US
foreign policy consensus has broken down and the widespread questioning of the efficacy of foreign aid
and the objectives it serves, policy continues to rest on the assumption that the US has important global
responsibilities and faces serious international threats to its vital interests. For this reason, US assistance
policy may be surprisingly impervious to change.
Lebovic, James H. (2005), “Donor Positioning: Development Assistance from the U.S., Japan, France,
Germany, and Britain,” in Political Research Quarterly, Vol. 58, No. 1, pp. 119-126.
In this study, I show that traditional models fail to account for a theoretically important, windfall profit
that countries receive from their primary donors and that a consequence of neglecting this “bonus
effect” is that models understate important (indirect) effects of donor interests on aid. Using a Heckman
treatment model, I assess bilateral aid distributed to 101 countries, between 1970 and 1994, by the U.S.,
Japan, France, Germany, and the United Kingdom, the OECD’s five largest bilateral aid donors. These five
analyses assume that, for a prospective aid recipient, a donor makes two interrelated decisions: (1) how
much aid to give that country and (2) how to position itself relative to other donors (i.e., whether or not
to be the primary donor). The findings support realist and neo-liberal arguments about the sources of
donor aid policy. […]
The evidence from the analysis is that the neglect of positional considerations renders traditional
models incomplete. Indirect effects of primary donor relationships linked to donor interests exert
substantial upward pressure on the foreign aid budgets of the U.S., Japan, France, and Britain in the
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1970-94 period. Primary donor relationships were pursued by the U.S. to serve its Cold War priorities
and security interests, by Japan to serve its trade interests, political concerns, and Asia-based strategy,
by France to serve its trade interests, by Britain to serve its political and security interests, and by France
and Britain to support their former colonies. In consequence, these donors acted as if giving aid in large
quantities to priority countries was not enough, as if influence rested in preponderance. Although the
evidence is less compelling that donor self-interest translated into net benefits for countries for which
Germany was the primary donor, the reason lies, in all likelihood, in historical realities and Cold War-era
preoccupations that left Germany less concerned with maintaining a visible global presence.
Supporting realist arguments, donors established themselves as primary donors within priority countries
to capitalize on the prestige and symbolic benefits that come from being the largest contributor. But this
apparent division of labor offers even stronger support for neo-liberal arguments: donors remained the
largest contributor for countries in which those donors immediate economic, political, and security
interests were not obviously at stake. Whether or not donors desire primacy for its own sake, they may
stand by their primary commitments and expect others to do the same. In that sense, the findings also
provide reason to probe the normative origins of state interest and not just settle for studying its effects.
Lebovic, James H. and Voeten, Erik (2009), “The Cost of Shame: International Organizations and
Foreign Aid in the Punishing of Human Rights Violators,” in Journal of Peace Research, Vol. 46, No. 1,
pp. 79-97.
The statistical analysis provides strong evidence that UNCHR resolutions that condemn a country for
poor human rights performance are correlated with large reductions in World Bank and multilateral loan
commitments, but have no impact on bilateral aid allocations. Instead, bilateral aid responds mildly to
short-term changes in levels of civil rights. These findings have a number of interesting implications for
the broader literature in international relations.
First, they shed light on whether public shaming votes in international organizations actually ‘matter’.
This issue was addressed heretofore with the circumstantial evidence that countries would not exert
energy in shaming, and defending against it, if such actions carried no weight. A more convincing case is
built around the practical consequences of these sanctioning votes, as they affect donor allocation
patterns. We account for this finding, in theoretical terms, by arguing that public votes communicate
information about actual norms violations and political preferences within the international community.
This information can be useful to other IOs, such as the World Bank, that make consequential decisions
under constraints imposed by the preferences of their political principals.
Second, the findings contribute to the large literature on material consequences that governments
experience for failing to live up to human rights standards. This literature has focused mostly on bilateral
aid or trade relationships and has reduced the role of IOs, at least by implication, to persuading or
socializing donors to design their aid policies around the human rights practices of potential recipients.
We argue that governments often do not have the incentives to punish norm violators bilaterally, even if
these governments would prefer, in the abstract, to punish rights abuses. This gives governments
incentives to delegate the enforcement of human rights norms to multilateral institutions, such as the
World Bank – this is an important point, because prior research suggests that states might soften their
abusive practices with the right foreign incentives, for example, preferential trade agreements (HafnerBurton, 2005).31
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Third, these insights contribute to the literature that asks why governments choose to delegate aid
allocation to multilateral institutions. Milner (2006) argues that governments do so because their
domestic publics will otherwise doubt that aid has a non-political character. Rodrik (1996) argues that,
compared to individual donors, multilateral aid institutions can more credibly demand policy
concessions from aid recipients. We provide an additional reason: multilateralism allows states to
overcome a collaboration dilemma – based in the competitiveness of strategic-based aid allocations –
that prevents states from deferring to normative principles when allocating aid.
Our findings are interesting, too, because the World Bank is not generally believed to engage in human
rights norms enforcement. Although the World Bank is under considerable pressure from NGOs and
governments to take human rights and other social/political factors into consideration when making
policy, project, and programmatic decisions, and has adjusted its staff and priorities accordingly, it must
also defer to the preferences of its principals. UN resolutions denouncing the human rights performance
of an individual government provide a strong signal that project applications by that government can
and should be evaluated with admonition. These signals are likely less important for the commission’s
actions per se than what they represent – a glimpse or culmination of a larger political process through
which countries are marginalized in international politics. By the time the UNCHR acts decisively against
alleged violators, they could be well along in the process of global shaming. Notable, for instance, is that
the commission contended with some cases (e.g. Israel) because they were symbolic cases and acted,
then, in response to world opinion as much as to reinforce that opinion. Regardless, the implication
remains that, in an important sense, multilateral institutions bolstered their interventions by ensuring
that they had adequate international political support and, thus, that the World Bank acted as a
selective enforcer of international human rights norms.
Lensink, Robert and White, Howard (2000), “Aid Allocation, Poverty Reduction and the Assessing Aid
Report,” in Journal of International Development, Vol. 12, No. 3, pp. 399–412.
The Assessing Aid report, drawing on work by Collier and Dollar, argued that to prioritize poverty
reduction aid should be reallocated to countries with large numbers of poor and which have good
policies. We entirely endorse the notion that aid could be better targeted to poverty reduction by
removing the factors that distort the aid programme, in aid allocation as well as project selection and
design. However, we would argue strongly against donors adopting the Collier-Dollar model as an aid
allocation rule. On theoretical grounds the model fails to appreciate that growth is only one channel
through which aid can affect poverty. On those grounds alone the importance of the policy environment,
whilst not irrelevant, is weakened. But the argument that ‘aid works better when policies are right’ is
also seen to be empirically flawed, so that the relationship between aid, policies, growth and poverty
reduction becomes rather more ambiguous.
The notion that selectivity should be applied, and so the poor abandoned in those countries who have
the misfortune to live under bad governments, no longer follows once the aid plus policies equals
growth formula is broken. This is perhaps just as well as there should be wider recognition that there is
not agreement about what are the ‘right policies’ for either growth or poverty reduction, and that the
same set of policies may not be appropriate in all times and all places. In general Assessing Aid gives
weak guidance to policy makers on how to improve the poverty impact of their aid. The discussion of aid
allocation is no exception.
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Liska, George (1960), The New Statecraft: Foreign Aid in American Foreign Policy, Chicago: University
of Chicago Press.
Loescher, Gil J. and Nichols, Bruce (1989), “Introduction,” in Loescher, Gil J. and Nichols, Bruce (eds),
The Moral Nation: Humanitarianism and US Foreign Policy Today, pp. 1-6, Notre Dame: University of
Notre Dame Press.
In the editorial pages of the New York Times in 1985 Sydney Schanberg wrote that the United States was
a “moral nation.” He claimed that U.S. leaders often appeared lost in “geopolitical balancing acts” and
seemed to lose “the memory of the great strength that is derived from being a ‘moral nation’.” A
striking example of this national conscience is the sense of guilt many American felt when boatloads of
Jewish refugees were refused in the 1930s, or Haitians were turned back in the 1980s. Schanberg
insisted that “the humanitarian tradition in the United States as not a myth,” and that many Americans
wanted its ideals reflected in government policy.
Humanitarian activities and tenets form an integral part of America’s dominant ideologies and moral
traditions. While these values compete with self-interest and realpolitik, their importance to many
citizens’ sense of legitimacy and purpose in foreign policy is such that no definition of the nation’s longterm interests which wholly excludes these values is likely to be adequate. Thus, Americans frequently
call upon their political leaders to demonstrate solicitude for the misfortune of outsiders and to
contribute materially to the amelioration of natural and other disasters which occur in distant nations.
Annually tens of thousands of Americans may be found outside the country’s borders working for
nongovernmental bodies and performing various acts of mercy traditionally described as humanitarian.
In many cases these private bodies work unquestionably alongside U.S. government agencies. Yet in
Central America, the Horn of Africa, and in many other places, private agencies and their employees are
increasingly forced to take sides, choosing whether to target humanitarian efforts with or against
governmentally sponsored goals.
The dimension of humanitarian assistance addressed in this volume, humanitarian relief, may be broadly
defined as the provision of assistance to victims of natural or political disasters. Its exponents, both in
government and in nongovernmental bodies, have traditionally aspired to elevate the needs of the
victims over limitations imposed by short-term political concerns. Yet humanitarianism in action –
whether in efforts to assist displaced persons following World War II, airlifts of food to Biafra in the late
1960s, or famine relief to Ethiopia in the 1980s – has involved a combination of moral good and
politically useful objectives. Far from representing a purely moralistic approach to the world,
humanitarianism has been pragmatically incorporated into aspects of U.S. foreign policy.
From the beginning of modern humanitarian efforts in the late nineteenth century, it has been a
constant struggle to inject principles into politics. While there have been marked American successes,
beginning with aid to Cuban victims of the Spanish-American War and famine relief in the Soviet union
in the 1920s, the presumption of the complementarity of privately sponsored humanitarianism and
government objectives in foreign policy has always been present. As long as we judge America to be a
“moral nation,” this complementarity makes sense. In the late 1940s and 1950s, for instance, the
national assent to anticommunism in foreign policy support the belief that aiding refugees from Eastern
Europe was a humanitarian task the United States and its citizens should shoulder. Aiding these refugees
provided both symbolic and instrumental gains for American foreign policy during the cold war.
Consensus was much less evident when the refugee population consisted of Palestinians, Chileans
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fleeing Pinochet, Haitian boat people leaving Duvalier regimes, or Salvadorians fleeing war and
repression.
This book constitutes a study of humanitarianism as a significant component of American foreign policy.
It examines current relations between nongovernmental organizations and the U.S. government in
overseas operations and illustrates some of the difficulty of reconciling principles and politics in the
administration of U.S. humanitarian policy. The topics covered in this book are among the most pressing
foreign policy issues facing the United States in the 1980s and beyond. The authors include academics,
journalists, human rights specialists and activists, former government officials, and leaders and
representatives of voluntary agencies, nongovernmental organizations, and foundations.
The first section of this book concentrates on the moral and political philosophy of humanitarianism and
its relationship to the conduct of U.S. foreign policy. Sidney H. Schanberg, the journalist whose wartime
experience in Cambodia in the 1970s were depicted in the film The Killing Fields, describes with simple
eloquence the importance of humanitarian traditions in U.S. foreign policy. However, Schanberg’s plea
for foreign policy grounded in moral traditions raises fundamental questions of political philosophy and
strategy. Henry Shue, an ethicist at Cornell, and Roger M. Smith, a political scientist at Yale, take sharply
divergent perspectives on how best to answer these questions.
Both Shue and Smith agree that nations, particularly the United States, define themselves by their ideals.
Both find that an emphasis on national interests at the expense of broad ideals of humanitarianism is
unacceptable. They disagree, however, on whether to base humanitarian action on communitarian,
national, or universalist principles.
Shue describes humanitarian activity as work that “must be done.” This is true, he argues, because the
nation interest of the United States cannot be defined without reference to moral principles. In his
ordering of such principles, an absolute and fundamental commitment to justice is essential, and priority
is given to cosmopolitan or universal principles over national aspirations and ideas. While Shue
acknowledges that constraints and conflicts are inevitable in the pursuit of ideals, their importance in
the lives of individual victims of political or natural disasters is obvious. Further, Shue notes “the
usefulness of a good reputation” that accrues to the United States through its involvement in such
efforts. Through a strong commitment to humanitarian goals, the United States goes beyond being a
“moral nation,” and helps to establish universal standards of humanitarianism.
Smith, on the other hand, places more emphasis on morality rooted in communal and national
aspirations and ideals rather than in cosmopolitan or universal ideals which Shue and others assume to
be morally superior. Smith argues that the world is made up of individual nation-states which do not
treat humanitarianism as moral truth above the fray of politics but as a political perspective which needs
to take into account national actors with a diverse range of interests and beliefs. He believes that the
United States would do better to begin with a sense of what America values, with its moral aims and
purposes, and to see how these moral requirements could best be furthered in the world as we find it
today. Smith distinguishes between the universal views held by humanitarian agencies and the national
views of U.S. policymakers. Because of their different perspectives and values, U.S. government officials
and private humanitarian agencies almost inevitably will clash. Perhaps the most striking difference
between the two involves action that “U.S. officials see as buttressing political forces hostile to liberty.”
Thus, for example, permission to send private humanitarian assistance, including school supplies to
schoolchildren in Cambodia, was denied by the U.S. State Department in the early 1980s because such
aid constituted help to a government hostile to U.S. interests. Nevertheless, Smith argues that these
contrasting perspectives can be “truly useful” and that the U.S. government and the private agencies
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can serve “to correct the characteristic blind spots of the other” and to engage in more “open-minded
critical dialogue with each other.”
In the second section of the book, two chapters examine the political and legal factors which must be
addressed in looking at U.S. humanitarian policy today. David P. Forsythe, a political scientist at the
University of Nebraska; and Peter Macalister-Smith, a jurist at the Max Plank Institute in Heidelberg,
offer analyses of these two related topics. Forsythe looks at the evolution of American institutions,
private and governmental, given over to international humanitarian action and places them in the
context of an evolving international system for delivery of assistance. As his analysis indicates, while
enormous progress has been made in the last forty years, institutional and political factors at times
overwhelm the best efforts to sustain humanitarian standards Macalister-Smith examines the evolution
of international humanitarian law in the twentieth century. While offering a frank appraisal of the limits
of humanitarian law, he remains cautiously optimistic that humanitarian principles in international law
will continue to achieve incremental growth.
In the third section of the book, several authors examine refugees, the closely related topics of asylym
and sanctuary in the United States, and the role of private humanitarian organizations in pressing
human right claims with U.S. and regional officials. Doris Meissner, former acting director of the
Immigration and Naturalization Service, and Michael McConnel, an activist with the Chicago Religious
Task Force on Central America, examine the issues of asylum and sanctuary for Central Americans who
have sought refuge in the U.S. and explore how we might evaluate these issues in the context of U.S.
and international law, morality, and church-state tensions. Few recent events in the humanitarian realm
have erupted with such force on the American domestic scene as has the sanctuary movement. For
many Americans, this issue more than any other has captured the confrontation between humanitarian
ideas and politics.
Gil Loescher, a political scientist at Notre Dame and the co-editor of this book, addresses the issue of
refugee policy in Central America, examining in detail the situation of refugees in Mexico, Honduras, and
Costa Rica and the various actors, their interests, and the ways in which they are affected by geopolitics,
ideology, and ethnic politics. He analyzes the attitude of the United States and its impact on refugee
policy, the role of the United Nations High Commissioner for Refugees, and the problems faced by
voluntary agencies in their struggle to preserve humanitarian “space” for their activities. A closely
related chapter by Lowell W. Livezey of the Woodrow Wilson School of Public and International Affairs
at Princeton examines the role of nongovernmental human-rights organizations and the conduct of
American foreign policy in Central America in the 1980s. Livezey discerns a growing rift between those
organizations that emphasize the political and cultural rights associated with American views of freedom
and those that press for more expansive views of human rights that focus on the “tangible welfare” of
individuals and groups in need. This latter group views the convergence of governmental and private
ends in humanitarian assistance as increasingly unlikely.
In the Horn of Africa, famine and refugee problems have intertwined in recent years to create one of the
most complex scenes of human need anywhere in the world. Each of the chapters in the final section of
the book address the actual mechanics of how assistance is organized. As Henry Shue points out in his
earlier chapter, Lawrence A. Pezullo and Jason W. Clay offer strongly contrasting views of the Ethiopian
famine. Starting with different premises, they reach different conclusions. Pezullo, formerly a career
State Department officer and now executive director of Catholic Relief Services, accepts the view that
the famine is largely natural, and that accommodations to the Ethiopian regime, however distasteful,
were necessary in order to provide any assistance at all. Clay, an anthropologist at Cultural Survival, a
Cambridge Massachusetts, research and advocacy organization, believes that private humanitarians, in
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their rush to capitalize on public sympathy for hungry Ethiopians, failed to understand the
overwhelmingly political nature of the famine, the uses made of food supplies, and the meaning of the
forced resettlement of untold thousands in the midst of Ethiopia’s civil war.
Frederick C. Cuny, a disaster relief specialist who heads the Dallas-based consulting firm INTERTECT,
points to many of the hidden political dimensions at work in famine relief operations. Sadly, many of
these same forces seem to be repeating themselves in the Horn of Africa in early 1988 as this
introduction is being written. Finally, Bruce Nichols, co-editor of the book and director of studies at the
Carnegie Council on Ethics and International Affairs, turns to a unique operation designed to
surreptitiously move 25,000 Ethiopian Jews, or Falasha, to Israel. When the private sector efforts of
Americans and some Israeli officials broke down in eastern Sudan in 1985, the U.S. government was
obliged to provide millions of dollars in covert aid to move endangered refugees and resettle them in
Israel. The Falasha operation, like many other U.S. refugee relief and resettlement activities, points
directly to the importance of prior foreign policy commitments and communal (versus international)
norms in setting humanitarian policy.
Lumsdaine, David H. (1993), “Chapter One: Do Moral Mater in International Politics?,” in Lumsdaine,
David H., Moral Vision in International Politics: The Foreign Aid Regime 1949–1989, pp. 3-29,
Princeton, NJ: Princeton University Press.
Realism has long contended that international politics is profoundly and inherently conflictual. The
bases for this claim vary from aggressive human nature to the character of the state or of the
international system. I have argued (1) that human nature is highly varied, and can produce destructive,
merely self-interested, or principled and altruistic deeds, and (2) that the international system does not
require prudent states to concentrate so exclusively on their own needs that no one can take care of the
system, or of weaker neighbors. Systemic forces do not entail any one way of coping, but permit a range
of state behavior and various types of international systems. The ambiguities which give states
significant choices suggest that philosophical and ideological differences can shape how states behave.
Principles and values systematically affect the world system, and waxing and waning ethical concerns
and changes in domestic political systems can significantly alter the overall character of international
politics.
This opens up several distinct lines of investigation and hypothesis testing, about domestic influence,
international norms, and the inherent meanings of various international practices. Each of these
hypotheses involves denying that the processes of international politics are discontinuous from the
social and moral character of personal life and civil society. Moral factors can alter the tenor of
international life, not only in peripheral ways, but by changing the character of the system.
Cooperation stems not just from incentives but from underlying attitudes and values. Insofar as
cooperation is simply making mutually advantageous (pareto-improving) deals, there is nothing
particularly fine about it: it may tend toward or away from peace or the restraint of oppression or
concern for the needy. Cooperation is valuable where it involves an ethic of working together to
promote essential and humanly beneficial change. Understanding cooperation narrowly conceived of as
cooperation among national egoists is not alternative but complementary to moral factors, because
practices of cooperation once begun have an inherent logic that may lead states in self-interested
cooperative arrangements toward broader cooperative values. But for just these reasons it is important
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to start developing analytic conceptions of cooperation that show their relationship to the moral bases
of society.
The forty-year history of foreign aid shows how many concepts discussed in this chapter worked out in
practice. Differences in domestic political principles, among leader and publics, best explain systematic
differences between the aid programs of different states and the reasons that aid got started. The role
of international society was at work, both in the dialogue between less developed countries and aid
donors and in the sense of appropriate behavior that constrained the donors as members of the OECD.
That practices once undertaken had their own momentum, and grew and changed influenced by the
meanings that constituted them as practices, may be seen both in the developments that prepared the
way for aid and in the evolution of foreign aid practices.
Strong humanitarian convictions shaped this large, novel, and important aspect of international
economic relations. Foreign aid is a paradigm case of the influence of crucial moral principles because of
its universal scope, and assistance form well-off nations to any need, its focus on poverty, and its
empowerment of the weakest groups and states in the international system. For the book as a whole
argues what chapter 2 presents in summary: foreign aid cannot be explained on the basis of the
economic and political interests of the donor countries alone, and any satisfactory explanation must give
a central place to the influence of humanitarian and egalitarian convictions upon aid donors.
Lumsdaine, David H. (1993), “Chapter Two: Why Was There Any Foreign Aid at All,” in Lumsdaine,
David H., Moral Vision in International Politics: The Foreign Aid Regime 1949–1989, pp. 30-69,
Princeton, NJ: Princeton University Press.
Foreign aid was the largest financial flow to the Third World consistently through the postwar period,
and was greater than all other flows combined, except in the period roughly from 1973-1985. The
sudden appearance of aid form nearly a score of developed democracies in the fifties, and their steady
commitment to aid since, cannot be explained by the individual or collective economic and political
interests of the donor states, though these interests did sometimes influence aid. Evidence about aid
spending, about which countries had the strongest aid programs, about public support for aid, about the
origins of aid, and about ongoing changes in aid suggests instead that the real bases of support lay in
humanitarian and egalitarian concern in the donor countries. Such concern was usually combined with
and internationalism which held that the only secure basis for world peace and prosperity in the long
run lay in providing all states with a chance to make progress toward a better life; but this kind of
internationalism tended to be held only by those who were committed to the welfare of poor countries
for other reasons, and was generally opposed to the use of aid to support narrow national interests.
As just discussed, the practice of foreign aid from about 1949 to the present also accords with the more
general arguments developed in chapter 1 about the ways in which moral factors can influence
international politics. There was regular influence of domestic concerns with poverty upon international
aid efforts. A sense of world citizenship led individuals to support assistance to the Third World, and
perceptions of international society led developed country governments to pay attention to
international norms and standards, to the kind of identity they wanted to develop, to the opinion of
other developed states, and to the complaints of Third World countries.
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Lundborg, Per (1998), “Foreign Aid and International Support as a Gift Exchange,” in Economics and
Politics, Vol. 10, No. 2, pp. 127-141, Oxford: Blackwell Publishers.
In this study the basis for non-altruistic granting of aid is derived from rivalry between two donors. We
specified a gift exchange model to explain the interaction between donors’ aid and the political support
they obtain from the recipients. According to the gift exchange hypothesis the relative political support
for the US is positively affected by US and negatively affected by Soviet aid. The hypothesis also implies
that US aid rises as a result of increased political support for the US and that Soviet aid falls. Another
theoretical result is that aid receivers’ absolute income level is a determinant of the aid shares. Drawing
on a study by Dudley and Montmarquette (1976), we also included a complementary model for altruistic
granting of aid suggesting that per capita incomes is an important determinant of aid.
As suggested by the gift exchange model, the aid shares were shown to affect political support in the
expected qualitative manner. The results suggest that the postwar increase in Soviet aid shares and the
fall in US aid shares since the sixties contributed to the fall in relative support for the US as shown in
Figure 1.
The regression also indicated that political support affects the aid shares in the way suggested by the gift
exchange hypothesis. Simultaneity between aid and support was hence show to prevail. The gift
exchange model also predicted that the recipients’ income level has a negative impact on the aid share
since it is more expensive to buy political support from countries with high income levels than from
those of low levels. This prediction, however, has not received support in the regression analysis; while
the estimates are of the expected sign they are not significant. Also the altruistic model is given
empirical support as per capita incomes yield negative and significant estimates for US and for USSR aid
shares.
The results suggest that the fall of the Soviet Union and the termination of the cold war should lead to a
decline in foreign aid from both the US and the nations in the former Soviet Union. As no incentives
remain to use aid to extract political support, such a reduction should be expected. This does not
necessarily mean that the world’s poorest will be negatively affected; as show, there are evidence of
altruism in both donors’ foreign aid. Furthermore, it might be that the aid grants motivated by foreign
political considerations are transferred into altruistically motivation donations. It also seems reasonable
that aid provided for foreign policy objectives is inefficient and that the remaining aid may be better
utilized in the recipient countries.
Finally, it should be remembered that our regressions are based on a game involving repeated one-shot
games. We discussed in section 3 the realism of this assumption. Since more realistic alternatives, that
would allow the history of the game since the last change of government to affect the outcomes, would
make the model intractable, it is hard to assess the implications for the estimates if the one-shot game
assumption is violated.
Lundsgaarde, Erik, Breunig, Christian and Prakash, Aseem (2007), “Trade Versus Aid: Donor Generosity
in an Era of Globalization,” in Policy Sciences, Vol. 40, No. 2, pp. 157-179.
This paper has examined the issue of instrument choice faced by developed countries to support
development in poor countries. Because developing countries face capital scarcity and capital is often
viewed as a sine qua non for development, rich countries can promote economic development via
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resource transfers. Prior research has identified foreign aid as an instrument for redistributing resources
internationally. It has not placed the issue of aid in the larger context of the politics of instrument choice.
Drawing on the ‘trade versus aid’ debate, this paper argues that varying levels of donor generosity can
only be understood when increased imports from developing countries to donor countries are taken
into account.
Our analyses confirm that rising levels of OECD imports from developing countries are associated with
reductions in OECD government’s foreign aid allocations. Thus, key OECD policymakers, with an eye
towards their domestic constituencies, are reducing aid budgets and justifying this by pointing to
increased imports from developing countries. While prior research has emphasized the importance of
social spending in influencing foreign aid budgets, our analysis does not support this argument. We also
do not find support for the partisanship variables that previous research has tended to emphasize.
However, we do find evidence that domestic economic conditions in the donor country, and
unemployment levels in particular, influence foreign aid budgets. Thus, only some aspects of the
domestic political context are important in shaping aid decisions.
The ‘trade, not aid’ debate has been around for nearly as long as the foreign aid regime itself, and has
figured prominently in foreign aid discussions in the United States at least since the Eisenhower
administration. However, the promotion of trade openness on the international development agenda in
the past two decades has increased its prominence. Our paper suggests that the ‘trade, not aid’
argument has had a significant policy impact in donor countries: increased imports from developing
countries have displaced foreign aid. This trend has several policy implications. If increased market
access leads rich countries to reduce foreign aid, then developing country governments may have fewer
options to explore alternative developmental paths. Moreover, citizens within developing countries may
not benefit equally from the type of development that trade promotes, since benefits would likely be
concentrated in the outwardly oriented sectors of the economy. Reduced aid may accentuate global
inequalities, especially if certain developing countries do not have the resources or skills valued in global
markets (Stiglitz 2002). Finally, reductions in foreign aid may also weaken rich countries’ leverage to
promote democracy and human rights in the developing world. While trade sanctions represent one
alternative means of achieving this objective, research suggests that although sanctions may serve an
important symbolic purpose, their efficacy in producing changes in state behavior is limited (Lindsay
1986).
As the WTO’s Doha Ministerial Declaration demonstrates, the argument that international trade is an
essential means of promoting economic growth and poverty alleviation in the developing world
occupies a prominent place on the multilateral trade agenda. If international trade has become the key
instrument to foster development ($2200 billion in OECD-developing country trade versus $50 billion in
aid in 2000), then international development scholars need to closely scrutinize the rules influencing the
division of gains from trade, not only between the North and the South, but also within the South.
Although the WTO is the key multilateral trade regime, a slew of regional and bilateral trade agreements
are also affecting the volume and directionality of trade. Such trade agreements should be carefully
examined not only in terms of gains and losses for the signatories, but also in terms of how they create
trade for and divert trade from non-signatories (De Melo and Panagriya 1992). Because geography may
privilege some developing countries regarding trade with OECD countries (Dunning 1981), the
‘geographically challenged’ countries may face difficult structural constraints in gaining access to
international trading networks through no fault of their own. One way to address these structural
disadvantages could be to include a ‘side agreement’ on foreign aid in regional and bilateral trade
agreements. In sum, international trade and international development scholars need to closely
examine this complex issue.
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In addition to paying increased attention to the distribution of gains from trade in the developing world,
this analysis suggests that it is essential that future research examine the way that geographical patterns
of aid allocations have changed within the context of overall aid reductions. The developing countries
that benefit from increased trade with the developed world and those that are hurt by aid cutbacks may
not overlap. Thus strong export performance among other developing states may further reinforce the
disadvantages facing the most aid dependent states by reducing the level of official assistance offered
by donors.
Just as geography or the absence of efficient economic institutions limit the ability of some countries to
reap the advantages of increased international trade, some states are at a fundamental economic
disadvantage due to a lack of political control within their territory. The recent ‘War on Terror’ has
drawn attention to failed states (Fukuyama 2004) and to how poverty facilitates the recruitment of
terrorists (Posen 2001/2). Because failed states cannot guarantee property rights, they are unlikely to
successfully participate in international economic exchanges. Trade as an instrument for development
will not have traction for such countries, while foreign aid may still enable donor countries to support
programs that counter poverty. An excessive reliance on trade as an instrument for economic
development may thus have important implications for international security in addition to its
consequences in the realm of international economics.
Macalister-Smith, Peter (1989), “Humanitarian Action and International Law,” in Loescher, Gil J. and
Nichols, Bruce (eds.), pp. 91-119, The Moral Nation: Humanitarianism and US Foreign Policy Today,
Notre Dame: University of Notre Dame Press.
Legal rights and duties with regard to humanitarian action already exist in certain restricted
circumstances, in particular under the terms of existing international instruments applicable in armed
conflict and in the important area of rescue at sea. However, extending such rights and duties to
humanitarian actions in situations of greatest need is a difficult task which remains to be achieved. The
problem for the development of humanitarian law is that it should be based on objective criteria of
human need, but must also take account of the practical political requirements of donor and recipient
states.
Although the pressure of urgent circumstances alone is often found to be the motivating force behind
developments at the operational level, only comparatively slow change or progress may be expected
with regard to the assumption by states of binding or general responsibilities. Thus, several of the
important UN specialized agencies and subsidiary organs involved in humanitarian action have
undergone considerable change over the course of time, but this has tended to come about mostly
through interpretation and usage rather than through formal amendments. Functional responsibilities
have not been transformed into legal duties.
The problem of international legal measures relating to humanitarian action appears to arise at several
levels. One important level concerns technical arrangements to expedite assistance; the concern here is
with measures which facilitate the efficient delivery of relief consignments, the movement and
functioning of relief personnel, and arrangements in connection with communications. A further level of
legal interest relates to the principles of humanitarian action, which are still neither universally nor
uniformly recognized; nevertheless, developments in humanitarian activities undertaken by states
bilaterally, by governmental and nongovernmental organizations and by private individuals all
contribute to establishing standards of responsibility for disaster victims, and they provide some norms
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for the conduct and evaluation of humanitarian operations. A third task is to relate existing legal and
operational approaches in the field of humanitarian action to contemporary understanding of the role
and purposes of international law and thereby to indicate the scope for development of both
humanitarian law and action. In essence, this means how to establish a broad field of humanitarian law
relevant to all who may require international assistance.
There is considerable merit in the legal approach based on relatively detailed technical rules, because
progress depends ultimately on the success of practical measures. At the same time, a framework of
principles relating to humanitarian action would usefully supplement technical measure, if such
principles could be both reasonably comprehensive and widely acceptable. More broadly, it could be
appropriate to re-examine the foundations for international humanitarian cooperation, in particular
those contained in Article 1(3) of the UN Charter which are no longer adequate to meet the current
need for humanitarian action. These foundations should be developed and reinforced so as to allow
them to serve as a basis for legal, organizational, and functional progress, all interdependent
prerequisites of an improved humanitarian order. The importance of firm foundations for humanitarian
policy as well as guiding principles for action, and in addition the necessary technical measures, should
all be emphasized more than ever in a period of greatly increased humanitarian needs.
In seeking progress in the humanitarian field, it has become clear that the attempt to extend and
improve humanitarian action themselves also involves – however slightly – an attempt to change the
whole humanitarian order, or the context in which humanitarian problems and response interact. At the
same time it may be perceived that some fundamental constraints seem to operate, which hinder such
change or prevent it from being too rapid.
Since at least the time of the League of Nations, international law and organization have manifested a
greatly increased attention to the situation of the individual, and individuals have increasingly become
the beneficiaries of international acts. However, these developments have not led to recognition of a
commensurate transformation in the international legal position of the individual. States and the
doctrine of state sovereignty remain cornerstones of international law, although in reality individuals
are both the creators and ultimate addresses of all law, national and international. People continue to
be subordinated to the power, and law, of the states. International law in turn continues to give primary
emphasis to the interests of states rather than to individual human values.
The field of human rights highlights an underlying problem which to some extent is symptomatic of the
whole international order. The problem stems from a fundamental contradiction in this field, namely,
that human rights law and its accompanying mechanisms are the creations of states, yet have the
supposed purpose of protecting the citizen from abuses perpetrated by those same entities. This
contradiction or dichotomy between the interests of the state and those of people goes a long way
toward explaining the gap which exists between law and practice in many different fields of
international relations, especially where human welfare is concerned.
Accompanying this underlying problem it may be observed that many humanitarian actions, like most if
not all governmental humanitarian organizations, are designed only to alleviate symptoms and not to
tackle basic causes.
The practical response to humanitarian emergencies at the national and international levels is still of a
fragmentary nature, and the global humanitarian system has only barely evolved beyond a mere series
of ad hoc reactions. The United Nations was supposed to be the center for coordinating the specialized
agencies and subsidiary organs, but most of them presently retain considerable autonomy. There is even
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much competition in humanitarian matters. Whatever future developments take place in the field of
humanitarian action, it therefore seems certain that the need to improve the coordination mechanisms
at the national and international levels will remain for the foreseeable future. Yet while the need for
coordination within the international humanitarian system is generally accepted, it has proved
extremely difficult in practice to define coordination more closely, and to agree on necessary measures.
Probably no one would deny being in favor of coordination of humanitarian action in principle, but the
real problems arise in practice in determining who shall coordinate and who shall be coordinated.
While it is only gradually becoming clear what steps are required or likely to be acceptable to confront
increasing humanitarian problems, at least it is fully apparent that increased international cooperation is
necessary in order to extend and improve the effectiveness of humanitarian actions. Greatly increased
international cooperation is also required in many other fields if serious economic and ecological
problems are to be averted, not to mention the dangers of military conflict. The question therefore
arises whether such cooperation can realistically be expected to materialize in the humanitarian sphere
in the foreseeable future.
The best answers seem to be that global humanitarian problems should be perceived as a challenge
which has the potential of drawing the world closer together rather than further dividing it. This answer
leaves plenty of scope for the development of individual action, particularly by the private person and
by nongovernmental organizations. On the other hand, the fact that the world is organized on the basis
of exclusive states, upholders of the doctrine of sovereignty, suggests that changes – if any – in the
international humanitarian order are still most likely to come about primarily through state actions.
Even in traditional international law, resting heavily on the foundation of reciprocity, elements of
common interest already blend with those of self-interest, albeit only a slight degree. Herein lies a
kernel for development, however, for self-interest can ultimately be seen to lie first of all in protecting
common interests. Thus, the search should continue to find new bases for cooperation, while seeking to
maximize the potential of humanitarian policy to serve this end.
Perhaps the following idea deserves to be more generally recognized and expressed: taking new steps in
cooperative international action to tackle humanitarian problems can in turn engender wider
international effects of a beneficial nature.
There is much room for further progress based on awareness that the development of international
humanitarian law, organization, and action is a reciprocating and self-reinforcing process which seeks to
fulfill the purpose of bringing definite humanitarian benefits to individual people. The aim must be to
seek for ways to ensure that the principle of humanity prevails – in a time of greatly increased needs but
also of greatly increased means for responding. With this in mind, the present challenge is to draw
practical lessons from the many existing texts and approaches, which are still insufficiently systematic,
and to apply those lessons so as to achieve a closer working relationship between functional and legal
aspects of humanitarian policy.
Macdonald, Ryan and Hoddinott, John (2004), “Determinants of Canadian Bilateral Aid Allocations:
Humanitarian, Commercial or Political?” in Canadian Journal of Economics, Vol.37, No. 2, pp294-312,
Blackwell Publishing.
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In this paper we have examined the determinants of the allocation of Canadian bilateral aid over the
period 1984-2000. We draw on models of donor behaviour that allow us to incorporate consideration of
humanitarian, commercial and political considerations. When we consider the entire period, we find
that allocations are moderately altruistic or humanitarian in the sense that the parameter on aversion to
inequality is greater than unity, though we note that it is not significantly different from unity. More aid
is provided to countries with good human rights. Canadian aid to Commonwealth and Francophonie
countries is effectively independent of per capita country income levels, whereas for countries that are
not members of either organization, aid falls as country income rises. Countries that import goods from
Canada receive greater levels of aid. These findings are consistent with Spicer's (1966) and Morrison's
(1998) depictions of Canadian bilateral aid being a reflection of a ‘trinity of mixed motives.’
However, the relative importance of these motives changes over time. As Canadian bilateral aid flows
fell throughout the 1990s, motives for aid would appear to have become increasingly self-interested in
that using aid to help the poorest countries, particularly those in sub-Saharan Africa, declined, while
commercial motives became more dominant. In September 2002 the Canadian government introduced
its most recent policy statement on aid, Canada Making a Difference in the World (Canadian
International Development Agency (CIDA) 2003). It indicates that CIDA will select a limited number of
countries for an ‘enhanced’ partnership arrangement. Selected countries will be those exhibiting low per
capita incomes and committed to good governance and the rule of law; they will receive a greater share
of incremental resources going to CIDA. It will be interesting to see whether this indeed reverses the
pattern of the last ten years.
Mason, Edward S. (1964), Foreign Aid and Foreign Policy, New York: Harper.
Conclusion (pp. 107-112)
A discussion of the relation of foreign aid to foreign policy necessarily assumes that foreign aid programs
are shaped to a substantial extent with the interests of the aid-dispensing countries in mind. I have seen
no reason to doubt the validity of that assumption. There is, however, a considerable variety of interests
influencing the amounts, the terms, and the form of aid within the aid-giving countries and among them.
Domestic economic concerns, the promotion of foreign trade, and security interests vie for priority with
a humanitarian desire for the well-being of others. In the United States this variety is suggested byte he
names of the agencies that, in one form or another, participate in foreign aid: the Agency for
International Development, the Peace Corps, the Food for Peace Program, the Export-Import Bank, to
mention only the principal participants. The changes over time in the title of the principal U.S. foreign
assistance agency also suggest shifting purposes and, perhaps, a certain ambiguity of purpose. The
Economic Cooperation Administration (E.C.A.) gave way to the Mutual Security Administration (M.S.A.)
which, in turn, was followed by the International Cooperation Administration (I.C.A.) and, now, by the
Agency for International Development (AID). There is a strong current of feeling in Washington that the
initials of the present agency, AID, give un unfortunate and misleading interpretation of its real purpose;
there is some disposition to return to a former name, Mutual Security Administration. Certainly the
debates in Congress would indicate that mutual security is and should be the prime concern of our
foreign assistance program.
Military assistance, a substantial part of defense support, and of expenditures from the contingency
fund are obviously directed to security objectives. It is less clear what interests of the United States are
served by economic development assistance. If such assistance is to be assessed in terms of its
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contribution to mutual security, it becomes necessary to form a judgment, first, on the extent to which
external aid can, in fact, advance the economic development of less developed countries; and, second,
on the question of what changes in political structure and behavior can be expected to accompany the
process of economic development. Although the evidence is far from adequate, it is easier to arrive at a
sensible judgment on the first question that on the second. Of a number of less developed countries to
which aid flows in quantity, it can be said that access to foreign exchange is the limiting factor to
economic growth. Some of these have already reached a stage of self-supporting development, and
others are not far from attaining it. When, however, external assistance is only one of the conditions
necessary for sustained growth, assessment of the contribution becomes more difficult. There also
intrudes the bothersome question of the extent to which the leverage of aid can and should be used to
bring about changes in domestic policies considered to be propitious to economic development. Still, in
the thirty-some less developed countries to which the bulk of U.S. economic aid is directed, it can be
said with some confidence that the prospects of development are substantially improved by the
availability of foreign assistance.
It does not follow from this that the less developed world is rapidly approaching a condition in which
growth can be sustained without external assistance. In fact, it seems probable that in many counties to
which we are heavily committed, a continuation of the growth rates of the recent past will require
substantially more rather than less external assistance. Those to whom this is a distasteful, and even
alarming, prospect would do well, however, to reflect on the difference between the nominal size of the
aid burden now shouldered by developed countries and the real sacrifice it represents. When all the
terms, limitations, and conditions surrounding the flow of aid are taken into account, the $6 billion a
year estimate of the total outflow of public funds from the advanced to less developed countries shrinks
to a grant equivalent of perhaps $2.5 billion. This can hardly be considered a monumental sacrifice. If
economic development assistance can and does in fact contribute to the emergence of a world in which
it is somewhat easier for the developed countries in general, and the United States in particular, to live,
it appears to be at small cost.
This, of course, is the crucial question that confronts any analysis of the relation of foreign aid to foreign
policy. What can economic development, assuming it can be assisted by foreign aid, be expected to
bring about in the area of political development and foreign policy in the aid-receiving countries? Is
there in fact a social process called political development that can be described objectively and, if so,
how is it related to economic growth? Economists, it is true, cannot tell us much about the origins or
causes of economic development, nor can they attribute with conviction indubitable welfare
consequences to economic growth. But they can offer a fair description of the economic development
process in terms of a set of arrangements producing an increasing flow of consistently related inputs
that over time will result in greater outputs of goods and services. And these inputs and outputs allow at
least rough measurement.
Discussions of political development, on the other hand, customarily stress two significant strands of the
process that do not appear to be necessarily related. One is concerned with an increasingly ability of the
organs of government to order human behavior to serve whatever goals the holders of political power
choose to have served. If economic development is an important goal, ability of the government to
govern is both a necessary condition and a consequence of economic growth. When General Ayub came
to power in Pakistan in 1958, the direction of the activities of the citizenry was substantially increased,
and the prospects of economic development commensurately improved.
The second strand emphasized in discussion of political development is concerned with a broadening of
public participation in the process of decision-making. Citizens whose voice is heard only in local affairs
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may over time come to be consulted in affairs of state. A government in which political power has
rested in the hands of an elite may in the course of development enlarge the size of the group whose
views are considered. This development may or may not lead toward parliamentary democracy. A single
party system that, as in Mexico, provides for consultation of a wide spectrum of opinion made be
deemed to be more politically advanced than a system closely controlled by a small group.
While there is some connection between the ability of a government to govern and the admission of the
citizenry to consultation, the connection is obviously very complex. Some degree of consent of the
governed is necessary to any effective ordering of human activities though there have been and are
apparently efficient regimes relying heavily on force and terror. On the other hand, examples are not
lacking of regime in which a broadening participation of citizens in the process of government has been
accompanied by a notable decline in the efficiency of government.
If foreign aid is to be used as an instrument of foreign policy and if the promotion of economic
development is not an end in itself, what kind of political development in the aid-receiving country is
sought to be achieved? Should assistance be denied to dictatorial regimes and be made available only to
those governments capable of establishing their democratic bona fides? What if democratic countries
show themselves incapable of putting into practice the domestic policies essential to economic
development and without which economic assistance is wasted? Reflection on these considerations in
Latin America and elsewhere leads one to the opinion, I think, that doctrinaire views on the direction
and use of foreign aid are unlikely to be effective. Under certain circumstances we may have to sacrifice
a desire to promote a wider participation of the governed in order to preserve a modicum of effective
government. On the other hand it is clearly useless to try to support governments who assert their
anticommunism but lack the effective support of their citizens.
~~~
The manuscript of this small volume was completed early in November 1963. Between that date and the
present writing, late January 1964, a number of things have happened to the AID program. These
include the Congressional vote on appropriations for fiscal year 1964 and the submission of the
administration’s budget request for fiscal 1965; the establishment of the Inter-American Committee on
the Alliance for Progress; the appointment by President Johnson of a Special Assistant who is
concurrently Assistant Secretary of State for Inter-American Affairs and U.S. Coordinator of the Alliance
for Progress; and within the administration a serious reconsideration of the organization of the Agency
for International Development.
Congress, eight months after the beginning of hearings and six months after the beginning of the fiscal
year, voted AID appropriations of $3 billion for fiscal year 1964. This compares with $3.9 billion
appropriated in the previous year and with $4,525 million requested by President Kennedy. Of the
appropriation, $2 billion represent economic assistance and $1 billion, military assistance. Together with
carryovers and recoveries from the previous year it makes possible an economic assistance program for
fiscal year 1964 of $2,473 million. For fiscal year 1965 the President has requested $1 billion for military
assistance and $2,392 million for economic aid. Together with expected carryovers and recoveries this
would provide programs for fiscal 1965 of about the same magnitude as for 1964. What effect the
reduction in size of the U.S. aid program will have on the contributions of other D.A.C. countries is
problematic, but is seems certain that the persuasiveness of American arguments for an increase will, to
say the least, be somewhat blunted.
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At the meetings of the Inter-American Economic and Social Council in November 1963, it was voted to
establish an Inter-American Committee on the Alliance for Progress. This Committee will consist of six
members, of which one will be a permanent U.S. representative and five will be representatives on a
rotating basis of Latin American countries. The Committee is intended to have an interlocking
relationship with the Committee of Nine and will be served by the Secretariat of the Economic Section of
the O.A.S. This action represents at least a beginning of an attempt to “Latinize” the Alliance for
Progress. The President has also attempted to unify more effectively the U.S. contributions to the
Alliance by appointing as his Special Assistant a joint Co-ordinator for the Alliance for Progress and
Assistant Secretary of State for Inter-American Affairs.
In its report on the aid program for 1964 the Senate Committee of Foreign Relations suggested a
thorough-going re-examination of the organization of AID before the submission of budget requests for
fiscal year 1965. In response to this suggestion the President appointed a mainly governmental
committee under the chairmanship of the Under-Secretary of State to examine the affairs of this much
reorganized agency. After rejecting on the one hand a suggestion that the Agency be merged into the
Department of State and, on the other hand, that it be broken into a number of parts (on the theory
apparently that Congress would not be able to see the woods for the trees), the committee and
President Johnson have settled for a further tightening up of the existing organization. Plus ça change,
plus c’est la même chose – as indeed it must if AID is to continue to be an effective agency for economic
development. It is, perhaps, time to recognize that U.S. foreign policy has serious responsibilities in the
less developed world and that no amount of administrative sleight-of-hand or political hocus-pocus is
likely to conjure them away.
Maizels, A. and Nissanke, M. K. (1984), “Motivations for Aid to Developing Countries,” in World
Development, Vol. 12, No. 9, pp. 879-900.
An analysis of the allocation of aid by recipient countries from the principal bilateral donors, and from
multilateral aid agencies, was made by cross-country multiple regressions for two periods, 1969-70 and
1978-80, using alternative recipient need and donor interest models. The results generally confirm
earlier studies that bilateral aid allocations are made largely (for some donors) or solely (for others) in
support of donors’ perceived foreign economic, political and security interests. By contrast, aid flows
from multilateral sources, as would be expected, are allocated essentially on recipient need criteria.
Over the decade up to 1980, there was a substantial shift in the composition of total aid flows from DAC
member countries, away from donor interest aid towards recipient need aid. There was, indeed, an
absolute increase in the real value of the latter. The rise in recipient need aid resulted from a shift
towards this type of aid within certain bilateral aid budgets, and from a shift from bilateral to
multilateral sources.
However, these shifts in aid motivation over the decade of the 1970s appear already to have been
reversed. Two major policy changes have become apparent since the late 1970s. First, there has been a
cut in real terms in contributions from DAC member countries to multilateral aid agencies. According to
the last DAC annual report, the turning point came in 1977-78, ‘growth in real terms from 1971-72 to
that peak was as high as 14 percent; since then it has been negative’.34 The stagnation in UNDP funding,
and the difficulties about the replenishment of IDA, are both pointers to the reduced priority now being
given by major donors to multilateral aid channels.
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Second, some of the major donors – particularly the United States – have been using bilateral aid more
openly as an instrument of foreign policy. The 50% cut, announced in December 1983, in United States
economic aid to Zimbabwe as a result of that country’s abstention in the UN Security Council vote on
the shooting down of a Korean airliner,35 is only one recent example of this trend. Other donors,
including Britain, have been tying their aid allocations much more closely to export orders.36
Unless these more recent trends are reversed, the relative balance of aid motivation seems virtually
certain to shift heavily away from recipient need considerations in the remainder of the present decade.
McGillivray, Mark and Oczkowski, Edward (1991), “Modeling the Allocation of Australian Bilateral Aid:
A Two Part Sample Selection Approach,” in Economic Record, Vol. 67, No. 2, pp. 147-52.
In this paper we have modelled Australia’s bilateral aid eligibility/amount decision-making processes
during the period 1980 to 1986. We have employed econometric techniques which are clearly applicable
to these processes, yet untapped in the aid literature. These methods allow for the possible dependence
of decisions, and explicitly recognize that the amount of potential aid is nonnegative. These applications
should find future applications to the eligibility/amount decisions of other aid donors. We hypothesized
that Australia pursues a range of objectives, humanitarian, commercial, political and strategic, and that
the pursuit of these objectives systematically effects the manner in which aid is allocated among
potential recipients. Our results generally offer support for these hypotheses. A notable result was, in
some years, evidence of a bias toward lowly populated countries in determining eligibility for aid,
together with a bias against lowly populated eligible countries in other years. The former seems to
indicate that Australia has sought to maximize returns from aid by avoiding allocating aid to those
countries in which the effort required to promote development is large.
McGillivray, Mark and Oczkowski, Edward (1992), “A Two Part Sample Selection Model of British
Bilateral Aid Allocation,” in Applied Economics, Vol. 24, No. 12, pp. 1311-19.
The allocation of British bilateral foreign aid among developing countries is simultaneously modelled,
focusing on allocations during the period 1980-87. Two aid allocation decisions are analysed using a
variant of the Lee-Maddala econometric model. The first decision concerns the determination of
developing country eligibility for aid, while the second concerns the amount of aid eligible countries are
allocated. Given the implied two-part decision-making process, sample selection techniques are
employed. It is hypothesized that British bilateral aid eligibility and amount decisions are based on
Britain's humanitarian, commercial and political interests in developing countries. Results obtained
indicate that these decisions are generally consistent with each of these interests, especially those
relating to the political importance of Commonwealth members.
McGillivray, Mark and White, Howard (1993), “Explanatory Studies of Aid Allocation Among
Developing Countries: a Critical Survey,” Institute of Social Studies Working Paper No. 148, The Hague:
Institute of Social Studies.
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Official aid transfers from developed to developing countries have remained an important feature of
international economic and political relations since the late 1940s. This is emphasized by the level of net
concessional aid provided by OECD Development Assistance Committee (DAC) member countries. Over
the period 1982 to 1991 alone, the value of this aid in 1990 prices and exchange rates amounts to just
under 500 billion US dollars (OECD, 1992). Not surprisingly, these transfers have attracted a degree of
attention in development literature. Since the 1960s, this literature has included quantitative
investigation of the allocation of aid among developing countries, either from the viewpoint of
subjectively evaluating or attempting to explain these allocations. The latter turns to indentifying the
determinants of inter-recipient aid allocation. We label these works as “descriptive studies” and
“explanatory studies” respectively.
In this paper, we survey the explanatory studies. A critical survey of the descriptive studies may be
found in White and McGillivray (1992). Our emphasis is on methodology and the robustness of results
emanating from these studies. After providing an overview of this literature, we divide studies into six
groups, which may be labeled as recipient need/donor interest, hybrid, bias, developmental,
administrative/incremental and limited dependent variable studies of allocation. The basis for
classification is the statistical models applied by these studies. We conclude with suggestions for further
modeling of aid allocation, paying special attention to what we consider as the attributes of a “good”
model of inter-recipient aid allocation. […]
We conclude by considering possible direction for future research based on what we consider to be
appropriate attributes for an aid allocation model. Our focus is on the estimated model, hence this
involves considerations of both theoretical and statistical issues.
The most fundamental requirement, in our opinion, is that the model be an approximation of the
operational nature of aid determination. Indeed, this is central to our criticisms of the literature. An aid
allocation is not the outcome of, say, the equilibrating forces of the economy. Nor is it some abstract
construction, or a phenomenon determined by the laws of physics. Our thesis is that an aid allocation is
the outcome of a bureaucratic decision making process, which is subject to both bureaucratic criteria
and the economic, political and other relations between the donor and recipient. Aid allocations are
subject to all the sorts of pressures and constraints to which other expenditures are subject. These
involve weighing-up and trading off competing objectives, information time lags and uncertainty,
ensuring that funds are fully committed and so on. Failure to consider precisely what it is that one is
attempting to model will almost certainly ensure that the outcome of this attempt is at best capricious,
or at worst, misleading.
Against this background, when modeling aid allocation one should:
-
endeavour to use the actual decision variable as the dependent variable, not the outcome of
this decision (in our view this should be absolute ODA commitments for data from 1969);
-
attempt to provide a sufficiently comprehensive model specification, in particular avoiding
estimating separate recipient need and donor interest models, or narrowly specified biases
models;
-
pay attention to the issues of eligibility and amount decisions and specify the model accordingly
(for example, if a good case can be made separate decisions, a two-part sample selection model
should be used);
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-
recognize the distinction between describing (evaluating) and explaining aid allocation (given
the use of regression techniques, there is absolutely no guarantee that both can be
simultaneously achieved);
-
give consideration to informational time lags;
-
consider whether aid allocations are simultaneously determined, both across donor aid
programs (as may be the case if donor’s current aid decisions are coordinated) and within donor
programs (as will be the case if current aid allocations are financed from a common pool of
funds);
-
consider whether recipients have input into aid allocation decisions and then formulate the
model accordingly;
-
explore the sorts of administrative factors likely to impinge on the decision making processes;
-
give consideration to the limited dependent variable and non-random sample selection issues,
both of which invalidate OLS; and,
-
conduct appropriate diagnostic tests.
We acknowledge that it may often be difficult to fully implement and satisfy each of these points:
applied research of this nature invariably involves compromises. This is not, however, an excuse to avoid
addressing the issues and continue to crudely estimate carelessly formulated regression equations.
Unfortunately, this has all too frequently been the case in the aid allocation literature.
McGillivray, Mark and Morrissey, Oliver (1998), “Aid and Trade Relationships in East Asia,” in World
Economy, Vol. 21, No. 7, pp. 981-995, Blackwell Publishing Ltd.
The literature on aid policy, and especially on donor motives for aid, abounds with assertions regarding
actual (but unproven) and potential reasons as to why aid and trade flows between donors and specific
recipients may be linked. This alone validates our attempt to assess the empirical basis for such
assertions. The arguments were set out in Section 2, which identified three alternative cases of the aidtrade relationship. We then presented some evidence on the nature of these relations among PacificRim donors and Asian recipients. Testing for causality using time series data is an advance on looking at
descriptive statistics and the results of aid allocation studies, but should be seen as no more than an
initial attempt to validate the aid-trade relationship. The available evidence suggests that there is indeed
a relationship between aid and trade, but that the specific nature of this relationship can vary between
donor-recipient pairs.
There is a notable concentration of Australian aid on Pacific Islands, which are close economic partners,
and dynamic Asian economies (where the allocation of aid may reflect trade potential rather than
development needs). Japan, a major donor and trading partner on a global scale, also concentrates its
aid on the more dynamic Asian economies, supporting the argument that Japanese aid flows are more
related to economic cooperation than to a needs-based development cooperation. The evidence that
aid flows within the region reflect or follow trade flows is plausible. One implication of this is that aid
and trade flows within the region have played a role in sustaining, if not actually promoting, the
economic dynamism within the region. Another implication is that the tendency of aid to ‘follow’ trade
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may imply that aid is attracted away from more deserving (in terms of needs) poor countries, both in
and outside the region, towards countries with a stronger economic performance (and hence larger
markets for trade). Because of the importance of trade links, it may be the case that much aid goes to
countries that need it least. This may have been a benefit to the dynamic economies of East Asia, but at
a cost to less dynamic developing countries throughout the world.
McGillivray, Mark (2003), “Aid Effectiveness and Selectivity: Integrating Multiple Objectives into Aid
Allocation,” United Nations WIDER Discussion Paper No. 2003/71.
This paper surveys recent research on aid and growth. It also provides an overview of research on interrecipient aid allocation. The overall focus of the paper is on the relevance of these issues for povertyefficient aid, defined as a pattern of inter-recipient aid allocation which maximises poverty reduction. It
identifies a range of poverty reducing criteria on which aid allocation or selectivity might be based,
calling for a broader selectivity framework. The paper argues that this framework should be built on a
recognition that the effectiveness of aid in increasing growth, and by implication in reducing poverty, is
contingent on a range of factors in addition to the quality of recipient country policy regimes. These
factors include political stability, democracy, post conflict reconstruction, and economic vulnerability.
McGillivray, Mark (2004), “Descriptive and Prescriptive Analyses of Aid Allocation: Approaches, Issues
and Consequences,” in International Review of Economics and Finance, Vol. 13, No. 3, pp. 275-292,
Elsevier.
This article surveyed two related strands of literature on the allocation of development aid among
recipient countries. The first strand consists of those studies seeking to describe or evaluate the
allocation of aid against normative criteria. The second strand comprises those that seek to prescribe
the interrecipient allocation of aid by deriving the amounts of aid each country should receive, also
based on normative criteria. A specific objective of the article was to compare the allocations of
different prescriptive approaches, not only among each other but also with actual aid allocations. This
exercise revealed some interesting results. Without exception, actually implementing these approaches
would see tremendous changes in the way aid is allocated, with some countries receiving much more
aid than they actually do and others receiving far less.
It should be emphasized that the prescriptive literature is still a very young, emerging one; that, to date,
only a handful of studies have been conducted emphasizes this. The usefulness of these studies can be
gauged by their impact on actual donor behavior, hopefully resulting in more developmentally oriented,
and less politically oriented, patterns of aid allocation. Further work is required if this outcome is to be
observed. A useful start to this work involves addressing inter alia the criticisms outlined in this study.
These criticisms include a possibly excessive reliance on growth as a determinant of poverty reduction,
ambiguities over the relevance of recipient policy regimes for aid effectiveness, and possible
disincentive effects of allocating aid based on need alone. More generally, there remains unresolved the
difficult normative issue of whether poor countries necessarily deserve more aid than others even if
they themselves have done little to enhance the welfare of their citizens.
267
McKinlay, Robert D. (1978), “The German Aid Relationship: A Test of the Recipient Need and the
Donor Interest Models of the Distribution of German Bilateral Aid, 1961-1970,” in European Journal of
Political Research, Vol. 6, No.3, pp. 235-257.
The major premise of this paper is that an identification of the criteria of aid allocation is of interest
specifically to explain the distribution of aid and more generally to indicate the nature and role of aid.
The variety of criteria which potentially can explain the distribution of aid can be organized in terms of
the perspectives of recipient need or donor interest. If the distribution of aid is accurately portrayed by
recipient need criteria, then the interpretation of aid in terms of economic assistance is valid, whereas if
the donor interest criteria are accurate, then the foreign policy interpretation is more appropriate.
The fit of the recipient need model against the annual distribution of German aid over the period 196170 is inadequate. It is clear, consequently, that the German aid programme is not based primarily on
humanitarian or welfare criteria. The economic assistance interpretation of aid, therefore, is not valid,
and an explanation of the German aid programme primarily in terms of a “moral obligation” is
inaccurate.
The donor interest model, on the other hand, provides a good fit to the distribution of German aid.
Consequently, we can interpret German aid in terms of a foreign policy conceptualization. While a
variety of German interests underlie and dictate the pattern of German aid, the clearest and most
important are trading or, more specifically, export interests. However, in addition to finding that the
distribution of German aid is not explicitly ‘antithetical to humanitarian nor welfare dictates, we also
find, within the general rubric of a donor interest interpretation, evidence of a quasi-humanitarian
component.
Thus, the German aid programme cannot be adequately summarized by either a stringent recipient
need or a stringent donor interest model. Nonetheless, we suggest that the German aid programme is
premised primarily from the perspective of German “vital interests”, and that as a consequence the
interpretation of German aid from the perspective of its forei