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 reevaluate 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 nations struggling economies and
welfare systems, with some, in contradiction to OECD best practices, advocating for
development assistance programs that also benefit the donor nations economies.
The fiscal questioning of foreign aid has further led to the questioning of aids
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 socioeconomic development, in light of South-South cooperation (e.g. Brutigam 2009;
de Haan 2009, 2010; Dollar 2008; Gill et al 2007; IOSCPRC 2005; Ravallion 2008;
Tjnneland 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. Brutigam & Tang 2009;
Brutigam 2009). During the Cold War, much of Chinas 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, Chinas
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

30

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 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 Chinas 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.

30

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:

IDEAS

INSTITUTIONS

INTEREST
S

ORGANIZATIO
N

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

30

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
nations 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. Lancasters 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 Lancasters 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:

30

FOREIGN POLITY
IDEA
S

ORGANIZATION

FOREIGN POLITY
IDEA
S

INTERESTS

INSTITUTIONS

ORGANIZATION

INTERESTS

INSTITUTIONS

DOMESTIC POLITY
IDEA
S

ORGANIZATION

FOREIGN POLITY
IDEA
S

ORGANIZATION

INTERESTS

INSTITUTIONS

INTERESTS

INSTITUTIONS

FOREIGN POLITY
IDEA
S

ORGANIZATION

INTERESTS

INSTITUTIONS

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 cause-effect relationship, based on the shared consensus of recognized

30

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 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:
Leaders Should
Promote:
National Ideals

Nationalist

The Community
beyond International
Borders
Exceptionalist

Universal Ideals

Progressive

Radical Progressive

Their Own Citizens

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.).

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Stokke (1989) also describes how aid policies are formulated through the
interaction of the external environment with a countrys domestic environment,
norms, interests and traditions. His compilation of analyses regarding the foreign
aid policies of five Western middle powers 1 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 Stokkes definition shares the core concepts of
humane internationalism, and adds to it a commitment to an open and multilateral
trading system as well the 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.). Stokkes 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
1

Canada, Denmark, the Netherlands, Norway and Sweden.

See Table 2 for further descriptions of the different forms of internationalism as defined by
Stokke (1989).
3
Canada, the Netherlands, Norway and Sweden.
4
The Netherlands has direct ties to a number of developing nations due to its colonial
heritage.
2

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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. Pratts
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. Thrien and Nol (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 (Thrien &
Nol 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, Thrien and Nol 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 (Nol & Thrien
1995), which proposes that the institutionalization of socialist welfare principles at
the domestic level shape the nature and practices of a nations foreign aid policy,
arguing that states with more institutionalized 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 partys
prolonged rule on a nations 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.
Thrien (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 Thrien 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

30

management systems (ibid.). In contrast, Thrien 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 Thrien and Nol
noted above, the Lefts 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.).
Thrien 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.). Thrien 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.). Thrien further argues that it is these divergent concepts,
concerns and arguments that have developed the international and domestic aid
regimes current today (ibid.). Thriens 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.).
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

30

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 Thrien (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 public-private 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 Gradsteins
(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
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 OLeary (1967). He analyzes the

30

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). OLeary 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.). Putnams two-level games
approach and his findings provide useful tools, in addition to those of Chong and
Gradstein, and OLeary, 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 principal-agent 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.). Mursheds 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 interest 5 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 mid-1970s, 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 Berthlemy (2005) also concerning the donor interest and
recipient needs models of donor aid provision motivation confirms Maizels and
Nissankes 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, Berthlemy (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
5

This includes, for example, donor self-interest with regard to political, economic or national
security considerations.

30

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 Berthlemy (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. 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 Japans
foreign aid policy is driven more by commercial interests (ibid.). Hook argues that
Japans 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 Holstis 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). Sogges 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. Sogges
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.

30

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 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 als study provide an impetus for analyzing the strengthening SouthSouth 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 recipients need for debt forgiveness, while

30

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 grantconcessional 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 grantconcessional 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 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

30

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 geostrategic and ideological considerations for different donors in their formulation of
foreign aid policies.
Schraeder et als (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.
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

30

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
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

30

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 actors 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.).
Hooks (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

30

decolonization, and this context provided the justification to domestic constituents

for foreign aid expenditures (ibid.). As many 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 worlds 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 executive-legislative 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 Olofsgrd (2007) confirm Griffins fears, and Hooks 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
Olofsgrd 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.
6

See also USAID (2002), Foreign Aid in the National Interest: Promoting Freedom, Security
and Opportunity, Washington, DC: USAID.

30

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 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 administrations 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 worlds
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
Chinas foreign aid motivations likewise moved away from the Cold War
ideological and political motivations in the post-Cold War period (Chaponnire 2009;
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.

30

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 Rais first study concluded that more evidence was
needed in the discussion of the causal relationship of foreign policy 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.).

30

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 EastWest split current in the bipolar 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 self-determination 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 North-South 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

30

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, Indias aspirations for permanent membership on the UN
Security Council,8 and the fact that Chinas 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 Voetens
(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.
Investigating IMF conditionality agreements, Kang (2007) observes that
conditions attached to loans varied both qualitatively and quantitatively, this is
despite the IMFs 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
8

See, for example, this article on the BBC News website: http://www.bbc.co.uk/news/worldsouth-asia-11711007

30

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 countrys 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 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

30

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 USs 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 Association 9 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 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
9

See article on Radio86.com website: http://en.radio86.com/news/world-bank-welcomeschinas-contribution-ida-zoellick

10
See article on caijing.com.cn: http://english.caijing.com.cn/2009-04-02/110132520.html.
This article states that Chinas contributions to the IMF are said to exceed that of Japan and
become second only to the US.

30

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

30

more concerned with form of governance (democracy) than with quality of

governance (ibid.).11
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 &
Schller 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
Americas 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
11

See also Neumayer 2002.

See Breuning (1995) for analysis of the correlation between foreign assistance rhetoric
and actual policy behavior.
12

30

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 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

30

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 donors 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 (Brutigam 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 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 (Chaponnire 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. Brutigam 2009; Broadman 2007; Chaponnire 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 Keohanes
(1993) analytic framework concerning the role of ideas in shaping policy could
provide a useful underpinning to such an analysis. Assumptions are easily made
13

Note, for example, Chinas activities within the framework of the Shanghai Cooperation
Organization.
14
See note 4 above, as well as Chinese participation in the Global War on Terror.

30

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 Chinas foreign policy decision making.
Additionally, the effect of Thrien and Nols (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 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 Pratts (1989) theory as to
why certain countries are more sensitive to recipient needs than others? It is clear
that part of Chinas 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 Holstis 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 Chinas global reach and increasingly
intense economic and political activities, it has already outgrown this role. Further,
Chinas aid provision and association with voting behavior in the UN could be
investigated, especially given the fact that Chinas 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
Chinas foreign aid policies, these need to be put into the perspective provided by
15

For further details see: Yu, O. (2008), Corruption in Chinas Economic Reform: A Review of
Recent Observations and Explanations, in Crime, Law and Social Change, Vol. 50, No. 3, pp.
161-176, Springer Netherlands.

30

the aid practices, both past and present, of Western industrialized nations, as well
as the context of Chinas 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._____________________45
ALESINA, ALBERTO AND WEDER, BEATRICE, (2002) DO CORRUPT GOVERNMENTS RECEIVE LESS
FOREIGN AID?, IN AMERICAN ECONOMIC REVIEW, VOL. 92, NO. 4, PP. 11261137._________46
ALPERT, EUGENE J. AND BERNSTEIN, SAMUEL, J. (1974), INTERNATIONAL BARGAINING AND
POLITICAL COALITIONS: US FOREIGN AID AND CHINAS ADMISSION TO THE UN, IN THE WESTERN
POLITICAL QUARTERLY, VOL. 27, NO. 2, PP. 314-327, UNIVERSITY OF UTAH.________________46
APODACA, CLAIR AND STOHL, MICHAEL (1999), UNITED STATES HUMAN RIGHTS POLICY AND
FOREIGN ASSISTANCE, IN INTERNATIONAL STUDIES QUARTERLY, VOL. 43, NO. 1, PP. 18598,
BLACKWELL PUBLISHING.______________________________________________________________47
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._________________________________________48
ARVIN, MAK B. AND DREWES, TORBEN (2001), ARE THERE BIASES IN GERMAN BILATERAL AID
ALLOCATIONS?, IN APPLIED ECONOMICS LETTERS, VOL. 8, NO. 3, PP. 1737._______________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

30

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.______________________________________49
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.
533547.__________________________________________________________________________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.______________________________________________52
BEENSTOCK, MICHAEL (1980), POLITICAL ECONOMETRY OF OFFICIAL DEVELOPMENT
ASSISTANCE, IN WORLD DEVELOPMENT, VOL. 8, NO. 2, PP. 137-44, ELSEVIER SCIENCE, LTD._53
BERTHLEMY, 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._______________________________54
BERTHLEMY, 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)
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SOGGE, DAVID (2002), TWO: WHO IS AIDING WHOM?, IN SOGGE, DAVID, GIVE AND TAKE:
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SOGGE, DAVID (2002), THREE: THE AID REGIME AND POWER AGENDAS, IN SOGGE, DAVID,
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ZED BOOKS._______________________________________________________________________367
SOGGE, DAVID (2002), SEVEN: WHEN MONEY TALKS, WHAT DOES IT TELL US?, IN SOGGE,
DAVID, GIVE AND TAKE: WHATS THE MATTER WITH FOREIGN AID?, PP. 140-165, LONDON &
NEW YORK: ZED BOOKS.____________________________________________________________370
SORENSON, DAVID S. (1979), FOOD FOR PEACE OR DEFENSE AND PROFIT? THE ROLE OF P.L.
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STOKKE, OLAV (1989), THE DETERMINANTS OF AID POLICIES: GENERAL INTRODUCTION, IN
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UPPSALA, SWEDEN: THE SCANDINAVIAN INSTITUTE OF AFRICAN STUDIES.____________________378
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NETHERLANDS, NORWAY AND SWEDEN , PP. 275-316, UPPSALA, SWEDEN: THE SCANDINAVIAN
INSTITUTE OF AFRICAN STUDIES.______________________________________________________384
SVENDSEN, KNUD ERIK (1989), DANISH AID: OLD BOTTLES, IN STOKKE, OLAV (ED.), WESTERN
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SCANDINAVIAN INSTITUTE OF AFRICAN STUDIES._________________________________________388
SVENSSON, JAKOB (1999), AID, GROWTH AND DEMOCRACY, IN ECONOMICS AND POLITICS, VOL.
11, NO. 3, PP. 275-97.____________________________________________________________391
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CONDITIONALITY, IN JOURNAL OF DEVELOPMENT ECONOMICS, VOL. 61, PP. 61-84.__________393
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ABOUT IT? IN JOURNAL OF DEVELOPMENT ECONOMICS, VOL. 70, PP. 381-202._____________394

30

TAFFET, JEFFREY (2007), FOREIGN AID AS FOREIGN POLICY: THE ALLIANCE FOR PROGRESS IN
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WHITE HOUSE (2010), NATIONAL SECURITY STRATEGY, AVAILABLE ONLINE:

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F.________________________________________________________________________________397
THRIEN, JEAN-PHILIPPE AND NOL, ALAIN (2000), POLITICAL PARTIES AND FOREIGN AID, IN
AMERICAN POLITICAL SCIENCE REVIEW, VOL. 94, NO. 1, PP. 151-162.____________________398
THRIEN, JEAN-PHILIPPE (2002), DEBATING FOREIGN AID: RIGHT VERSUS LEFT, IN THIRD
WORLD QUARTERLY, VOL. 23, NO. 3, PP. 449-66._____________________________________399
THORBECKE, ERICK (2000), THE EVOLUTION OF THE DEVELOPMENT DOCTRINE AND THE ROLE OF
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PROGRAMME, IN BOSE, ANURDHA AND BURNELL, PETER (EDS.) (1991), BRITAINS OVERSEAS AID
SINCE 1979: BETWEEN IDEALISM AND SELF-INTEREST , PP. 97-124, MANCHESTER: MANCHESTER
UNIVERSITY PRESS._________________________________________________________________402
TRAVIS, RICK AND ZAHARIADIS, NIKOLAOS (2002), A MULTIPLE STREAMS MODEL OF U.S.
FOREIGN AID POLICY, IN POLICY STUDIES JOURNAL, VOL. 30, NO. 4, PP. 495-514._________402
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DEVELOPMENT ASSISTANCE IN AFRICA: A POOLED TIME SERIES ANALYSIS, IN INTERNATIONAL
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USAID (2002), FOREIGN AID IN THE NATIONAL INTEREST: PROMOTING FREEDOMS, SECURITY AND
OPPORTUNITY, WASHINGTON, DC: USAID._____________________________________________405
VOETEN, ERIK (2000), CLASHES IN THE ASSEMBLY, IN INTERNATIONAL ORGANIZATION, VOL. 54,
NO. 2, PP. 185-215._______________________________________________________________408
VOETEN, ERIK (2004), RESISTING THE LONELY SUPERPOWER: RESPONSES OF STATES IN THE
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PAPER PREPARED FOR THE REINVENTING BRETTON WOODS COMMITTEE AND WORLD ECONOMIC
FORUM CONFERENCE ON THE FUNDS ROLE IN EMERGING MARKETS: REASSESSING THE ADEQUACY
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30

WADE, ROBERT HUNTER (2002), US HEGEMONY AND THE WORLD BANK: THE FIGHT OVER
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JOURNAL OF POLICY MODELING, VOL. 17, NO. 3, 307314.______________________________417
WANG, T. Y. (1999), U.S. FOREIGN AID AND U.N. VOTING: AN ANALYSIS OF IMPORTANT
ISSUES, INTERNATIONAL STUDIES QUARTERLY, VOL. 43, NO. 1, PP. 199210._____________418
WATANABE, YUKO (2006), WHAT DETERMINES BILATERAL AID DISTRIBUTION? EVIDENCE FROM
MAJOR DONORS, UNDERGRADUATE HONORS PAPER, DEPARTMENT OF ECONOMICS AND
INTERNATIONAL STUDIES PROGRAM, UNIVERSITY OF OREGON._____________________________418
WEDEL, JANINE R. (2005), US FOREIGN AID AND FOREIGN POLICY: BUILDING STRONG
RELATIONSHIPS BY DOING IT RIGHT!, IN INTERNATIONAL STUDIES PERSPECTIVES, VOL. 6, PP. 3550._______________________________________________________________________________419
WHITE, HOWARD AND MCGILLIVRAY, MARK (1992), DESCRIPTIVE MEASURES OF THE ALLOCATION
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INSTITUTE OF SOCIAL STUDIES._______________________________________________________419
WINDSOR, JENNIFER (2008), MAINSTREAMING DEMOCRACY AND GOVERNANCE IN FOREIGN
ASSISTANCE, IN PICARD, LOUIS A., GROELSEMA, ROBERT AND BUSS, TERRY F. (EDS.), FOREIGN
AID AND FOREIGN POLICY: LESSONS FOR THE NEXT HALF CENTURY , PP. 414-424, NEW YORK: M.
E. SHARPE, INC.____________________________________________________________________420
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MANCHESTER UNIVERSITY PRESS._____________________________________________________421
WITTKOPF, EUGENE R. (1973), FOREIGN AID AND UNITED NATIONS VOTES, IN AMERICAN
POLITICAL SCIENCE REVIEW, VOL. 67, NO. 3, PP. 868-888, AMERICAN POLITICAL SCIENCE
ASSOCIATION.______________________________________________________________________421
WOOD, BERNARD (1982), CANADA AND THIRD WORLD DEVELOPMENT: TESTING MUTUAL
INTERESTS, IN CASSEN, ROBERT, JOLLY, RICHARD, SEWELL, JOHN, AND WOOD, ROBERT (EDS.)
RICH COUNTRY INTERESTS AND THIRD WORLD DEVELOPMENT, PP. 94-127, LONDON: CROOM
HELM.____________________________________________________________________________422
WOODS, NGAIRE (2005), THE SHIFTING POLITICS OF FOREIGN AID, IN INTERNATIONAL AFFAIRS,
VOL. 81, NO. 2, PP. 393-411.______________________________________________________427
WOODS, NGAIRE (2008), WHOSE AID? WHOSE INFLUENCE? CHINA, EMERGING DONORS AND
THE SILENT REVOLUTION IN DEVELOPMENT ASSISTANCE, IN INTERNATIONAL AFFAIRS, VOL. 84,
NO. 6, PP. 1205-1221.____________________________________________________________429
WRIGHT, JOSEPH AND WINTERS, MATTHEW (2010), THE POLITICS OF EFFECTIVE FOREIGN AID,
IN ANNUAL REVIEW OF POLITICAL SCEINCE, VOL. 13, PP. 61-80.__________________________429

30

YOUNAS, JAVED (2008), MOTIVATION FOR BILATERAL AID ALLOCATION: ALTRUISM OR TRADE
BENEFITS, IN EUROPEAN JOURNAL OF POLITICAL ECONOMY, VOL. 24, NO. 3, PP. 661674,
ELSEVIER._________________________________________________________________________430
ZAHARIADIS, NIKOLAOS, TRAVIS, RICK AND WARD, JAMES B. (2000), U.S. FOOD AID TO SUBSAHARAN AFRICA: POLITICS OR PHILANTHROPY? IN SOCIAL SCIENCE QUARTERLY, VOL.81, NO.2,
PP.66376, AUSTIN: UNIVERSITY OF TEXAS PRESS.______________________________________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 nondemocratic 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 noncolonies.
From the point of view of efficient aid, each of the big three donorsU.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 Japans 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

30

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 lowincome 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. 11261137.
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 Chinas Admission
to the UN, in The Western Political Quarterly, Vol. 27, No. 2, pp. 314-327,
University of Utah.
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.

30

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 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.

30

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. 18598, 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.
A strong inverse relationship between per capita assistance and population of aidreceiving countries is found in an examination of Canadian bilateral foreign aid to 33

30

countries over the period 198292. 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 recipients 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.
1737.
A strong inverse relationship between per capita assistance and population of aidreceiving 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 recipients coverage under the Lom 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.

30

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.
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.

30

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 postCold 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 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. 533547.
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 IMFs 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

30

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 loanGDP ratio
has a substantial inverse relation to economic growth in the contemporaneous 5year period. However, the instrumental estimates indicate that the
contemporaneous relation of the IMF loanGDP 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
variablesinvestment, 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.
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 positionsbecause of large
quotas, large IMF staffs, and political and economic proximity to the IMFs main
shareholding countriesuse 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 countrys 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.

30

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 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
post-Cold 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

30

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 believeat 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 19652001, 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, 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 governmentsincluding,
but not limited to, the United Statesface 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,

30

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.

Berthlemy, 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.
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 Berthlemy 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

30

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 Berthlemy 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.

Berthlemy, 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.
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

30

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 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.

Berthlemy, 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.
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 self-interests, 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;

30

 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;
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-yearold 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.

30

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:
-

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

30

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.
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

30

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 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

30

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.
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 AIDs 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.

30

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 Presidents
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 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

30

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 non-governmental 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

30

effectiveness for 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. 289329.
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
governments 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.

30

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 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 Olofsgrd, 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

30

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 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 worlds 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 administrations
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.

30

Bose, Anurdha (1991), Aid and the Business Lobby, in Bose, Anurdha
and Burnell, Peter (eds.) (1991), Britains 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 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 governments 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 authors 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 ODAs
departmental ethos, which has always shown a strong bias towards money-moving

30

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 Frances 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 gardes
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 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.

30

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 (redploiement 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.)
(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 cooprants 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

30

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 Franais de lEtranger 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 decision-makers 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 Franco-Africaine, recently set up as a small-scale replica of
Commonwealth meeting, and which receive the bulk of the development cooperation efforts;
(2) a second circle consisting of the other African countries as well as Caribbean,
Pacific and Mediterranean countries to which the EEC Lom 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
gardes). 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 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.

30

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 libralisme ogranis 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.

30

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

30

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 agenda-setting. 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 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 Easts (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

30

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 listare 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 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, USAIDs 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 Presidents 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).

30

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 development-type 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.
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.

30

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 mid2008, 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 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 softskill 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.

30

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 Banks 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. 4449).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 donorsand some African leaders
say they want to see created on the other. Even 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 Africas international relations: to situate
understandings of the geopolitics of Africas 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 Africas international relations.

30

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 theorys implications are clear: political
reform needs to precede economic development. The democratic institutions of
Western Europe ensured that the U.S. Marshall Plans 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 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.

30

Burnell, Peter (1991), Introduction to Britain's Overseas Aid: Between

Idealism and Self-Interest, in Bose, Anurdha and Burnell, Peter (eds.),
Britains Overseas Aid Since 1979: Between Idealism and Self-Interest, 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

30

electoral process and indifferent to whether elections reshuffle government.

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 aids 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 NonEconomic 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.

30

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 conceptual failures on Washingtons
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 Centers 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 Preegs Philippine case study demonstrates, the failure to devise sound
and achievable overt objectives and then maintain these objectives as the entire

30

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.
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 donors objectives and the recipients 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 aids 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
faade for political intentions, on long-term 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

30

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 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 well 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

30

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 ones
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 well-understood 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 aids 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.
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?

30

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 longterm 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 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

30

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 recipientcountry 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.
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

30

consequence). Powerfully dramatized by Ernest Preegs 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 others 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 Washingtons 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. Graves 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 donors 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 Koreas dependence on U.S. aid has

30

ended. (The point on the predispositions of the recipient countrys ruling factions,
also explored in this section of the report, was also in play in our inability to force or
induce political reforms.)
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 Marcoss
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
Washingtons 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 Pakistans cooperation on Afghanistan
was secondary had ended.

The factor of multiple goals is, in some of the cases, linked to that of spigotcontrol to create the worst possible situation for exerting leverage on the recipient.
If one or some of the goals of a multiple-goal 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 Washingtons demands on any
other objectives.

All cases and associated research underscore the importance of the

relationship between the donors 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 groups perception of
those interests. Within this, the cases point to the ruling groups perceptions of its
own, not the countrys, interests, and other the development of counterconstituencies 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

30

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.
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 countrys 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,

30

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
Washingtons goals when it demanded rent-labeled-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 Washingtons 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. 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 war-related 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
studys 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
donors insistence on clear performance standards, whether the donor is the United
States alone, the United States and its allies, or an international agency. []

30

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.
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. Baers 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.

30

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. 847868.
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, 1990-1993. 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 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

30

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 modelunless one assumes international capital markets
are perfectin 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 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,

30

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 aideven well
managedto 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.

30

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. 182-214, 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 selfsufficiency (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 Britains 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 countrys
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

30

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.
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. 140, 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 co-operation 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?

30

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 post-war 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 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 Wests international
community, with hardly a ripple of effect on the immediate well-being of the Norths
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

30

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 worlds 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 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

30

possible. It also seems clear from this analysis that progress in this endeavor is
worth striving for, for the Norths sake as well as the Souths. 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 SelfInterest, pp. 204-209, Manchester: Manchester University Press.
Aid is often described as beginning with Trumans 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 Partys 1990 policy documents, however, promise to
achieve the goal within five years.
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.

30

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 UKs 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 crdits 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
schemes 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 Boses account of business lobbying in Chapter 7 only
supports this afterwords 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 ODAs 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 antipoverty 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 muting
of criticism of official aid by NGOs though it would be too Machiavellian to suggest
that this was an aim of the policy.

30

At the same time, actual practice has borne out many of the ODAs 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 Robinsons 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 Ministers 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 1970-71; 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 Asias 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 Africas plight, standard theories of international
relations have something to explain.
Britains 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 UKs 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

30

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 ECs own Court of Audit produces some fairly damning
commentary.
Effectiveness
British aid has a reputation for technical quality. The World Banks 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 Britains 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

30

characteristics, it may be difficult for debtor countriesas well as creditorsto

escape from repeated cycles of debt relief.

Chong, Alberto and Gradstein, Mark (2008) What Determines Foreign

Aid? The Donors Perspective, in Journal of Development Economics, Vol.
87, No. 1, pp. 113.
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 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.un-ngls.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 richcountry 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.

30

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.
The language of youre 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 worlds 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

30

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.
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 governments
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 coalitions 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 Afghanistans people, the situation has now become

30

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 aids primary driving force. The fortunes
of the worlds 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 middleincome 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 future of the worlds poorest
continent. Christian Aid calls on the Prime Minister to use this opportunity to refocus the worlds 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 worlds 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.

30

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 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.

30

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

30

presented in this chapter provides an analytical reference point for that inquiry.
Chapter 2 explores in greater detail the 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.

30

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 twentyfirst century. [..]

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.

30

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 worlds 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 affirmative action benefiting Third World countries. This
program is summed up by the Group of 77s 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.
Machiavellis 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. []

30

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.
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,

30

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 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 individuals civil and political rights. Today the term human rights
encompasses much of the Progressive foreign policy agenda. As a result, much of

30

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 Carters
four short years in office were not enough to make much progress in these areas.
It is too soon to gauge President Bushs 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
administrations response to Iraqs 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.
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, anti-expropriation 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

30

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).
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

30

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 Unions 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 Unions main objective
was to develop a network of Third World allies who would be willing to adopt 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,

30

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 Canadas
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 Canadas 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

30

criteria, over the past decade the Canadian government has maintained generally
friendly relations with El Salvador, Honduras, Cuba, and Nicaragua.
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 countrys 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 Canadas 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 applicants country when
making loan decisions. In this case, the Canadian governments 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 Banks decision making with negative consequences for its activities. 14

30

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 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 Carters
emphasis on respect for rights of the integrity of the individual. The findings from
Cingranelli and Pasquarellos 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 nations military. The

30

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.
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 countrys government during any presidents
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

30

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 anti-communist 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, marketoriented 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
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

30

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 worlds largest creditor
nation, but by the end of 1989, it was the worlds 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
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

30

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 North-South 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 twentyfirst 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 selfinterested 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 Worlds 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 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

30

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 Iraqs 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-fordemocracy 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:
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.
Moscows worry is that the United States will treat the current disarray in the
East Bloc as an unfettered opportunity to use our power. 25

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.

30

1.

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.

30

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
institutionssuch as the International Monetary Fund, World Bank, Paris Club, and
consultative group meetingshave 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 mid1990s. 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 observesas other havelarge 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. 829837.
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 Japans. 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.

30

Clarke, D. P. (1992), Distributions of Official Development Assistance

Among Developing Country Aid Recipients, in The Developing Economics,
Vol. 30, No. 3, pp. 184197, 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 middleincome 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
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. 14751500,
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.

30

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.

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.

30

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.
117-158, 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 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--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

30

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
Africas 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 excolony 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. 2951.
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 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 levelsall 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

30

wars 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
circumstancesnamely, the presence or absence of the cold war and the
opportunities and constraints inherent to eachand 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 tomorrows 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 Governments
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 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.

30

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

30

and those attempting to theorize about the causes and consequences of

development and underdevelopment.
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.

30

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 shortterm 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.

Dollar, David, Levin, Victoria, (2006) The Increasing Selectivity of Foreign

Aid, 19842003, in World Development , Vol. 34, No. 12, pp. 20342046.
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 198489 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 Japans interests in seeing the Third World develop
are, it is argued, rather unclear. Japans 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

30

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 Japans 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 Japans 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 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 middle-income 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. low-income 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.

30

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 19732002. 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
pressure by the worlds 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 trade-related 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

30

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, increasesconsidering 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 worlds 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 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. 454473.
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,

30

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 postSeptember 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.

30

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
recipients 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 recipients 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 postCold 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 theoretical attention should be focused on the issue
of credible commitment in the allocation of foreign aid.

30

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 aids 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 selectivitythe principle that aid will only work in countries with good
economic policies and efficient, squeaky-clean 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 circumstancesfor 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. 2348.
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 doesnt 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.

30

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.
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.
77480.
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 class-relevant 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

30

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 commitmentin this case to trade liberalization and a
particularly narrow definition of securityis 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 occursin 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 concerns of the US statenot 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 USAIDs 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
Developments 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 states 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 USAIDs 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

30

categorizations found in the framework. This follows Rankins (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 neoliberalisms 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.

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

30

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 research 21 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.

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. 459-487, 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. []

30

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 socio-culturally 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 anti-Communist
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 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 Afghanistans 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 Afghanistans proxy war. This paper eschews such
optimistic geopolitical assessments. It is better to hold a sceptical vision of
Afghanistans 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.

30

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 Pakistans 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 worlds 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 Gormans conclusion (Gorman, 1993: 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,

30

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 donors 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 povertywealth 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
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.

30

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 representatives 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.

30

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. 210223.
Our analysis of panel data from 1960 to 1997 indicates that several aid allocation
criteriadevelopment concerns, commercial importance, strategic importance, and
democratizationplay 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
selectivityless 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 cycleand in the US it apparently doesthe 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.

30

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.
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 Nixons 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 legitimacyis necessarily eroded. Equally, the ability to commit credibly to

30

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 Banks 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 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.

30

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 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. 1731.

30

State-buildingthe creation of new governmental institutions and the strengthening

of existing onesis a crucial issue for the world community today. Weak or failed
states are close to the root of many of the worlds most serious problems, from
poverty and AIDS to drug trafficking and terrorism. While we know a lot about statebuilding, 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 resources were there, the institutional
capacity to treat the disease is lacking in most countries in sub-Saharan 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

30

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 peoples ideas really matters
for policy. To many economists, and to political scientists captivated by their modes
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

30

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 peoples conceptions of their
identities, evoking deep emotions and loyalties. The worlds 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 worlds 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 peoples 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
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

30

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 longterm 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 earths 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 Ikenberrys 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

30

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 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 mens 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 Webers metaphor, but also by
obscuring the other tracks form the agents 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

30

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 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.

30

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 1950s,
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.
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 Europes 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 ones own resources for the benefit of another

30

country is a humanitarian one. Helping someone poorer that oneself has always
appealed to mans 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 1950s. China,
too, had been plundered by the imperialists including Czarist Russia. As a
consequence, the Russian made a sincere effort in the early 1950s 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 self-interest. 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 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-1950s, 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

30

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 Freis government in Chile at the same time that Fidel Castro
was calling for a revolt in the country. Castros 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 others 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 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? Russias efforts in Eastern Europe left those

30

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 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

30

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 1950s and 1960s.
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 Mossadeghs 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-Asian-Latin 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 Russias

30

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.
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, Russias inability to solve its own agricultural problems generates a
skepticism with regard to Russias agricultural aid programs. Russias 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.

30

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
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, Skou Tour,
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

30

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 Russias
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 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?

30

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 couldnt 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 1960s 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 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 time-

30

consuming 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 Americansponsored 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 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 Unions.
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

30

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 countrys 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 countrys 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 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

30

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
1950s and early 1960s. Then acceptance of aid from a particular donor often
implied strict adherence to the donors 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

Australias 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 middleincome 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

30

empirical results of the per capita aid equations provide some support for the view
that Australian bilateral aid discriminates against more populous countries.
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 Australias Aid to Indonesia, in Journal of Developing
Areas, Vol. 33, No. 3, pp. 37994.
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 timeseries 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 Australias 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 Australias aid to Indonesia explains the recipient
need concerns.

30

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
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 worlds largest
donors of foreign aid, have altered their policies toward the countries in the AsiaPacific 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, Japans 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. Japans aid policies have indeed moved
beyond geo-economics; Japans 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 administrations 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

30

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.
Tokyos 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 adoptthe 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 Japans largest aid recipient in the world. As to the future,
there is no evidence that the so-called bursting of Japans 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 Japans. But either Japan is wasting
its money or the U.S. is wasting its influence in one of the worlds 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

30

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.
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.

30

Griffin, Keith (1991), Foreign Aid After the Cold War, in Development
and Change, Vol. 22, No. 4, pp. 64585.
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 skillsare 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 socio-economic 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 Trumans 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
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

30

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
Kennedys 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
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.

30

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 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

30

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 neoimperialism 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.

30

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.
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 policymaking. 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

30

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.

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 lessrealistic 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

30

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 actors (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 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.

30

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 military-trade
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 crisis-driven 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, 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 Duvaliers 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

30

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 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

30

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 policymaking 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
Somozas reign? How did these exiles, many of whom were officers in Somozas
National Guard, support the Chamorro opposition then? Since they were clearly coopted 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 termed aid. Otherwise, the support should be

30

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 UScreated 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),

30

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.
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

30

reality, to arbitrary across-the-board cuts for the abstract objective of a balanced

budget is both inefficient, and nave. 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 GR-H, also diminish time available for debate on regions and countries that do not
have current hotspot status.
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 illinformed 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
recipients 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

30

Taiwan was administered outside the budget by semi-autonomous 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 policymaking thus lacks coherence. Operating in piecemeal fashion, this permits the most
powerful actors in the executive branch to exercise primary control. AID has the
least influence on practically every issue, meaning that despite AIDs 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 Committees-contractor lobbies and softer
perspectives exercised by weaker actors such as AID and State. Agency positions on
aid cannot always be predicted. But AIDs 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.

30

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, Stalins 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 Chinas leader had anticipated. And once the Stalinist model was fully
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. Yugoslavias relations with the
USSR would certainly have been smoother if Tito had been willing, like other Eastern
European leaders, to tailor his policies to Stalins wishes instead of his theories. The
idea of moving toward socialism and acceptance of Stalins definition of socialism
motivated him far more than Stalins 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

30

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 countrys 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 longlasting 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. 375398.
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 nonexistent? 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 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

30

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 third-generation 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. 54770.

30

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 cross-country 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
aidpolicy interaction term. We therefore believe to have substantiated that it is
premature to rely on policy indexes, such as the one proposed by BurnsideDollar,
in the allocation of aid.
We also note that empirical conclusions about aid effectiveness, based on crosscountry 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
investmentgrowth processes are required before we can derive satisfactory
empirical specifications and formulate useful testable hypotheses.

Harris, Stuart (1982), Australias 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

30

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 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 Australias previous
frequent uncritical acceptance of Western attitudes, often leading in rejecting Third
World proposals without offering constructive alternatives. Yet, although Australias
stated political attitudes may now be constructive, responses in practice on
economic issues remain unhelpful. Although Australias 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 Australias policies nor, with the deterioration in the post-war
international co-operative system, and the Wests inward-looking attitudes, do the
chances of outward-looking approaches globally seem high. Moreover, outwardlooking 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, Australias 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 Worlds 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

30

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 Wests 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
Australias 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 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-toface 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 Trumans 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.

30

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 Aristotles 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 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 recipients 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

30

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 doctormoral
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.
455467, Elsevier.
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.

30

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 Chinas 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 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 countrys 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,

30

we used a quantitative model to estimate the effects of different factors that

determine the level of a countrys relative ODA. This analysis shows direct
relationships among ODA as a proportion of GNI and a countrys 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 countrys expenditure on foreign assistance increases as
it becomes more prominent within the global economy, and as the countrys
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 countrys
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 Chinas 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 countrys 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, Chinas political leaders
should correspondingly become more concerned about similar matters within the
wider international arena.

30

Chinas 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 Chinas level of openness to the rest
of the world and its rate of economic expansion, the international environment
might degrade during the process of Chinas 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 Chinas
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

30

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 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 Knacks (2001) regressions
of governance change against aid, we find that lagging aid reverses Knacks result
(see Appendix B). With regard to aids 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

30

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 Dollars 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 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 aids 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

30

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 Dollars aidpolicy interaction term disappears with the updating of Burnside and Dollars
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 Subramanians 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 studiessuch
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 aidwas just starting to have a sizeable positive impact
on growth rates.34
Nevertheless, the results reported in this paper are not in entire disagreement with
the main thrust of Burnside and Dollars 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

30

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 preferencedependent countries vis--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 worlds
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 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 donorrecipient co-operation 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.

30

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 selfinterested, 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 states 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 donors broader foreign
policies. The direction and assigned functions of each donors aid flows were also
examined along with their performance in relation to the ODA regimes qualitative
standards.
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

30

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 worlds rich and poor, the
alleviation of short-term suffering within LDCs, and the benefits derived from longterm economic, social, and political development. Within the ODA regimes, aid flows
have been commonly characterized as a moral obligation of the worlds 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. Frances 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 OECDs 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

30

the ODA regime in general, which continued to emphasize more immediate

responses to basic human needs as the essential imperative of development aid.
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 Japans 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

30

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.
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 by-product of the concentration of U.S. assistance to
Egypt and Israel. The security emphasis, consistent with the nations 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. Frances 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 countrys 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

30

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--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.
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 post-World 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 states 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

30

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 longrange 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 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 Japans 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

30

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 war-prone, 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 economic policy of
individual country is affected both by the international economic structure and by
the states 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 longterm objectives of nation-states and must be considered in any comprehensive

30

effort to understand comparative foreign-policy behavior (see Walker, 1987; and

Wish, 1987).
Appling Holstis 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 Frances 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 Frances 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, Japans 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. Japans 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 Japans previous imperial ambitions in East Asia, but
it remained an explicit goal of Japans leadership into the 1990s and found
expression in the interrelationships between Japanese ODA flows, trade ties, and
patterns of overseas private investment.
Swedens 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 countrys 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 Swedens
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:
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

30

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 states 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
Holstis 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 states 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 states 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 states 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 systems
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

30

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
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 hegemonicstability theorists, the erosion of U.S. hegemony has not been accompanied by the
breakdown of most transnational economic regimes. Many middle-income 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 worlds 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,

30

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 support for many Pacific states that
were considered strategically important in the face of perceived internal challenges.
Japans 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 countrys
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

30

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.
The prevalence of domestic politics in the U.S. ODA program was in large part a byproduct 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 foreignpolicy interests. As Orr noted, There exists a greater degree of delegation of
authority by the [Japanese] legislative branch to the administrative branch. Career

30

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 countrys conflictive political culture. This discord existed to a lesser
degree in the area of foreign policy, however; a general consensus existed on
Frances 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 foreign policy, including the
distribution of development assistance. The French legislature, though formally
empowered to approve the presidents specific policy initiatives, generally deferred
to the chief executive as the guarantor of French national interests.
In this respect, Frances 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 countrys 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 countrys 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

30

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 countrys 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 Swedens 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.
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 longstanding disputes over aid quality and other issues remain unresolved. These
tensions will be explored in the final chapter, along with the future prospects of

30

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 Wars 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 UNs
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 worlds 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 Wars 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 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.

30

Thus, the emphasis of this anthology has been on the shifting logic of developmentaid 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 Clintons 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

30

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 coordination. The United State, though the worlds 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 Christophers 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 Japans 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, Japans 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 crosspressures 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 EUs 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 long-term
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,

30

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 well-documented 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 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
Summits concluding manifesto, Agenda 21, were arguably salient at the global
level but difficult to prioritize domestically in the context of more tangible and shortterm concerns. Given that all twenty-one members of the OECDs 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

30

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 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 post-Cold War
period. But the aid relationships 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
Yeltsins 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 worlds 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 state-driven, 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.

30

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 sub-Saharan 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 shortterm 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 post-Cold War era, now
the era of the anticommunist dictator is behind us.
In general, we have witnessed a paradoxical pattern among recipients of foreign
assistance in the post-Cold War period. Foreign aid has increasingly been directed
toward more affluent LDCs and middle-income 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, export-led industrial expansion. It is axiomatic that rapid
industrialization and urbanization provide the best hope for curbing global

30

population growth, which has emerged as the most urgent problem facing
humankind. But what are the costs of this strategy?
The worlds 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 todays 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 Wars 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 rates have varied widely even
among states at similar levels of development (Kegley and Wittkopf, 1995: 301305). 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, So 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
worlds population in the mid-1990s, the United States accounted for approximately
25 percent of annual world oil consumption (Wald, 1990). As other states

30

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 PRCs
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 countrys 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 Chinas 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 worlds 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 watertreatment 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 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 worlds
most affluent states.

30

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 UNs 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 UN-sponsored 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 increasingly evident as

30

donors exposed
experience.66

their

conditionality

programmes

to

the

test

of

practical

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 regimes
qualitative rankings. The intimate relationship between US strategic self-interests
and its aid programme was apparent to other donors and recipients alike, leaving a
legacy of distrust that endured long after the Soviet Unions 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 worlds poorest
areas is to be truly sustainable, so should be the financial assistance provided by
the worlds 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

30

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 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 selfinterests 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 aids 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.

30

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.
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 longterm 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

30

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 postcommunist 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 50-odd 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 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.

30

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.
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 subfields 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:

30

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.

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

30

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.
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

30

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 crossnational 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
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

30

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

30

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 Passmans ad hoc issue coalition was based within his Foreign
Operations Appropriations Subcommittee, in which he was able to get every
member, 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 bills 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 consensusbuilding 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 fellowmember 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

30

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 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. 631641.
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

30

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 selfhelp 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-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 middle-income 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

30

the middle-income 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 grantloan 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 grantloan mix.
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 grantloan 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 grantloan 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.

30

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. 5974, 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 aid-giving, 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 selfinterest 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, 19831997, 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 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--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

30

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 IMFs
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.

Krre, 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 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

30

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, nonconvertible 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 Partys 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 Partys attitude as a result of the
Partys links with industry. No doubt such links exist, but to attribute the Partys
policies to them only would be over-simplistic. 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 Governments 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 the probably failure of

30

the project, with possibly negative consequences for Swedens 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 Swedishoriented appropriations. With regard to the country-programming 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 cooperation 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 Swedens 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 worlds 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

30

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 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 director-general 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 day-to-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 partys 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

30

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.
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 Governments 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 cooperation 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 knowhow 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

30

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 non-project 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.
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.

30

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.
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

30

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 others
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.
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

30

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-foragreement 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 administrations 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.

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.

30

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.

30

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.
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 regions
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 countrys level of funding
increases with its populationup 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.

30

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.

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

30

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 East-West 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 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.
Its 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 assistancethe entire
foreign operations billas 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

30

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 countrys ability to
access and use all its available resources for economic growthparticularly those
that relate to integration in the global economythen 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
transferswithout the environment of an effective political economywill generate
poor results. Our policy development and our advocacy must place an emphasis on
those policies that will generate successnot 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 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 2015much 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.

30

That should result from a reflection on our need to break out of the trap of doeverything development.
These messages of trade and focus are not ones that weand many in the
development or advocacy communitiesare 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 development-assistance 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 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.

30

Integrative tendencies among Third World member nations form the basis of both
the Third Worlds emergence and its collective decision-making. Concerning the
latter issue, three characteristics should be emphasized:
1. The Third Worlds 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 decision-making 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.

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.

30

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 Councils relevance in world affairs.

Lai, Brian (2003), Examining the Goals of U.S. Foreign Assistance in the
Post-Cold War Period, 1991-1996, 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

30

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.
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.
Aids Origins and Evolution

30

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.
Looking back, there is a political logic to the evolution of aids 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 aids 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 aids 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
aids purposes is underlined by the experience of those countries Japan and

30

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 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-for-development 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

30

doubts about the effectiveness of aid in spurring development, especially in subSaharan 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 worlds 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-for-development 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 books 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
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 peacemaking, 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

30

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 Japans 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 Japans 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 Japans 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 Frances 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 developmentoriented 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 Franafrique. Whether reforms in the organization of
French aid highly fragmented like that of Japan will lead to a more 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.

30

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 Denmarks aid.
The governments 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
countrys 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 Denmarks 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.
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

30

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 center-right 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 aids 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 aids 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 aids purposes. The Folketing often debated aid issues and
was long a vehicle for education and consensus-building 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.

30

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, aids 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 aids development purpose is prominent, but it is not
usually adequate to ensure that development is aids 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 aids purposes.
Development has gradually become a more prominent purpose in German aid as
the Ministry of Development has increasingly gained responsibilities over Germanys
aid programs. The fragmented aid organizations in France and Japan have
contributed to the weak development purpose in those governments 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 aids 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 Denmarks
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 aids purposes. If domestic political forces are so

30

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 aids 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 developmentoriented NGOs that, in turn, become 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 aids 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 aids impact on growth have
often found aid to be ineffective. Yet one of the lessons from this study is that aids
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-for-development norm, aids 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

30

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 aids impact in the future continue to apply development
criteria indiscriminately to all aid rather than distinguish among aids different
purposes and if future evaluations find that aids 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 aids purposes into account in making our evaluations, and we are
not there yet.
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 Bushs 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 aids purposes and policies, in its
organization, and in its overall status in U.S. foreign policy. If transformation in

30

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 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

30

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 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

30

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 Presidents 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 worlds 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 the worlds 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

30

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 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.

30

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 aids 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, Ral 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

30

International and 1.9 per cent through the Industrial Cooperation program in 1984.
And it goes predominantly to the 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. 112). 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
everyones 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

30

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 programs 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 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-togovernment 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.

30

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
self-serving 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.
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

30

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 Canadas 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-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 Canadas 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
Canadas tying policy have already been discussed. That Canada should be more

30

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
Canadas 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 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

30

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 OECDs 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 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

30

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 (Hafner-Burton, 2005).31

30

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 strategicbased 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 commissions 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. 399412.
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

30

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.

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 Americas 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 nations long-term 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 countrys 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

30

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 SpanishAmerican 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 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, Schanbergs
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

30

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 can serve to
correct the characteristic blind spots of the other and to engage in more openminded 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 MacalisterSmith, 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

30

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 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 Ethiopias 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.

30

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 19491989, 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 (paretoimproving) 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 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

30

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 19491989, 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.

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.

30

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
worlds 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 oneshot 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.

30

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 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 governments 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 WTOs 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

30

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.
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.

30

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 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.

30

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 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

30

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.
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,

30

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 aiddispensing 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 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

30

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

30

whose voice is heard only in local affairs 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 administrations
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

30

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.
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 a change, plus cest la
mme 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.

30

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 197172 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.
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 countrys 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 Australias bilateral aid eligibility/amount decisionmaking 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.

30

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.
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

30

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);

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 donors 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.

30

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
aid-trade relationship. We then presented some evidence on the nature of these
relations among Pacific-Rim 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 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 inter-recipient aid allocation. The overall focus of the paper is on the
relevance of these issues for poverty-efficient aid, defined as a pattern of inter-

30

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.

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

30

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 1961-70 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 foreign policy utility is valid. However, this
interpretation must be modified to accommodate a quasi-humanitarian component.

McKinlay, Robert D. (1979), "The Aid Relationship: A Foreign Policy Model

and Interpretation of the Distributions of Official Bilateral Economic Aid of
the United States, the United Kingdom, France, and Germany, 1960-1970,"
in Comparative Political Studies, Vol. 11, No. 4, pp. 411-463.
While the humanitarian interpretation of aid transfers provides a very clear
explanation of the aid relationship, it is now generally accepted that this
interpretation is inaccurate. The criticisms leveled at the humanitarian
interpretation consistently suggest that aid transfers are premised more on the
foreign policy interests of the donor than on the welfare or humanitarian needs of
the recipient. In general, however, the foreign policy view is stated only negatively
that is to say, in the form of a critique and rejection of the humanitarian view. We
have tried to establish a more positive and systematic foreign policy model on the
basis of the proposition that aid provides the utilities of commitment and
dependence which a donor can employ to promote and protect a variety of
interests. If this model and the test procedure are accepted, then it should now be
clear that we have a reasonable, albeit rather low-level, explanation of bilateral aid
transfers.

30

The obvious point of reference from which to make a higher-level evaluation of our
findings lies in the literature on imperialism. 48 Unfortunately, it is not easy to
aggregate our findings with this literature. In the first place, the analysis of aid
comprises only one segment of imperialism, and, furthermore, our study, covering
only the distribution, neglects the impact of aid. Secondly, there is no such thing as
the theory of imperialism. Quite apart from its size and diversity, the literature on
imperialism is frequently polemical, written at a very gross level of aggregation and
characterized all too frequently by untestable proposition. It is quite simply beyond
us to use our findings to test or evaluate the multitude of so-called theories of
imperialism. Rather, we shall indicate the approach to the analysis of imperialism
that we find most persuasive, and then summarize our findings in terms of this
approach.
Cohens work (1974) represents, in our opinion, the most productive approach to
the analysis of imperialism. Imperialism is defined quite simply and unambiguously
as any relationship of effective domination or control, political or economic, direct
or indirect, of one nation over another. The attraction of this definition is that it
begs no questions and contains no overt or covert assumptions. The forms and
forces of imperialism, as Cohen points out, should be divorced from the definition of
imperialism, and treated as subjects for empirical inquiry.
Moving beyond the purely conceptual stage, we agree with Cohen that the taproot
or explanation of imperialism lies not so much in the domestic structure of
advanced industrial states as in the structure of the international system. 49 (In
fairness to Cohen, we should point out that from now on we are not paraphrasing
his work). In particular, the international system is characterized by a high level of
overt and unmoderated competition. This competition stems from the absence of
any basic normative order and the lack of complementary or collective goal
formulation and implementation. The presence of substantial asymmetries within
this environment of unmoderated competition encourages dominant actors to use
control strategies to promote their interests and thereby maintain dominance.
In order to amplify this characterization of the taproot of imperialism, we can use
the distinction between a social system and a system consisting of social
interactions. Whereas the former consists of a set of components which interact
within a basic normative order to pursue a set of complementary or collective goals,
the latter consists simply of interactions which take place without any pronounced
normative order or collective goal formation.
The advanced industrial states are unequivocally highly developed social systems.
Each component subsystem manifests a large number of formal and informal rules,
invariably reinforced by formal or informal sanctions. Furthermore, there are rules
and sanctions governing the interactions of all the component subsystems. These
rules and sanctions create the basic normative order. In addition, although all the
component subsystems do not display identical goals, there is commonly a high
level of complementarity. 50 What is most critical, however, in this context is the
growth in the roles and capabilities of the central government. This organization has
come to assume responsibility for an enormous range of collective goals, and in the
process has become the grand orchestrator of modern industrial societies. 51 Thus,
while competition within industrial societies is still very prevalent, the combination

30

of rules, sanctions, and collective goals serves to moderate this competition, and
provide a basic order for domestic interactions.
In contrast, the international system should be seen either as a system comprising
social interactions or at least an embryonic social system. Though formal and
informal rules, at both official and private levels, do exist, they are not nearly as
extensive. Sanctions to reinforce these rules, particularly at the formal level, are
even less well developed. Collective goal formulation and implementation is
virtually non-existent. The most highly developed manifestations of rules, sanctions
and collective goals are found in the activities of intergovernmental organizations
(IGOs). Without disputing the important innovations of these organizations as far as
international rule-making and collective goal formation are concerned, a number of
important caveats must be noted: IGOs possess limited resources and few
sanctions. Their resources are tied to nation state contributions, and their outputs
reflect quite closely the international hierarchy. Many IGOs simply reflect and
thereby reinforce prevalent international cleavages and tensions. A number of
important issues or areas of interaction (such as nontariff barriers or the Eurodollar
market) are outside their sphere of jurisdiction. Finally, major states often bypass
these organizations. Thus, not only is it abundantly clear that IGOs are very far
removed from supranational authorities, but also we would argue that, by virtue of
rejecting and reinforcing the international hierarchy, they can actually exacerbate
competition.
While the growth of interaction and interdependence within the nation state has
been accompanied by a concomitant expansion of integrative and regulatory
mechanisms, this has not been the case in the international system. As a
consequence, the propensity for international actors to use domination strategies to
control their environment is much more pronounced. This propensity to domination
is further encouraged and facilitated by colossal asymmetries.
We can distinguish two forms of imperialism, which we label political and economic,
in terms of the rationales underlying attempts to maintain dominance. The political
form has its origin in competition stimulated by preoccupations with national
security, and consequently control and influence strategies are employed by
dominant states to enhance their security. The economic form derives from
competition stemming from issues such as trade and investment. Consequently,
control and influence strategies are used in the pursuit of material well-being.
Our proposition that aid provides the donor with commitment and dependence
utilities is compatible with the imperialism assertion that dominant states employ
control and influence strategies. Our proposition that donor interests underlie and
structure the distributions of commitment and dependence is compatible with the
imperialism argument that, in an environment of essentially unmoderated
competition, states employ control and influence strategies in order to protect their
interests and thereby preserve their dominance. Furthermore, the interests profiled
by our model accommodate both the political and economic interpretations.
We find strong confirmation for the foreign policy interpretation for each of the
donors. There is a further similarity among the donors in that, although different
interests underlie the distributions of commitment and dependence of any donor,
these interests tend to be complementary. Finally, while there are changes in the

30

interests structuring each donors distributions of commitment and dependence,

there is generally a high degree of consistency in the critical interests over the
period 1960-1970.
There are, however, important difference among the donors in how systematically
and comprehensively developed the foreign policy basis of their aid relationship is,
and in the particular interests which are promoted.
The foreign policy basis is most highly developed in the aid relationships of America
and France. On account of the size of its aid programme, America achieves high
levels of commitment and dependence. Furthermore, a clear set of complementary
interests provides a good explanation of its distributions of commitment and
dependence. The much smaller aid programmes of the European donors mean that
none can rival the global scope and scale of the American programme. By
concentrating its aid in a relatively small number of countries, France can equal,
and, in some respects, even surpass America in a more restricted sphere. This is
true, however, only for the French aid relationship with its former colonies. Although
the extension of French aid to nonformer colonies is certainly compatible with the
foreign policy interpretation, the low levels of dependence established in these
recipients indicate that the foreign policy basis of this aid relationship is not highly
developed.
These two donors, however, pursue quite different sets of interests. The centrality of
power political and security interests in the American aid programme reflects clearly
the global superpower security role of America, and makes this aid relationship
directly consonant with the political interpretation of imperialism. The salience of
trading interests in the French aid programme makes it more compatible with the
economic interpretation. There are also aspects of the political interpretation
present in the importance attached to the maintenance of a sphere of influence in
the context of the former colonies. However, the correspondence between Frances
trading interests and its sphere of influence perhaps make the significance of the
sphere of influence more politicoeconomic than purely political.
The foreign policy basis, though certainly very clear, is less highly developed in the
British and German aid relationships. While neither has an aid programme modeled
primarily on humanitarian considerations, there is a quasi-humanitarian component
in both programmes. Furthermore, neither follows the French strategy of
concentrating aid in a relatively small number of recipients. Consequently, neither
can match the global levels of commitment and dependence established by
America or the more restricted levels established by France. Britain, however, does
allocate relatively more aid to smaller countries, and consequently achieves
comparatively high levels of commitment and dependence. Furthermore, we can
provide good explanations of the distributions of these distributions. On the other
hand, the comparatively low levels of German aid dependence and the relatively
poor explanations of the distributions of relative commitment and dependence lead
us to conclude that Germany does not manipulate its aid allocations so as to
maximize the benefit it could gain from its aid programme.
The centrality of trading interests indicates a basic similarity in the German and
French aid relationships. However, the German aid relationship does not incorporate
a sphere of influence dimension, and also its foreign policy basis is considerably less

30

developed than that of France. Consequently, Germanys aid programme more

weakly reflects the economic interpretation of imperialism. Britain has parallels with
both the American and French aid relationship. Like France, Britain pursues the
maintenance of a sphere of influence, but, unlike France, the rationale for this
seems to be political rather than economic. Thus, the British sphere of influence
does not correspond as closely with British gross trading interests. In this respect,
Britain, like America, conforms more closely to the political interpretation of
imperialism. The critical difference between Britain and America is that while the
former in some respects does attempt to play a global role, its interests are
considerably more parochial than American ones. Thus, former colonial ties, though
not all-embracing, are still very prevalent, while security considerations more
closely reflect past associations than they do the more current preoccupation with
the containment of communism.
While there are important differences in the types of interest pursued and in how
systematically and comprehensively the foreign policy orientations are developed,
the aid relationships of each of the four major Western donors are compatible with
the foreign policy interpretations of aid. Thus, in rather more general terms, the
major Western bilateral aid programmes can be seen as dimensions of different
manifestations of contemporary imperialism.

McKinlay, Robert D. and Little, Richard (1977), A Foreign Policy Model of

US Bilateral Aid Allocation, in World Politics, Vol. 30, No. 1, pp. 58-86.
The rationale for this paper is based on the proposition that although the foreign
policy view of aid is now dominant, it has not been developed systematically.
Initially we establish an analytic foreign policy model of aid allocation. The model
suggests that the provision of aid enables the donor to form relations of
commitment and dependency. These in turn afford foreign policy utilities that can be
used by the donor to promote and protect certain of its interests.
The research objective is to identify the substantive interests pursued by the United
States through its aid program over the period 1960- I970. Although there is some
variation in the specific interests associated with commitment and dependency, our
findings indicate that power-political and security concerns are the central interests
supported by and controlled through the U.S. aid program. There is, therefore, an
underlying complementarity between commitment and dependency in the sense
that both are used to pursue the same sets of interests. Furthermore, we find that,
during the period examined, there is a high degree of consistency and stability in
the interests that are pursued.
The foreign policy model that provides the most satisfactory explanation of the U.S.
aid program conforms to a general view of international relations characterized by
the political interpretation of imperialism. Imperialism assumes that there is
inequality among states, and that the dominant states employ strategies of control
and influence to preserve their dominance. There are, however, various
interpretations of imperialism that are distinguished by the rationale underlying and
explaining the attempts to maintain dominance. The political interpretation
characterizes the international system in terms of competing nation-states

30

operating in an anarchic environment. The combination of competition and anarchy

encourages a preoccupation with national security. The strategies of control and
influence that are associated with imperialism can be used by states to enhance
their security. Our proposition that the provision of aid affords the utilities
associated with commitment and dependency permits aid to be seen as a
dimension of imperialism. Our substantive finding that power-political and security
interests structure the pattern of commitment and dependency established through
U.S. aid is consonant with an explanation of the U.S. aid program in terms of the
political interpretation of imperial- ism.22

McKinlay, Robert D. and Little, Richard (1978a), The French Aid

Relationship: A Foreign Policy Model of the Distribution of French Bilateral
Aid: 1964-1970, in Development and Change, Vol. 9, No. 3, pp. 459-78.
The foreign policy critique of the humanitarian interpretation of aid (namely, that
aid is more closely related to the interests of the donor than the needs of the
recipient) has not been developed more positively into a clear and systematic
formulation of the aid relationship. We have attempted to provide a more positive
and satisfactory alternative by establishing an explicit foreign policy model. Aid is
conceptualized as a form of commitment and dependency, and the rationale
underlying its distribution is seen in terms of the attempt by the donor to promote
and protect a variety of its interests through the utilities inherent in commitment
and dependency. We have suggested that we can test our foreign policy model and
interpretation of aid in the case of France by examining whether clear and explicit
interests underlie and explain its aid distribution.
The appearance of a clear set of interests, which can explain well the distributions
of commitment and dependency established through French aid, suggest strong
confirmation of the foreign policy interpretation of the French aid relationship. More
precisely, our findings lead to the conclusion that France maintains two distinct aid
relations. While both are compatible with the general foreign policy interpretation,
the aid relationship with the former colonies is more stringently foreign policy
oriented. The legacies of the assimilation and association colonial policies are still
very apparent in that former colonies are selected as recipients precisely because
they constitute a distinct sphere of influence. The two major themes, characterizing
the allocation process in the former colonies, are the promotion of French trade and
the maintenance of a sphere of influence. Similar considerations underlie the French
aid relationship with its non-colonial recipients. The diversification of French trade
has been closely followed by the diversification of its aid, so that by 1970 France
has incorporated virtually all its major trading partners into its aid system.
Furthermore, an analysis of the allocation process illustrates the salience of French
overseas economic interests. However, the foreign policy basis of this relationship
is not as highly developed. The non-colonial recipients do not constitute a sphere of
influence, and the level of dependency is so low that we can interpret aid only in
terms of commitment.
This evaluation of the French aid relationship can be placed in perspective by
comparing it with our findings on the nature of the aid relationship of the US and
UK.23 We have found that our general foreign policy interpretation of aid provides a

30

good explanation
differences appear
the foreign policy
interests promoted

of the aid relationship of each of these donors. However,

among the donors in how systematically and comprehensively
basis of their relationship is developed, and in the particular
and protected through aid.

In terms of the systematic development of the foreign policy basis of its aid
programme, France in some extent rivals the US and certainly surpasses the UK.
Simply by virtue of the size of its aid programme the US can achieve much higher
levels of commitment and dependency than any European donor. 24 France
compensates to some extent, however, by having a relatively larger aid programme
than the US and by concentrating its aid on a much smaller number of recipients. 25
Thus, while France cannot rival the global scope and scale of the US programme, it
can equal the US in a more restricted sphere. In contrast, the UK does not follow
Frances compensatory strategy. The relative size of the UK aid programme more
closely resembles that of the US than France, while the number of UK recipients
shows that the UK has a global commitment which again is closer to the US than
France.26 Thus, while France certainly cannot equal the US, by pursuing a
compensatory strategy it manages to maintain a well developed foreign policy basis
and, unlike the UK, avoids being a pale imitation of the US.
When we examine the major interests promoted and protected by the aid
programmes of the three donors, the independence and well articulated foreign
policy basis of the French aid relationship is once again apparent. While France and
the US are similar in having a well developed foreign policy orientation, they pursue
quite different types of interest. Power political and security considerations,
reflecting very clearly the global superpower security role of the US, are the central
interests underlying the distributions of US aid commitment and dependency.
France demonstrates none of these concerns. While the maintenance of a sphere of
influence has some parallel with the security concerns of the US, the security
considerations of the US are strongly influenced by the current preoccupation with
the containment of communism, whereas the French security concerns are not only
less salient but also more parochial and more closely related to historic ties.
Furthermore, the predominant influence of overseas economic interests in the case
of France has no counterpart in the US context. Superficially, there appears to be
some resemblance between French and British interests. Britain is certainly
preoccupied with a sphere of influence which again is strongly reliant on historic
associations. However, the UK aid relationship has signs of a quasi-humanitarian
influence which is not apparent in the French relationship; the UK also manifests a
more extensive and general antagonism to communism, albeit not as pronounced
as in the case of the US; the UKs sphere of influence is not nearly as clearly defined
as Frances; and, finally, the UK appears to be interested solely in a sphere of
influence per se, and, unlike France, not in maximizing any particular interests
within this sphere.
Thus, all three major Western donors have an aid relationship which is generally
consonant with a foreign policy interpretation. In contrast to the US, the French aid
relationship reflects its status as a major as opposed to a superpower. In contrast to
the UK, the French aid relationship reflects a major power status characterized by a
more marked degree of independence and a better articulated set of interests.

30

McKinlay, Robert D. and Little, Richard (1978b), A Foreign Policy Model of

the Distribution of British Bilateral Aid: 1960-70, in British Journal of
Political Science, Vol. 8, No. 3, pp. 313-322.
Hitherto the foreign-policy critique of the humanitarian interpretation of aid (that aid
is more closely related to the interests of the donor than the needs of the recipients)
has not been developed into a clear and systematic formulation of the aid
relationship. We have attempted to provide a more positive and satisfactory
alternative to the humanitarian interpretation by establishing an explicit foreignpolicy model. Aid is conceptualized as a form of both commitment and dependency
and the rationale underlying the distribution of aid is seen as an attempt by the
donor to promote and protect a variety of its interests through the advantages
inherent in commitment and dependency. We have suggested that we can test our
foreign-policy interpretation of aid in the case of the United Kingdom by examining
whether clear and explicit interests underlie and explain its distribution of aid.
The appearance of a clear set of interests which can adequately explain the
distribution of commitment and dependency established through aid suggests
strong confirmation of the foreign-policy interpretation. The most important factor
responsible for dictating the structure of commitment and dependency is the
attempt on the part of Britain to promote and protect a sphere of influence. We
have argued that Britains interest in this is essentially political rather than
economic. Furthermore while the maintenance of the sphere of influence is not
entirely divorced from Britains current or more long-term interests, it is clear that
paternalistic and historical interests play an important and persistent role.
While the major preoccupation is maintenance of a sphere of influence, other
interests do contribute to the pattern of aid disbursed by the United Kingdom: there
is a selective antagonism to Communism, a preference for multi-party democratic
regimes, and, in the case of absolute commitment, a humanitarian influence. While
the pattern of commitment and dependency differs, there is a basic consistency in
the interests served, and in the persistence of these interests over time.
This analysis of the U.K.s allocation of foreign aid can be placed in perspective by
comparing it with official governmental statements on foreign aid policy, and with
our findings on the policies pursued by the USA and France.
The 1958 Montreal Commonwealth Economic Conference introduced a series of
major changes in the British government's conception of aid. By 1964 the United
Kingdom had clearly accepted a commitment to provide economic aid to
independent countries, the volume of aid had been substantially expanded, and the
number of recipients had grown. Despite these innovations, the British government
did not take any major policy initiatives. 20 However, the arrival of the Labour
Government in 1964 seemed to provide an opportunity. Before 1964 the Labour
party was committed to a humanitarian, large-scale aid programme, and this was
reiterated, albeit in a more cautious form, in its 1964 election manifesto. The new
Labour Government acted quickly, establishing the Ministry of Overseas
Development (ODM) and giving cabinet status to the minister. 21 In 1965, the ODM
produced its first White Paper which declared that the basis of the aid programme
is a moral one. While this statement was tempered by mention of certain long-

30

term British interests, the basis of the aid programme was explicitly defined in
humanitarian terms.
Our foreign-policy interpretation of British aid contrasts sharply with the official
view. Our findings show that the basis of the aid is not a moral one, and reveal no
signs of new policy initiatives or changes, and no major expansion in the volume of
aid. On the contrary, our findings corroborate the general conclusion of other
commentators, who, from a different perspective, have argued that on the whole
Labours record has been discreditable. 22 It is clear that British aid has not evolved
as the result of any explicit or long-term initiative but rather as a consequence of
more immediate and ad hoc considerations of foreign policy. 23
Our analysis of British aid is much more compatible with the results of our study of
American and French aid.24 We have found that our foreign-policy interpretation
provides a good explanation for all three countries. However, differences between
the three do appear: the foreign-policy basis is not as systematically and
comprehensively developed in each case and the particular interests promoted and
protected vary.
In general, the foreign-policy basis of the British aid programme is not as
systematically developed as in the cases of the USA or France. Simply by virtue of
the size of its aid programme the USA can achieve much higher levels of
commitment and dependency than any European donor can. France compensates to
some extent by having a relatively larger aid programme than the USA and by
concentrating its aid among a much smaller number of recipients. Thus, while
France cannot rival the global scope and scale of the American programme, it can
equal and in some respects even surpass the USA in a more restricted sphere. The
United Kingdom, however, does not follow the compensatory strategy of France.
The relative size of the U.K.s aid programme more closely resembles that of the
USA than of France, while the number of the U.K.s recipients shows that it has a
global commitment which again is closer to the USA than to France. As a
consequence, the United Kingdom appears as a paler imitation of the USA rather
than a copy of France, and so does not achieve the levels of commitment and
dependency developed by either one or the other.
The less systematically developed basis of the British aid programme becomes even
more apparent when we examine the different types of interest pursued by these
three donors. The central interests underlying the distribution of aid by the USA are
those of power politics and security. These reflect very clearly its superpower
security role. The central interests underlying the French aid programme are the
maintenance of a sphere of influence and the promotion of its trade. The United
Kingdom has parallels with both these donors. Like France, the United Kingdom has
a preoccupation with a sphere of influence. However, the sphere of influence is not
as clearly defined, and the U.K.s interest in its sphere is essentially political while
Frances interests are both political and economic. The political basis of the U.K.s
aid programme has its counterpart in that of the USA but while the United Kingdom
in some respects does try to play a global role, its interests are considerably more
parochial. Thus, former colonial ties, though not all-embracing, are still very
influential, while security considerations reflect historical associations rather than
the explicit concern with the containment of communism that is prevalent in the
USAs programme. Finally, although the U.K.s aid programme is certainly not

30

modelled on humanitarian considerations, it contains a humanitarian component

that is absent from the policy of France or the USA.
Our study of the U.K.s aid programme shows it to be compatible with a foreignpolicy interpretation of aid, and thus clearly at odds with the official view. In this
respect the U.K.s aid policy is similar to that of the USA and France. However, while
there is a consistency and complementarity in the U.K.s distribution of commitment
and dependency, the U.K. does differ from the USA and France in that the foreignpolicy basis is not as explicitly or systematically developed.

McKinlay, Robert D., and Little, Richard (1979), "The U.S. Aid Relationship:
A Test of the Recipient Need and Donor Interest Models," in Political
Studies, Vol. 27, No. 2, pp. 236-50.
Two models of aid allocation, offering alternative interpretations of the aid
relationship have now been examined. The recipient need model, where aid is
distributed in accordance with economic and social welfare needs, supports an
economic assistance interpretation; the donor interest model, where aid is
distributed in accordance with donor interests, supports a foreign policy
interpretation.
Our findings do not support the recipient need model, and therefore, disconfirm a
humanitarian or economic assistance interpretation of the US aid relationship. They
do, however, support the donor interest model and, therefore, confirm a foreign
policy interpretation. Many of the interests associated with a foreign policy
interpretation, however, have little influence on the distribution of US aid. The level
of economic development, the political structure, and the level of overseas
economic involvement have no major direct influence. It is the power political and
security interests of the US which consistently prove to be the central criteria
underlying the distribution of aid over the period 1960-70.
Two general conclusions can be drawn from the findings. The first is that the US
does not appear to distinguish between a commitment and a leverage strategy. The
two strategies coalesce. This situation arises because the US is primarily concerned
with the power criteria of the potential recipients rather than the relationships and
policies which they develop. By concentrating on the ascribed power characteristics
of the recipients, it appears that the US is not simply using aid either to reward and
punish potential recipients, on the one hand, or manipulate their policies, on the
other. The findings are consistent with the view that the potential recipients
compete with each other for US aid and that their success depends upon their
relative power capabilities rather than their willingness to subscribe to a particular
line of policy. States which have developed policies commensurate with US
interests, therefore, are not rewarded on the basis of the degree of their
subservience to the US, but rather on the level of their power capabilities. Similarly,
the willingness of the US to supply aid to states pursuing policies detrimental to US
interests is also determined by the power capabilities of these states. The US,
therefore, appears to use both commitment and leverage strategies, but these are
byproducts of the decision to use power criteria to determine the size of aid
allocation.

30

The second conclusion follows from the first. It is that the importance attached to
power and security interests is consonant with the image of the international
system advanced by the realist school. 17 The image depicts international relations in
terms of competing states acting in an anarchic system. The absence of any central
authorities capable of establishing and maintaining international order engenders a
preoccupation with security. States attempt to enhance their security by developing
and maintaining a favourable balance of power. 18 The significance of a state, from
this perspective, is determined by the level of its power capabilities. Since the
Second World War, the US has been preoccupied with the question of global
security. Our findings suggest that this preoccupation has extended to the area of
aid allocation. In other words, the amount of aid allocated by the US is determined
by the importance of the recipient in the power structure of the international
system. The US, therefore, appears to allocate aid on the basis of a realist view of
international relations.

Meernik, James and Poe, Steven C. (1996), U.S. Foreign Aid in the
Domestic and International Environments, in International Interactions,
Vol. 22, No. 1, pp. 2140.
This study is an initial empirical investigation of domestic and international
environment variables on U.S. foreign aid allocation, from 1947-1990. We
hypothesize that both of these environments affect aggregate aid levels, and are
therefore important to the aid allocation process as contextual factors that influence
the amounts of aid that will be available for allocation among recipient countries.
When we test domestic and international environmental models separately, we find
each performs quite well. However, in our most stringent test of these hypotheses,
in which both international and domestic factors were included, we find that
international variables, on the whole, tend to be more important. Variables
identifying years in which the U.S. was a participant in war, the degree of conflict in
U.S. Soviet relations, and the Marshall plan period are found to have had statistically
significant impacts on aggregate levels of foreign aid once other factors are
controlled. We also find that the domestic factor of economic hardship, which we
measure with a misery index, is associated with fewer funds being devoted to the
aid budget. We close by discussing the implications of these findings to U.S. foreign
aid allocation, and outline some ideas for future research on foreign aid.

Meernik, James, Krueger, Eric L. and Poe, Steven C. (1998), Testing

Models of US Foreign Policy: Foreign Aid During and After the Cold War,
in The Journal of Politics, Vol. 60, No. 1, pp. 63-85, Southern Political
Science Association.
To conclude convincingly that strategic aims are declining in importance and that
ideological goals are gaining prominence will require more data for future years.
Since the Cold War has only just ended and the norms and structures of the new
order are just emerging, it is important to analyze continually the evolution of
American foreign policy goals. Having never been an active participant in a world
bereft of an all-consuming threat, the United States has little experience to draw

30

upon to guide it through an uncertain international environment. Thus, a great deal

of change will still likely emerge in the conduct of U.S. foreign policy. And certainly it
is important also to expand the analysis of foreign policy behavior in this new
environment to other activities, such as the use of military force, the defense
budget, and foreign investment.
Ultimately, we believe that scholars should take the opportunity afforded by the end
of the Cold War to develop models of state behavior and foreign policy that are
more dynamic and comprehensive. We ought to derive measures of changes in the
level of systemic threat and the effect of changes in the international distribution of
power that are more sensitive to predict to what extent states can modify foreign
policy goals. If the international environment has become less threatening, states
may become less concerned with relative gains and more interested in cooperation.
This kind of new world order ought to encourage states to take a long-term,
enlightened self-interest approach to international affairs. It may make possible the
fostering of institutions among states that promote economic development and the
rights of individuals. Certainly if the United States remains a hegemonic power, we
can expect it to try to inculcate these kinds of values (Ikenberry and Kupchan 1990).
Or if, as some argue, the international environment is becoming more unstable
(Huntington 1993; Mearsheimer 1990), we may observe states increasingly
resorting to beggar-thy-neighbor type policies. If such disorder arises (or has already
arisen), states may be pressured to reduce their commitments to ideological goals
and depreciate the value of long-term objectives. While our initial evidence would
indicate this has not been the case yet, we would urge scholars to take into
consideration the changes wrought by the end of the Cold War when developing and
testing models of international relations. We need to take the recent criticism of
international relations and foreign policy analysis (Gaddis 1992-1993; Lebow 1994)
to heart by broadening our horizons and studying change or risk failing to foresee
the next big event.

Menkhaus, Kenneth J. and Kegley, Charles W. Jr. (1988), The Compliant

Foreign Policy of the Dependent State Revisited: Empirical Linkages and
Lessons from the Case of Somalia, in Comparative Political Studies, Vol.
21, No. 3, pp. 315-46.
Studies of the linkage between economic dependence and foreign policy compliance
have been confounded by the difficulties of measuring dependence. Single
indicators of dependence may be inadequate reflections of what appears to be a
multidimensional phenomenon, but the relative potency of these factors has not yet
been weighed. The ability to determine the relative salience of dependence factors
has been limited by the dominant state-centric model employed in prior research,
which examines a single dominant state and the foreign policies of its many
dependencies. This model fails to capture what, in reality, is the norm: that most
peripheral states find themselves involved in dependent relations with two or more
regional and global powers. A dependent state-centric modelone that examines
a single dependent state's foreign policies vis--vis its several dominant states
thus is theoretically warranted, and its application provides an opportunity to
compare the relative salience of different types of dependence across multiple

30

dominant partners. An initial application of this model to the foreign policy of

Somalia toward its dominant states from 1976 to 1980 suggests that export trade
dependence is highly associated with a subordinate state's subsequent foreign
policy behavior, whereas levels of foreign aid and military assistance dependence
are not. In suggesting that weak states may experience different types of
dependencies on different dominant countries and that these diverse relationships
are associated with different kinds of behavioral consequences, this case study
demonstrates the utility of this alternative model for addressing the linkage
between economic dependence and political compliance, and reduces confidence in
existing bargaining-based investigations of the generalized compliance
hypothesis.

Michalak, W. (1995), Foreign Aid and Eastern Europe in the New World
Order, in Tijdscbrift voor Economische en Sociale Geographie, Vol. 86,
No. 3, pp. 260-277.
Aid to Eastern Europe is designed specifically for macro-economic stabilization and
projects in infrastructure, nuclear weapons and nuclear waste disposal,
improvement of the environment, training, transfer of technology and acquisition of
know-how related to the functioning of democratic institutions, market economies
and administrative systems. Most of these aid programmes are conditional upon
adoption of far reaching economic and political reforms. Unfortunately, the donor
countries lack coherent strategy and political will to devote substantial resources to
the goal of stabilization of eastern Europe. Western aid is often considered in
eastern Europe as overly cautious and overdue. Ethnic conflicts, the depth of
economic decline and the sheer size of this region contribute to the confusion and
shortsightedness of aid policies. Western aid is unlikely to make any significant
impact on the process of reforms and stabilization of eastern Europe if it is to
continue unmodified.

Milner, Helen V. and Tingley, Dustin (2010), The Political Economy of US

Foreign Aid: American Legislators and the Domestic Politics of Aid, in
Economics and Politics, Vol. 22, No. 2, pp. 200-232.
Theories developed in the international political economy literature and used
successfully on trade policy can help explain voting on foreign economic aid. Many
have claimed that there is no set of domestic interests that supports foreign aid
(e.g. Lancaster, 2007). Our data show that this is not the case; i.e. it allows us to
reject the null hypothesis that there are no systematic influences on legislators
support for foreign aid. An identifiable and theoretically predictable group of
legislators who support foreign aid exists. Domestic political and economic factors
systematically influence American legislators when they cast their votes on foreign
aid. Furthermore, we show that legislators seem to respond to the diffuse interests
of their constituents, as some models of Congress predict. Legislators appear to
understand the distributional implications of aid and to vote in accord with the
preferences of their constituents, even though they are not organized and lobbying
for such aid. Foreign aid is politicized and others have shown that domestic

30

interests within donor countries affect aid policy (e.g. Alesina and Dollar, 2000;
Dudley and Montmarquette, 1976; Fleck and Kilby, 2006; Irwin, 2000; Therien and
Noel, 2000). Our contribution is to show which domestic groups support and oppose
foreign aid and to provide a theoretical explanation for these voting patterns.

30

We show that two of the most important political economy theories the
HeckscherOhlin and StolperSamuelson theorems have significant explanatory
power for aid votes. On economic aid votes that have domestic distributional
consequences, the StolperSamuelson predictions provide a strong explanation for
patterns of support and opposition to such aid. Controlling for a wide variety of
factors, districts that are better endowed with capital (labor) are more (less)
supportive of economic aid, as the theory predicts. On other votes, like food aid and
military aid, where the distributional consequences of aid are muted, the division
between capital and labor is less salient. We thus offer one of the first systematic
theoretical and empirical analyses of preferences surrounding foreign aid. We also
utilize differences in types of aid to help evaluate our theoretical predictions. We
show that political economy theories can be usefully imported into other issues
areas when those areas have distributional consequences. An interesting question is
whether this type of influence on aid policy exists in other donor countries. Interests
matter, but so does ideology. Legislators respond not just to the material interests of
their constituents, but also to their ideological predispositions. Legislators in leftleaning districts favor economic aid more than do right-leaning ones. On military
aid, however, this relationship is reversed. Districts and legislators who prefer a
larger role for the government in the economy and have stronger tastes for
egalitarianism seem to be more disposed toward providing economic aid to others
abroad. As Lumsdaine argued, a preference for government intervention at home to
alleviate poverty appears to carry over to the international realm. Research on other
countries suggests that this ideological pattern of support exists in other donors
(Tingley, unpublished). The support that we sometimes find by organized labor for
aid seems to rest heavily on its ideological appeal. But unlike in trade where
conservative individuals generally support free trade, conservatives tend to oppose
foreign economic aid. This ideological division is the opposite of the one in trade,
and it makes the political coalitions in trade and aid different.

30

Another contribution is our finding that organized interest groups and their
contributions to legislators are systematically related to support for aid. Legislators
respond to the diffuse preferences of their voting constituents, but they are also
attentive to the pressures brought to bear by organized interest groups. Many
studies have found that campaign contributions do not affect legislators voting on
issues (e.g. Fiorina and Peterson, 1998; Smith, 1995). Instead they argue that
interest groups give contributions to like-minded legislators and that this friendly
giving is driven by common ideology and constituent interests and not an attempt
at influence (e.g. Bauer et al., 1972). Here we examine whether organized interest
groups and their PAC contributions are systematically associated with votes on aid.
We show that campaign contributions are channeled in ways that correlate with
both ideological and political economy models of support (and opposition) to foreign
aid. Such contributions (from money-centered banks and corporations) may account
for why some conservative Republicans have been more likely to defect from their
partys position against aid, and why some liberal Democrats (because of
contributions from labor organizations) may be more supportive of aid as a strategy
of international engagement than they are of international trade. This finding stands
alongside our other results, which suggest that a districts factor endowments also
influence legislators with particular ideological positions to vote differently than
they might have on purely ideological grounds. In sum, organized interest groups
and district economic characteristics seem to be predictably associated with
legislative activity on economic aid, as they are on trade policy (Baldwin and
McGee, 2000; Beaulieu and Magee, 2004).
More generally, our analysis implies that foreign aid policy is not driven solely by
American foreign policy objectives, but also responds to underlying domestic
political conditions. Presidents do not seem to dominate aid policy; their positions
and preferences are not among the key factors that we identify in affecting a
legislators votes on economic aid. Aid may well be used as an exchange
mechanism to alter other countries behavior, but it must first command enough
domestic support to win Congressional approval (Bueno de Mesquita and Smith,
2007). The existing literature that examines whether donor interests or recipient
needs shape aid indirectly tests whether domestic interests matter by examining
the characteristics of the recipients (Alesina and Dollar, 2000; McKinley and Little,
1979). In contrast, our study shows that domestic interests in the donor country
directly affect foreign aid. Presidents must construct aid policy so they can garner
majority support for aid in Congress. Legislators do not vote on aid randomly; they
take into account its effects on their districts and vote accordingly. Political economy
models can well explain this.

Mitchell, John (1991), Public Campaigning on Overseas Aid in the 1980s,

in Bose, Anurdha and Burnell, Peter (eds.) (1991), Britains Overseas Aid
Since 1979: Between Idealism and Self-Interest, pp. 146-157, Manchester:
Manchester University Press.

30

The 1980s were a period of mixed fortunes for public campaigning on Britains
overseas aid. There are some successes and also some failures. The 1990s opened
with campaigning proceeding from a rather higher base better informed as a
result of the lessons of the experience of the last decade, and with several notable
firsts to its credit; and, in the case of the World Development Movement a
membership that was seven times larger than in 1980. The aid programme of the
British government will undoubtedly have to face up to some new challenges and
also some exciting opportunities. But, because of the widespread acknowledgement
that global environmental matters concern everyone, there is now a real chance of
mobilizing new and powerful sources of public support.

Moon, Bruce E. (1983), The Foreign Policy of the Dependent State, in

International Studies Quarterly, Vol. 27, No. 3, pp. 315-340.
The above conclusion makes it very tempting to imagine that it is possible to extend
the dependency model to offer an explanation of longitudinal as well as crosssectional findings. Richardson (1976, 1978) and Richardson and Kegley (1980) have
succumbed to this temptation and attempted a longitudinal test of the proposition
that increasing dependence leads to increasing foreign policy compliance. In so
doing, however, they have merged the bargaining and dependence models in a
mistaken way. Substituting measures of dependence for measures of aid-giving in
the above longitudinal formulation does not produce a test of the dependency
model, since the essense of the dependency view lies in the focus upon structural
characteristics of relationships which persist over time. To examine yearly changes
in measures of external reliance is to invite measurement error and/or conceptual
confusion. For example, while the precise volume of exports (the measure of
dependence employed by Richardson and Kegley) certainly fluctuates over the short
term, this says very little about changes in external reliance. Indeed, even the sense
of dependence most often utilized in discussions of national power and influence (as
opposed to the formulations associated with dependencia) involves the sensitivity of
one nation to conditions in another (Caporaso, 1978). Such sensitivity or
responsiveness cannot be measured in the short-term but only in the longer run. To
say that a nation depends upon exports is to say that in years when exports are
high, the nation prospers and that in years when exports fall, the nation suffers.
Thus, yearly fluctuations in export levels do not constitute a measure of
dependence such that dependence is higher when exports are good and lower when
exports are bad. More significantly, however, dependence is simply not a concept
which makes very much sense within a framework whose foundation is the notion of
short-term bargaining.
This is not to say that the attempt to merge the two models is either impossible or
undesirable. Rather, a different fusion is called for. Cross-sectionally, measures of
dependent relations are impressively correlated with voting agreement. Not all
features of dependent relations are as immutable over time as the dependencia
tradition would seem to indicate, however. Substantial year-to-year fluctuation in
voting behavior, for example, does occur. But much of this change seems to occur
with change in regime. It seems plausible that the syndrome of dependent relations,
based upon a foundation of external reliance, generates strong, though not always
irresistible, pressure towards the establishment of a government whose views are

30

compatible with those of the dominant nation and which is then supported by
foreign aid flows. The foreign policy of that government can be viewed as the result
of a process of distortion in the sense that in the absence of such dependent
relations, a very different policy would probably have been generated. Short-term
influence has very little place within this view, since the need to influence a
government whose orientation is already fundamentally similar is rather small.
However, external reliance does not deterministically generate a foreign policy
distortion and in this sense some element of tacit bargaining may be said to be
involved. The promise of American aid (and most likely other benefits such as trade
and policy support) implicit in the choice of a government with pro-American views
is likely to influence the course of political events in a poor nation. In this sense,
bargaining of a sort does occur; the cost-benefit calculations of individuals within a
society must surely be altered by the knowledge that American aid (of a variety of
forms) will follow certain kinds of choices.
Of course it remains that structural relations of dependence are sufficiently powerful
that choices counter to the preferences of the dominant nation are at best difficult
and in some circumstances impossible. These constraints appear to operate
broadly, however, at the level of the creation of structural political and economic
forms rather than in the short-term and relatively narrow areas suggested by the
bargaining model. The kinds of longitudinal change in dependent relations which
may indeed carry the implications suggested by the dependency formulation are
not likely to occur except in the case of quite massive and step-level
transformations such as that identified in the literature as a dependency reversal
(Orton and Modelski, 1979; Holsti, 1982). The processes by which such
transformations occur are worthy of study since it appears that it is at such
junctures that American influence is most likely to be manifested. It may also be the
case that the constraints imposed by political dynamics within the nation are
equally powerful in preventing substantial changes in foreign policy except in the
case of a massive lurch in which one set of elites are replaced by another.
The contribution of this study is to point the way toward a reconceptualization of the
sources of American influence/policy distortion in the Third World in recognition of
the rather limited role that influence as an on-going bargaining process seems to
play. A number of tasks remain, however. The generally disappointing findings of the
bargaining model may suggest to some that either the theoretical formulations of
bargaining must be re-examined (probably with respect to scope conditions) or that
better measures and tests be designed. They may be correct.
It seems more likely, however, that the findings correctly identify the
correspondence of American and Third World foreign policy orientations as a
consequence of consensus, rather than compliance. If so, the dependency
perspective would seem to offer a promising track, though, it must be noted, far
from the only such possibility. With the issue framed in this way why do various
nations arrive at roughly similar foreign policies? we see clearly that we have
returned the question to the mainstream of comparative foreign policy concerns.
Why does a nation arrive at the foreign policy it does? While we have arguably
eliminated one possible answer (bargaining) we have not conclusively chosen
between two broad tracks. One, not discussed here, pursues the problem by
searching for parallel processes operating across nations which operate
independently to yield similar outcomes. The other, centering around dependency

30

conceptions, pursues the possibility that the foreign policymaking processes

(broadly conceived) of nations are as joined as their economic, political, social and
cultural relations. Our very crude findings seem generally supportive of efforts along
these latter lines.

Morgenthau, Hans J. (1962), A Political Theory of Foreign Aid, in The

American Political Science Review, Vol. 56, No. 2, pp. 301-309.
The major conclusions for policy to be drawn from this analysis are three; the
requirement of identifying each concrete situation in the light of the six different
types of foreign aid [humanitarian foreign aid, subsistence foreign aid, military
foreign aid, bribery, prestige foreign aid, and foreign aid for economic development]
and of choosing the quantity and quality of foreign aid appropriate to the situation;
the requirement of attuning, within the same concrete situation, different types of
foreign aid to each other in view of the over-all goals of foreign policy; and the
requirement of dealing with foreign aid as an integral part of political policy.
The task of identifying concrete situations with the type of foreign aid appropriate to
them is a task for country and area experts to perform. Can country A not survive
without foreign aid? Is its government likely to exchange political advantages for
economic favors? Would our military interests be served by the strengthening of this
nation's military forces? Does this country provide the non-economic preconditions
for economic development to be supported by foreign aid? Are our political interests
likely to be served by giving this nation foreign aid for purposes of prestige? Can a
case be made for foreign aid in order to alleviate human suffering? What kind and
quantity of foreign aid is necessary and sufficient to achieve the desired result?
To answer these questions correctly demands first of all a thorough and intimate
knowledge and understanding of the total situation in a particular country. But it
also requires political and economic judgment of a very high order, applied to two
distinct issues. It is necessary to anticipate the receptivity of the country to different
kinds of foreign aid and their effects upon it. When this analysis has been made, it is
then necessary to select from a great number of possible measures of foreign aid
those which are most appropriate to the situation and hence most likely to succeed.
In most cases, however, the task is not that simple. Typically, an underdeveloped
country will present a number of situations indicating the need for different types of
foreign aid simultaneously. One type given without regard for its potential effects
upon another type risks getting in the way of the latter. One of the most
conspicuous weaknesses of our past foreign aid policies has been the disregard of
the effect different types of foreign aid have upon each other. Bribes given to the
ruling group, for instance, are bound to strengthen the political and economic status
quo. Military aid is bound to have an impact upon the distribution of political power
within the receiving country; it can also have a deleterious effect upon the
economic system, for instance, by increasing inflationary pressures. Similarly, the
effect of subsistence foreign aid is bound to be the support of the status quo in all
its aspects. Insofar as the giving nation desires these effects or can afford to be
indifferent to them they obviously do not matter in terms of its over-all objectives.
But insofar as the giving nation has embarked upon a policy of foreign aid for

30

economic development which requires changes in the political and economic status
quo, the other types of foreign aid policies are counterproductive in terms of
economic development; for they strengthen the very factors which stand in its way.
This problem is particularly acute in the relations between prestige aid and aid for
economic development. The giving nation may seek quick political results and use
prestige aid for that purpose; yet it may also have an interest in the economic
development of the recipient country, the benefits of which are likely to appear only
in the more distant future. Prestige aid is at best only by accident favor- able to
economic development; it may be irrelevant to it, or it may actually impede it. What
kind of foreign aid is the giving country to choose? If it chooses a combination of
both it should take care to choose an innocuous kind of prestige aid and to promote
economic development the benefits of which are not too long in coming.
Afghanistan is the classic example of this dilemma. The Soviet Union, by paving the
streets of Kabul, chose a kind of prestige aid that is irrelevant to economic
development. The United States, by building a hydroelectric dam in a remote part of
the country, chose economic development, the very existence of which is unknown
to most Afghans and the benefits of which will not appear for years to come.
It follows, then, from the very political orientation of foreign aid that its effect upon
the prestige of the giving nation must always be in the minds of the formulators and
executors of foreign aid policies. Foreign aid for economic development, in
particular, which benefits the recipient country immediately and patently is a more
potent political weapon than aid promising benefits that are obscure and lie far in
the future. Furthermore, the political effects of foreign aid are lost if its foreign
source is not obvious to the recipients. For it is not aid as such or its beneficial
results that creates political loyalties on the part of the recipient, but the positive
relationship that the mind of the recipient establishes between the aid and its
beneficial results, on the one hand, and the political philosophy, the political
system, and the political objectives of the giver, on the other. That is to say, if the
recipient continues to disapprove of the political philosophy, system, and objectives
of the giver, despite the aid he has received, the political effects of the aid are lost.
The same is true if he remains unconvinced that the aid received is but a natural, if
not inevitable, manifestation of the political philosophy, system, and objectives of
the giver. Foreign aid remains politically ineffectual at least for the short term as
long as the recipient says either: Aid is good, but the politics of the giver are bad;
or Aid is good, but the politics of the giver good, bad, or indifferent have nothing
to do with it. In order to be able to establish psychological relationship between
giver and recipient, the procedures through which aid is given, and the subject
matter to which it is applied, must lend themselves to the creation of a connection
between the aid and the politics of the giver which reflects credit upon the latter.
The problem of foreign aid is insoluble if it is considered as a self-sufficient technical
enterprise of a primarily economic nature. It is soluble only if it is considered an
integral part of the political policies of the giving country which must be devised in
view of the political conditions, and for its effects upon the political situation, in the
receiving country. In this respect, a policy of foreign aid is no different from
diplomatic or military policy or propaganda. They are all weapons in the political
armory of the nation.

30

As military policy is too important a matter to be left ultimately to the generals, so

is foreign aid too important a matter to be left in the end to the economists. The
expertise of the economist must analyze certain facts, devise certain means, and
perform certain functions of manipulation for foreign aid. Yet the formulation and
over-all execution of foreign aid policy is a political function. It is the province of the
political expert.
It follows from the political nature of foreign aid that it is not a science but an art.
That art requires by way of mental predisposition a political sensitivity to the
interrelationship among the facts, present and future, and ends and means. The
requirements by way of mental activity are two-fold. The first is a discriminating
judgment of facts, ends and means and their effects upon each other. However, an
analysis of the situation in the recipient country and, more particularly, its
projection into the future and the conclusions from the analysis in terms of policy
can only in part be arrived at through rational deduction from ascertainable facts.
When all the available facts have been ascertained, duly analyzed, and conclusions
drawn from them, the final judgments and decisions can be derived only from subtle
and sophisticated hunches. The best the formulator and executor of a policy of
foreign aid can do is to maximize the chances that his hunches turn out to be right.
Here as elsewhere in the formulation and conduct of foreign policy, the intuition of
the statesman, more than the knowledge of the expert, will carry the day.

Morrissey, Oliver (1993), The Mixing of Aid and Trade Policies, in World
Economy, Vol. 16, No. 1, pp. 69-84.
We have argued that tied aid, or more generally aid that is used to further the
export objectives of donors, provides less benefit to recipients than untied aid (there
is a presumption that aid from multilateral agencies will generally be preferable to
tied bilateral aid). We see no need to summarise the issues here but make two
points. First, donor self-interests rather than recipient-interests are the principal
determinants of bilateral aid policy for most of the major donors, although the
strength of trade within donor self-interests does vary considerably (the US, for
example, appears to place most emphasis on its foreign policy objectives). Second,
export competition between donors is the dominant trade objective for which aid is
used, as an export subsidy (such as mixed credits) or in more general support for
exports (such as tying). Use of aid in this way induces rent-seeking in the donor
economy, as exporters try to capture aid policy, and may well reduce net donor
welfare in addition to reducing the potential benefits of aid to recipients. The
essence of our argument is that the use of aid to further trade interests does not
serve the recipients objectives for aid nor does it necessarily serve the donors
trade objectives.
It will be clear by now that we advocate the use of public procurement rules to
institute EC-wide tying of aid; this will increase the competition in supplying many
aid-supported goods to LDCs and will benefit recipients. Donors which support tying,
such as France and Italy, should take heed of the increased transnational links
between major EC companies as these imply that they cannot be sure that it is their
domestic producers who actually benefit from tying (this is particularly relevant to
mixed credits, see Morrissey, 1991). Furthermore, we advocate that the DAC take a

30

stronger, more restrictive, line on tying and mixed credits. The recommendations
listed below derive from this conclusion, as does our view on the optimal mix of aid
and trade policies, which is no mix at all - aid and trade policies should be
independent of each other.

Mosley, Paul (1981), Models of the Aid Allocation Process: A Comment on

McKinlay and Little, in Political Studies, Vol. 29, No. 2, pp. 245-253.
Within individual donor countries, two separate forces have recently been tending to
induce greater progressivity in allocations of aid, with the results shown in Tables 1
and 2. The first is a decision on the part of many donors to be more selective in the
allocation of aid and concentrate it on countries that need it more, originating some
ten years ago but borne into policy under the impetus of the famines in much of
Africa and the oil price rise in 1973-4, which between them drove a large wedge
between the more fortunate and the less fortunate developing countries. Such a
decision to concentrate aid on the poorest countries of the world had by 1977 been
taken by, amongst DAC countries, the Netherlands, Sweden, Australia, Canada,
Switzerland, the UK and the USA. 12 Whether one sees these decisions as altruistic or
not is irrelevant: to the extent that they are carried through into policy, they
produce ipso facto greater conformity with the predictions of the recipient need
model.
Separately from this, however, donors are likely to be pressured in the direction of
greater responsiveness to recipient needs by the recipients themselves. It is a
constraint on the validity of McKinlay and Littles general approach that it is wholly
donor-centred: a given donor, on their approach, has a certain sum of money to
hand out, which he then allocates to recipients either on criteria of donor interest
or on those of recipient need. Such an approach obscures the bargaining power of
recipient countries in the process of aid allocation. In fact, if a particular country
experiences an event which causes it to have sudden needs, for example natural
disaster (Bangladesh 1972, Ethiopia 1973) or balance of payments crisis, then these
needs will generate requests from recipients which will be met passively by aid to
the limit of the donors capacity. But the aid thus given, of course, builds up aiddependent vested interests and commercial channels, which are unlikely to lapse
when the immediate emergency does. There is thus a gradual, and in general
irreversible, shift of aid to the more disaster-prone countries; and as these are in
general the poorest, 13 it is likely that aid donors practice of responding to
emergency requests will of itself tend over time to push aid programmes in a more
recipient-need centred direction. To argue this way is, of course, to do no more
than to apply to the specific case of overseas aid expenditure a general principle
applying to all public expenditures, namely Wildavskys principle of budgetary
incrementalism. Just as, in Wildavskys analysis, the allocation of a governments
expenditure between spending departments generally remains locked in the
conventional channels of past practice but can alter at the margins if one spending
department puts up a particularly plausible case for an increase in its share of the
total budget,14 so also the pattern of a donors aid allocation is, in the absence of
any external stimulus, locked in the conventional channels of past obligation
(including, in many cases, ex-colonial ties) in normal times but can alter at the
margins if particular recipients evince an exceptional need for aid. Such

30

alterations, we have argued, are most likely to occur in favour of the poorer
countries; and they are subject to a ratchet effect which makes them unlikely to be
reversed however transient the circumstances which led to their being
implemented. Additional to these factors making for a greater salience of recipient
need criteria within donor countries, it is also the case that there has been a drift of
the over-all OECD aid burden from countries whose ability to apply such criteria is
constrained by past colonial and strategic ties, and in particular the United States,
to countries subject to no such constraints (for example West Germany, Canada,
and the Scandinavian countries). Table 3 illustrates this; it should be noted that the
United States is included among the constrained countries on account of the large
quasi-colonial military commitments it built up among Third World countries,
particularly Asia, during the 1950s.
The unconstrained donor countries, of course, are freer to respond to the
promptings of recipient need than are the constrained countries. This partly
explains the fact that for 1977 the recipient need model fits the total of DAC donor
countries (Table 1, bottom part) much better than any of the individual donors in
Table 2.
We therefore conclude that if an appropriate model is used it is not possible,
contrary to the contention of McKinlay and Little, to reject the hypothesis that
recipient need is a significant determinant of the pattern of aid allocation for most
Western capitalist countries. As one moves forward from the 1960s in time and
outwards from the special case of donors who are ex-colonial powers to consider the
case of aid donors not constrained by historical commitments to specific less
developed countries, the explanatory power of the recipient need model increases.

Mosley, Paul (1985), The Political Economy of Foreign Aid: A Model of the
Market for a Public Good, in Economic Development and Cultural Change,
Vol. 33, No. 2, pp. 373-393.
What determines the type and quantity of overseas aid given by individual donor
countries? Answers to this question in the existing literature are polarized into two
groups. One of them offers a theoretical treatment based on the theory of public
goods which is not consistent with the available data, and the other offers empirical
correlations without any explanatory theory. The first group for example, Pincus
and Olson and Zeckhauser treats aid, like defense, as an international public
good. Small countries, on this approach, are free riders, spending relatively little
themselves while deriving benefits from the expenditures of larger countries. But
this approach is not consistent with even a casual scrutiny of the OECD aid
community in which, broadly speaking, the smallest countries are the most
generous donors. The second group for example, Hoadley and Beenstock
discover correlations between a countrys ratio of aid to GNP and certain
independent variables which may be expected to influence it (e.g., that countrys
GNP, its dependence on foreign trade, its governments position in the ideological
spectrum, and the state of the domestic economy). However, these findings are not
fitted into any theoretical framework, so that it is difficult to work out what they
really mean.

30

The approach of this paper is to treat foreign aid as a public good for which there is
a market, albeit a highly imperfect one because the consumers donor country
taxpayers are ignorant about the very nature, let alone the price, of the
commodity they are buying. On this view, factors on the demand side (i.e.,
taxpayers response to their countrys aid program) will help to determine the
quantity of aid disbursed as well as factors on the supply side such as the donor
governments desire to obtain strategic or trading benefits from aid. This view will
be shown to be consistent in many cases with the available data; it contrasts with
the approaches previously discussed, all of which consider only supply side
influences on aid disbursement. []
In conclusion, there are three perceptible patterns of adjustment in the market for
international aid. In the first pattern, electorates are responsive to the quality of aid
which their governments provide, and their governments respond to the pressures
they impose by altering the quantity of their aid. In the second pattern,
governments respond to such pressures from citizens by changing the quality rather
than the quantity of their aid. In the third and last pattern, governments do not
respond to public pressure by altering the pattern of their aid, but rather by seeking
to persuade the electorate to accept the pattern of aid which they have already
decided to adopt. The implication of the existing literature is that only this last
pattern of adjustment is worth considering; this preliminary study suggests,
however, that it is not the only pattern of adjustment which exists, and that the aidgiving process is by no means as exclusively characterized by market leadership on
the part of the state as that literature has implied.

Moss, Todd, Roodman, David and Standley, Scott (2005), The Global War
on Terror and US Development Assistance: USAID Allocation by Country,
1998-2005, Center for Global Development Working Paper No.62.
The launch of the Global War on Terror (GWOT) soon after September 11, 2001 has
been predicted to fundamentally alter US foreign aid programs. In particular, there
is a common expectation that development assistance will be used to support
strategic allies in the GWOT, perhaps at the expense of anti-poverty programs. In
this paper we assess changes in country allocation by USAID over 1998-2001 versus
2002-2005. In addition to standard aid allocation variables, we add several proxies
for the GWOT, including the presence of foreign terrorist groups, sharing a border
with a state sponsor of terrorism, troop contributions in Iraq, and relative share of
Muslim population. []
We do not find that any of our GWOT proxies (or their interactions) are significantly
correlated with changes in country allocation of aid flows to the rest of the world,
including to sub-Saharan African countries. Concerns that there is a large and
systematic diversion of US foreign aid from fighting poverty to fighting the GWOT do
not so far appear to have been realized.[]
Before drawing any conclusions about the impact of the GWOT on aid flows, several
important caveats are required. First, we have only looked at the provision of
development assistance, which is but one aspect of U.S. foreign policy. Second, our
measure of U.S. development assistance has been circumscribed by using only

30

bilateral aid from only one U.S. agency. Third, we have only looked at total
aggregate flows to countries and not at the composition of flows by sector or other
substantive category. Fourth, we have also chosen five particular GWOT proxies, but
many others could be envisioned. Lastly, it may simply be too early to pick up any
significant differences in aid allocation. Changes in allocation criteria and systems
may take years to become established and refined, and the pipeline effect for aid is
well documented, often requiring several years for actual changes to occur.
Despite these caveats, one conclusion, even if only preliminary, does emerge from
the data: any major changes in aid allocation due to the GWOT appear to be
affecting only a handful of critical countries, namely, Iraq, Afghanistan, Jordan, and
the Palestinian Territories. The extra resources to these countries also seem to be
coming from overall increases in the bilateral aid envelope, combined with declines
in aid to Israel, Egypt, and Bosnia and Herzegovina. Since the aid curtailments to
Israel and Egypt were planned well before 2001, and the decline to Bosnia and
Herzegovina is the result of the end of the immediate post-conflict reconstruction
phase having nothing to do with the GWOT, this increased availability of funds may
be a coincidence, but also is clearly an enabling factor to allow aid to be channeled
elsewhere. There may also have been a subtle shift outside such countries toward
those with higher shares of Muslim population. Time may tell whether this is the
beginning of a larger trend. But at this point, concerns that there is a large and
systematic diversion of U.S. foreign aid from fighting poverty to fighting the GWOT
do not appear to have been realized.

Mourmouras, Alex and Rangazas, Peter (2004), Conditional Lending

Under Altruism, IMF Working Paper WP/04/100.
IFI loan programs help liquidity-constrained LICs raise human capital investments. If
IFIs could commit in advance to demanding full loan repayment from their lowincome borrowers, unconditional loans would produce efficient outcomes. This
paper examined the implications of IFI altruism for the effectiveness of such loan
programs when IFIs cannot commit to require full repayment. When IFIs cannot
commit in advance to demanding any agreed repayment from poor countries,
unconditional loans are inefficient. The LIC would set investment too low in the
attempt to gain loan repayment forgiveness in the future. We have demonstrated
that IFIs can design time-consistent conditional loan programs that overcome this
moral hazard. In our model, conditionality preserves pareto optimality and achieves
first-best redistribution even in the presence of complications related to uncertain
LIC investments and selfish recipient governments.
Our solution to the Samaritans dilemma is for the altruistic donor to present
recipients with a loan schedule where both the loan amount and its interest rate are
conditional on investment. The optimal loan schedule creates incentives for the
recipient to choose investment efficiently while at the same time receiving an
interest subsidy, and thus a transfer, that varies with investment and future income
realizations. The optimal interest rate subsidy balances the tension between the
IFIs altruistic concerns for LICs and its fiduciary responsibilities to IFI creditors. The
solution does not require commitment on the part of the donor and does not trigger

30

renegotiation to write principal down at the time of repaymenta recurrent practice

with loans to LICs.
Conditional loans to some LICs have not always been associated with solid results in
the past (see Dollar and Svensson, 2000; IMF, 2002a; and Ivanova, Mayer,
Mourmouras, and Anayiotos, 2003). Some countries have not been able to grow out
of their poverty despite long-standing IFI engagement. Our analysis suggests that
IFI altruism does not need to be a fundamental source of this failure. If IFI altruism is
properly reflected in the financial terms and conditionality of IFI loans, full efficiency
can be achieved, encompassing pareto optimality and first-best redistribution.
Reconciling the prediction that conditional loans will help poor countries achieve
first-best allocations with the mixed results of conditional loans on the ground is a
challenge. One possibility, not examined in this paper, is that IFIs and their LIC
borrowers face incentives to systematically overstate LIC repayment prospects,
leading to boom-bust cycles in which IFI lending is followed by LIC debt distress and
ex post debt relief. Empirical evidence does suggest that IFI projections of LIC
economic growth and export earnings are consistently overoptimistic, leading to
understatement of future LIC debt and debt-servicing burdens. Partly in response to
this problem, the IMF has recently revamped its framework for assessing debt
sustainability (IMF, 2002b). A second issue concerns the effectiveness of
conditionality in the presence of domestic policy failures and IFI commitment
problems. The present paper provided a welfare case for conditionality based on the
IFIs inability to commit in a model that abstracted from policy inefficiencies in
recipient countries. In a companion paper (Mourmouras and Rangazas, 2004) we
examine a model of special interest groups that features inefficient fiscal
redistribution. In this environment, the effectiveness of conditional loans in
mitigating domestic policy inefficiencies is circumscribed by the IFIs commitment
problem.

Mourmouras, Alex and Rangazas, Peter (2009), Foreign

Voracious Politics, in IMF Staff Papers, Vol. 56, pp. 786-810.

Aid

with

Countries with voracious politics divert large amounts of public resources to

unproductive transfers to powerful interest group [sic]. This is a source of poverty,
because resources devoted to such redistribution reduce the efficiency of resource
allocation and lower national welfare. Fractious politics also makes it more difficult
for the international community to assist developing countries. Loans conditioned
on public investment alone may not improve welfare in countries with voracious
politics. The higher taxes needed to pay back foreign debt may further increase
rent-seeking, which could lower the returns to public investment below the cost of
debt repayment.
When confronted with a highly contentious political environment in recipient
countries, donors may require additional conditions to guarantee that their loans
will increase the recipients national welfare. One guiding principle for the donor
community is to develop conditions that shift the burden of debt repayment away
from the taxation of productive work and toward the taxation of rent-seeking. This
may be accomplished by insisting that debt be repaid by cuts in programs

30

susceptible to rent-seeking. Because the susceptible programs are likely to vary

from country to country, it is critical that the recipient countrys finance minister,
and similar officials are involved in establishing the appropriate conditions in
partnership with donors. In working with recipient country officials, donors should
help weak central governments reduce the incentives to engage unproductive rentseeking.
Consistent with our analysis, donors have sought to place conditions on their
assistance to developing countries that aim at increasing government investment
and reducing government consumption (which may also include corrupt public
investment projects). Empirical evidence suggests that lowering government
consumption raises economic growth (see, for example, Barro, 1997, Chapter 1; and
Baldacci, Clements, and Gupta, 2003). Our analysis offers a new supporting
argument for loan conditions that require cuts in government consumption, rather
than increases in taxes, to finance loan repayment.

Murshed, S. Mansoob (2004), Strategic Interaction and Donor Policy

Determination, in International Review of Economics and Finance, Vol.
13, No. 3, pp. 311-323.
Summary
1. In motivating agents to exercise effort, attention needs to be focussed on
intrinsic motivation as well as extrinsic financial payments. Outcomes will
improve when effort is a signal of the agents ability and motivation. This
means that the principal has to be seen to take the agents effort into
account.
2. The public sector is notorious for fixed wage contracts leading to minimal
effort levels by the agent. When the agents type or quality is in doubt
(adverse selection), incentive payments may be designed to make the agent
reveal his true type. Even then a problem remains, as the inferior-type agent
will reduce effort exacerbating moral hazard. This trade-off between moral
hazard and adverse selection needs to be borne in mind even in principal
agent relationships involving legislatureaid agency relations.
3. When a variety of principals with divergent interests interact with the same
agent, they are not only better off colluding with each other, but would also
be pooling their influence on the agent at the initial stage of the principal
agent relationship. In a sense they will be trading in their concerns. Examples
of varying objectives include the dilemmas posed by strategic and
commercial interests on the one hand, and developmental concerns on the
other hand. Certain principals will be more interested in the former, and
others (including NGOs) in the latter.
4. In the context of endogenous domestic policy formation regarding aid,
median voter preferences need to be considered mainly in direct democracies
utilizing referenda. But usually it is powerful lobbies that influence aid policy.
There will also be altruistic motivation regarding aid related to common

30

humanity considerations. These altruistic motivations need to be worked on.

In most societies, however, lobbies are most important because the few (rich
and powerful) are far better at collectively organizing around their interests.
5. When signalling credible commitment to preannounced policies is the
problem, the governance structure in donor countries needs to generate
extra and immediate costs to reneging on agreed policies. This is particularly
necessary in donor countries where on many occasions a newly elected
government commits to development and human rights improvements, but
at some later stage reneges on them in favour of strategic interests.

Mushkat, Marion (1972), The Politics of Development Aid, Its Planning,

Financing and Strategy in the Seventies, in Dritte Welt, Vol. 1, No. 2, pp.
197-233, Meisenheim.
Often researchers considering development and aid policy, assume the problem is
of recent origin. In fact the U.N. Machinery For Aid And Development began to take
form only 15 years after its creation and the U.N. Charter makes no specific mention
of development tasks1. It is equally true that related activities by the Great Powers
and other countries were determined by the changes in international relations, the
instigation of competition in the fields of economics, society and culture and efforts
to maintain spheres of influence by non-bellicose means 2.
It is also true that presentation of the problems by the developing states were first
formulated upon their transition from dependency to independence, as the process
of decolonization developed in the sixties 3. Still one cannot ignore the fact that the
problem was raised earlier by the pioneers of the struggle for home rule,
advancement of education and society among different peoples 4 and also by the
early fighters for fundamental change in the family of nations to further freedom,
equality, justice, and peace through cooperation among all countries 5.
It should be pointed out that this approach found concise expression at the
Columbia Congress comprised of representatives from all religions held on the
occasion of the 1893 Chicago Worlds Fair. There it was stated that the peoples of all
continents living under foreign rule have an equal claim to equality, freedom and
their own culture as well as European aid to help them overcome their social plight.
Gradually this stand gained prominence in other non-governmental conferences
including not only Pan-African congresses but also in pacifist, inter-parliamentary,
science and socialist gatherings 6 as well as in deliberations on international law 7 and
in the activity programs of international organizations, particularly following World
War I.
The League of Nations and the mandate system in particular and the ILO which
were founded during that period, already reflected to varying degrees greater
attention to dependent peoples and the obligations to aid their development.
This tendency grew following World War II. Hence the pertinent principles in the U.N.
Charter the role assigned to the Economic and Social Council, trusteeships and the
Trusteeship Council, the Charters Declaration regarding non-self-governing

30

(colonial) territories, the provisions concerning the activities of the U.N.s

specialized agencies and other organizations 8. But until the 1965 Bandung
Conference, and in fact up to the crises brought on by the Russian intervention in
Hungary and the Suez Campaign in 1956, which gave prominence to the demands
of the Third World on the one hand and to the initial crumblings of the blocs on
the other aid to developing countries did not play any important role either in
Soviet or American foreign policy.
The U.S. aid activities up to this point reflected a continuation of the same policies
with but a change of address applied already during World War II as a means of
offering political, economic, military, and human support to the allies, this time in
order to rehabilitate and unify them against a new enemy. That is why, starting from
the Korean War in 1950 and especially in view of the USSRs successes in
developing nuclear weapons, the military and security aspects of aid became
crucial.
The Truman Doctrine of 1947, which promised economic and military support to
countries whose freedom was endangered by the Soviet threat, laid the foundations
for the Marshall Plan of the same year and for the western alliance of 1948, which
in 1949 became NATO. These steps, and continuing fear of the USSR led to an
increase in the military share of this support, until 1953 it constituted two thirds of
the total American aid, most of it direct to her European allies. However, at the
same time it became clear that aid of a non-military nature was needed not only for
security purposes but also for advancement of the U.S. economy in view of her role
in international trade and the need to resuscitate for this purpose the markets and
currency in countries tied to the Dollar9. On this foundation emerged the
Organization for Economic Cooperation in Europe, the European Coal and Steel
Community and later the European Common Market with its attendant institutions.
Similar phenomena in the Eastern Bloc included the Council for Mutual Economic
Aid in 1949 and the Warsaw Pact in 1955 and all other steps taken for unification,
expansion and military preparedness10.
This new stress on non-military aid began to be felt during 1953, the year Stalin
died, and with the first signs of the easing in inter-bloc tensions at the end of the
Korean War and later in Indo-China. They were tied to the deepening realization that
political-military doctrines based first of all on preparations for a new world order
were already dated. This change of emphasis accompanied the weakening of the bipolar system in international relations, the appearance of cracks in established
blocs, and an increase in the number of new states and their pressure in the
international arena.
All this emphasized the role of aid to the Third World as a whole and Africa in
particular as an essential part and most important arm of the foreign policy of the
Great Powers as well as other countries.
Of course, the aid problem received different treatment by the U.N. in spite of the
fact that the U.N. crystallized its policies under the influence of the Great Powers
because the organization took into consideration its basic principles and the
demands of the majority in the Family of Nations those receiving aid.

30

The influence of the Bandung Conference on these changes was not directly felt
because the main issues of the conference were mainly tied to the efforts at limiting
and abolishing all forms of colonial domination including Chinese and Soviet,
crystallizing the internal relations of the Third World 11. Since it became clear that
this aim could not be easily achieved without economic growth and social change
and without proper outside aid, discussions were initiated in the U.N. Family and for
the betterment of the existing relations bi-lateral ties were re-consolidated. As a
result, the need arose to define the term backwardness and to establish the value of
planning and appropriate aid channels 12.

Natsios, Andrew (2006), Five Debates on International Development: The

US Perspective, in Development Policy Review, Vol. 24, No. 2, pp. 131139.
Andrew S. Natsios was Administrator of the United States Agency for International
Development until January 2006. The US has the largest aid programme in the world
but labours under certain constraints, notably a proliferation of Congressionallyimposed budget earmarks. Mr Natsios has been an articulate advocate as well as an
outspoken reformer of the US approach to aid.

Nelson, Joan M. (1968), Aid, Influence, and Foreign Policy, New York:
MacMillan.
Chapter 1: Aid Purposes (pp. 11-30)
[] Aid as a Multipurpose Instrument
Most U.S. economic aid is intended either to promote economic and social progress,
or to help restore security and stability in countries where terrorism, insurgency, or
external attack are current or imminent. Much smaller sums are used for more
immediate political purposes or for humanitarian programs. But each of these
general objectives encompasses many more specific goals. Moreover, the U.S.
economic assistance program in any one country often is designed to pursue more
than one type of these objectives.
Nor is there any simple correlation between the form of aid and the primary purpose
of specific aid actions. Most technical assistance serves development purposes. But
political considerations not infrequently enter the selection and design of particular
projects, and occasionally technical assistance is used for primarily political or
security goals. Similarly, both capital projects and commodity imports may serve
virtually pure development purposes, almost exclusively political or security goals,
or a combination of objectives. However, when A.I.D. finances technical, capital, or
commodity assistance for political or security purposes, it normally draws on a
special fund called Supporting Assistance, which has been appropriated by Congress
specifically for such purposes.
The fact that aid is used to serve so many goals causes confusion and draws
criticism at home and abroad. There is broad support among the U.S. public for

30

developmental and humanitarian aid, although many are impatient that the task of
development seems to take so long. But aid for political purposes has a nasty ring.
Yet specific political uses of aid for example, withholding aid from military juntas to
demonstrate U.S. disapproval win widespread approval.
Congress is deeply divided regarding the proper goals of foreign aid. Some
Congressmen steadfastly support developmental aid to Latin America and, for
example, India, but question the value and wisdom of economic aid for security
goals. Others heartily approve of aid that seems to serve clear security or stability
interests, but challenge pouring millions indeed, billions into developmental aid.
The disparities within Congress regarding aid priorities are illustrated by Senator
Fulbrights and Representative Thomas Morgans respective views on the wisdom of
separating the military assistance and economic assistance bills. From 1962 to
1965, Senator Fulbright, as Chairman of the Senate Foreign Relations Committee,
urged that economic assistance legislation be divorced from military assistance
bills, while Chairman Morgan (Democratic, Pennsylvania) of the House of Foreign
Affairs Committee insisted that separating the two programs would cause the
economic aid bill to be cut to ribbons. As for using aid to promote immediate
political objectives, Congress virtually unanimously condemns the idea in principle,
yet is quick to propose using aid for protecting U.S. fishing interests or discouraging
trade with Cuba.
In the developing countries themselves, the fact that U.S. economic aid is
sometimes used to protect U.S. economic interests or to try to influence internal
politics or foreign policy positions of recipients is readily interpreted as proof that
the entire program is part of a neo-imperialist scheme.
The further question arises whether aids multiple goals are consistent with each
other. There is no simple answer. To a large degree, different uses of aid are
complementary. The outcome of an immediate political crisis within an aid-receiving
country may be crucial for its long-term development prospects. Reasonable
security and stability are prerequisites for economic and social progress, and in
some circumstances evidence of such progress may be an essential ingredient in reestablishing security and stability.
But not infrequently, foreign policy purposes for which aid is an instrument conflict.
Desire to maintain cordial diplomatic relations, or concern for a regimes stability, or
interest in maintaining access to a military installation may inhibit U.S. efforts to
promote reform. Conversely, insistence on development criteria may interfere with
effective use of aid for short-run political goals. The manner in which aid is used in
one country may also affect U.S. interests in other countries. Military aid that
stimulates an arms race is an obvious example. Less obvious is the disincentive
effect that U.S. crisis support for an inept regime may have in neighboring
countries. If the United States is willing to come to the aid of a government that has
failed to take needed measures to avoid a budget or foreign exchange crisis, others
may well conclude that they need not undertake painful reforms to qualify for aid.
In Ethiopia, for example, the United States has sought simultaneously to maintain
the right to operate an important military communications center, to encourage
modernizing forces in a country where feudal authority is still strong, and to dampen
down the long smoldering border dispute with Somalia. Military aid is a quid pro quo

30

for the communications center. But strengthened Ethiopian military forces may
threaten the precarious truce with Somalia, and may divert a growing portion of the
budget from development uses. Moreover, U.S. arms aid to Ethiopia is a major
cause for Somalias heavy reliance on Communist arms aid. On the economic side,
substantial reforms are prerequisites for real progress. Yet too vigorous support for
modernizing groups may antagonize others whose good will is essential for
maintaining access to the communications center. On the other hand, modernizing
groups may be expected to grow more powerful and apparent U.S. support for
conservative forces may jeopardize future good relations.
Some conflict among objectives is inevitable. However, there is a strong tendency in
the Executive Branch not only to gloss over conflicts among goals in defending
proposed or actual actions before Congress and the public, but also to minimize
such conflicts in its own deliberations. Sometimes conflicts are transitory, and
muddling through may be preferable to borrowing trouble, that is, to anticipating
problems which may not materialize. Often, however, obscuring a potential conflict
increases the chances that it will occur. Franker appraisal of relations among
objectives and more effort to anticipate the side-effects of programs would be
feasible and almost surely useful.

Chapter 2: Allocation Criteria and Types of Country Programs (pp. 31- 47)
U.S. economic aid programs are a veritable menagerie of sizes and shapes,
reflecting both the wide range of U.S. interests they serve and the tremendous
variation in the aided countries own circumstances.
Criteria for Allocating Aid
Three basic criteria largely determine the volume and content of U.S. economic
assistance in any particular country. These are the political importance to the United
States of the countrys stability and growth; the ability of the country to absorb
external resources for growth; and the availability to the country of resources on
appropriate terms from other sources. []
Types of Country Assistance Programs
The purposes, and therefore the design, content, and administration of the U.S.
economic assistance programs in different countries vary widely. Any classification
of types of country programs is arbitrary, and some individual programs do not fit
comfortably into the system. Nonetheless, some grouping is essential if one is to
grasp the pattern of the total U.S. economic aid effort. Most of A.I.D.s country
programs can be reasonably described as fitting one of three categories: major
development-oriented programs; major programs directed to restoring security and
stability; or limited programs directed to narrower goals. This classification is not a
system for making decisions, but a description of the results of the decision-making
process. In other words, A.I.D. does not classify countries and thereby determine
what size and kind of aid program they shall receive. Rather, the basic allocation
criteria, country circumstances, and U.S. interests produce the pattern. []

30

Chapter 3: Program Planning (pp. 48-67)

The precise amount and composition of aid to particular countries is largely
determined through an elaborate annual program planning process. The process
has inherent limitations, which should be stated immediately.
Program analysis takes U.S. foreign policy objectives in each country as given.
Therefore, if some U.S. interests conflict with others for example, desire to press
for reforms versus concern for the immediate stability or the good will of the host
government the conflict will be reflected in inconsistent or vacillating aid
programs.
The current program also constrains planners. Few technical or capital assistance
projects are completed in one year. At any one time, the bulk of most country
assistance programs consists of projects started several years earlier and not yet
completed. The country situation, or U.S. judgment of priorities, or the nature of the
U.S. interest in the country may have changed in the interim. But the projects
cannot be abruptly broken off or modified without badly damaging mission morale,
violating contractual obligations, and, in all likelihood, straining relations with the
aided country.
The annual program analysis is intended as a serious reappraisal of the current
program and a framework for future programs. But those who planned the current
program are understandably committed to it. If they have been replaced by
newcomers, the latters fresh look is properly constrained by the knowledge that the
total program cannot be abruptly or radically altered. Therefore, the major
contribution of good program analysis and planning is to guide new activities and
additional measures to promote self-help a fraction of total activity. This is not
necessarily unfortunate. Most development measures require sustained effort.
Moreover, U.S. economic assistance is afflicted with periodic fads: community
development is key to growth one year; human resource development is the
watchword a few years later. It may be better to stick with and accomplish a
second best program than to disrupt U.S. host country efforts with repeated
changes.
A still more fundamental constraint is our inadequate knowledge about
development. The benefits expected from proposed major changes should be great
enough to allow for substantial margins of error. And yet, precisely because our
knowledge is inadequate, program planning must be flexible enough to
accommodate new ideas and approaches. The line between continuity and inertia is
often hard to draw.
Finally, many aid decisions are made completely outside the annual planning cycle.
This is true of many, though not all, short-run political uses of aid.
These constraints sometimes make the program planning process look like and
elaborate play-act, with little connection to actual action. Yet for all its limitations,
the annual program cycle remains the single most important channel for decisions
regarding U.S. economic aid. It affects some kinds of aid much more directly and
immediately than others. The volume of commodity assistance and the self-help
conditions attached to such assistance are largely determined by annual analysis.
Selection and design of new technical assistance projects is less closely tied to

30

overall analysis, and capital projects float more loosely still, for reasons discussed
later in this chapter. In terms of types of country programs, the annual program
planning process is much more relevant and important for development programs
than for programs that emphasize security or limited political objectives.
Programming Principles
Among the program planning principles that have emerged from twenty years
experience with large-scale foreign aid programs, the most basic are the closely
linked concepts of country programming and concentration. Country programming
implies both tailoring U.S. efforts to the particular circumstances of the individual
country, and coordinating all types of U.S. aid into an integrated country program
rather than conducting semi-independent technical, capital, and commodity aid
efforts. Concentration simply means focusing aid on a few high-priority goals. []
The Content of Program Analysis
This sketch of the program planning process has identified the major steps and
actors, but gives little sense of its substance. In theory, program analysis moves
through a logical sequence covering the following steps:
1. Indentifying the major U.S. objectives that aid is intended to promote in the
country.
2. Assessing the host country situation and trends, including its plans, programs,
and policies, in order to identify major problems and important lines of potential
progress.
3. Anticipating the probable role of other donors during the planning period under
consideration.
4. In view of these considerations, selecting more specific goals on which to focus
U.S. economic aid. The principle of concentration suggests that these goals be
relatively few say four to six in number.
5. For each goal, identifying all the important measures needed, including policy or
administrative changes as well as capital investment and creation or
improvement of skills and institutions. Many of the necessary actions can be
taken only by the host government. The United States may be able to encourage
self-help measures. Other donors may already be assisting with some aspects of
the problem, or might be encouraged to do so. Finally, some of the needed
measures will be appropriate for direct U.S. action technical assistance, capital
projects or commodity assistance. Very few significant goals can be
accomplished solely or primarily through U.S aid. Therefore, it is important that
aid be viewed in the broader context of all the important measures the goal
implies. []

Neumayer, Eric (2002), Is Good Governance Rewarded? A Cross-National

Analysis of Debt Forgiveness, in World Development, Vol. 30, No. 6, pp.
913-930.

30

The analysis in this paper has shown that the need for debt forgiveness is clearly a
powerful determinant of the allocation of debt forgiveness, thus confirming the first
hypothesis. As concerns the second hypothesis, the evidence supports the
statistical significance of creditors political interest only for the US military grants
variable. As concerns the third hypothesis, there is no clear answer. There is
evidence that some aspects of governance have an influence on the allocation of
debt forgiveness, but other aspects and governance in general were often found to
be statistically insignificant. It is maybe not surprising that of all the different
governance aspects voice and accountability, political rights and civil liberties
and regulatory burden should stand out as having some, if modest, influence on
the allocation of debt forgiveness. After all, the respect for the political and
participatory rights of citizens and the abstention from highly distortionary and
burdensome economic policies have long been a top priority on the demand list of
aid donors and debt creditors. As mentioned above, while respect for political and
participatory rights of citizens is more consensually accepted as one aspect of good
governance, regulatory burden is more contestable as it relates to a particular
view on economic policy making.
Overall, it seems therefore fair to say that in the past debt forgiveness has not been
used much to reward countries with good governance. From a normative point of
view, future debt forgiveness should revert this. Allocating a greater share of debt
forgiveness to countries with good governance would create the right incentives for
highly indebted countries and would most likely lead to a more effective and
productive use of the resources employed. This will be true no matter what the total
amount of debt forgiven for all countries, an issue, which this article has not
discussed.
By implication, a similar argument can be made for the allocation of new lending
and, indeed, for aid disbursement. Critics argue that the debt crisis is partly to
blame for loose lending to corrupt and unaccountable governments with poor and
highly distortive economic policies, that is, countries with bad governance (Hanlon,
2000; Roodman, 2001). To prevent this from re-occurring lenders need to take
better into account the quality of governance of potential borrowers while at the
same time trying to help those countries improving their governance that are
committed to reform.
In order to do so, creditors and lenders need to invest more into developing highquality indicators of governance and collecting the necessary data. At the moment,
besides major efforts at the World Bank, the construction of governance indicators
is mainly left to private companies that sell their information to international
business. Their view on what constitutes good governance need not coincide with
how creditors and lenders perceive good governance, however. There is therefore
still a long way to go to strengthen the role of good governance in international
financial lending and aid allocation decisions.

Neumayer, Eric (2003a), The Determinants of Aid Allocation by Regional

Multilateral Development Banks and United Nations Agencies, in
International Studies Quarterly, Vol. 47, No. 1, pp. 10122.

30

The results of analyzing the determinants of aid allocation by various multilateral

donors can be summarized as follows: many multilateral donors have a bias toward
less populous countries in giving more aid to them, at least initially. This represents
a rather striking result given that our dependent variable is not even aid per capita,
but aid as a share of total aid allocated. If one looked at aid per capita instead the
bias toward less populous countries would be even clearer. Considering that poor
people in more populous countries are not any less in need of aid than those in less
populous ones, this result is somewhat disturbing. Do multilateral agencies believe
that aid is more efficiently spent in less populous countries? Is it because they
believe that an aid program below a certain minimum size makes no sense? There
currently seem to be more speculations than confirmed findings and more
qualitative research is needed as to why this bias exists and why it is apparent at
the multilateral level as well.
All multilateral donors looked at here with the possible exception of UNDP take the
economic needs of potential recipient countries into account and tend to allocate
more aid to countries with lower per capita incomes. As concerns human
development needs as represented by a low PQLI score, these are taken into
account by the UN agencies, but not by the regional development banks, which
mostly focus on economic need. The only exception is the Inter-American
Development Bank. It is maybe not surprising that the development banks focus on
economic development needs rather than human development needs given that
often big infrastructure projects and the promotion of economic growth are on the
top of their agenda for development assistance. Nevertheless, given that all
development banks proclaim a commitment to poverty reduction and human
development as well, their perception of what constitutes recipient need seems to
follow a narrow view in being confined to the level of national income. The UN
agencies all seem to embrace a more comprehensive view, which again is maybe
not surprising given the emphasis on human development in such agencies as, for
example, UNDP and UNICEF, which do not finance big infrastructure projects and
whose primary goal is not the promotion of economic growth.
As expected, higher military expenditures and arms imports by and large do not
induce multilateral aid donors to provide more aid. The only exceptions are the
Asian Development Bank, for which arms imports and military expenditures test
with opposite signs, and UNDP, as well as UNICEF, which strangely seem to provide
more aid to countries with greater arms imports. Note that it is not claimed here
that the latter result reflects an intentional allocation decision by the two agencies.
It might just be due to chance. As argued above, it puts the two agencies into a bad
light nevertheless given that countries with higher arms imports are likely to have
low expenditures on human development.
Whilst respect for political freedom (but not for personal integrity rights) is a
statistically significant factor for aggregate multilateral aid allocation, this is not
true for every donor looked at in this study. There is some weak evidence that the
Inter-American Development Bank, UNICEF, and UNTA provide more aid to countries
with higher respect for political freedom. But for the UN agencies this evidence is
not very robust with respect to the size of the sample being determined by the
inclusion or not of certain control variables. The African Development Bank is the
only donor to take into account respect for personal integrity rights within recipient
countries, but the result is not robust to the inclusion of other control variables and

30

the consequent decrease in sample size. As concerns the perceived level of

corruption in a recipient country, it only tests significantly in the case of the InterAmerican Development Bank and UNICEF, but the estimated coefficient is negative.
In other words, if anything these two donors tend to give more aid to more corrupt
countries! Note, however, that this result is not robust with respect to substituting
the relevant variable with a time-varying one.
As concerns former colonial experience and geographical proximity to either the
United States, Western Europe, or Japan, donors differ from each other. The Asian
Development Bank, UNICEF, and UNTA share the bias of bilateral as well as
aggregate multilateral aid allocation in providing more aid to countries with a longer
colonial experience. The opposite is true for the African and Inter-American
Development Bank as well as possibly for UNDP. The three UN agencies all give
more aid to countries geographically more distant from the United States, Western
Europe, or Japan. One can interpret this to the effect that the UN agencies try to
counteract to some extent the bias that is apparent in the aid allocation of many
other donors.
This article has analyzed aid flows, which have not been looked at before. It has
thus added to a more comprehensive understanding of the determinants of total aid
allocation. All in all, there are not all that many differences among the multilateral
aid donors looked at here and between these and bilateral donors. Beyond
economic and possibly human development needs there is very little evidence that
regional development banks and the three UN agencies take into account respect
for political freedom and the extent of perceived corruption in recipient countries.
Given that political freedom constitutes a fundamental human right and that
corruption represents a fundamental obstacle to the proper use of external finance
one would wish that these two factors played a more prominent role in their aid
allocation. Perhaps most disappointing from a normative point of view is the
outright insignificance of respect for personal integrity rights as a determinant of
multilateral aid allocation. But, again, this is not much different from bilateral aid
allocation in spite of much rhetoric to the contrary (Neumayer, 2003a, 2003b).
On a more positive note, the multilateral aid donors looked at here do not share the
geographical proximity bias of bilateral donors and only some of them share the
bias toward countries with former colonial experience. However, the amount of aid
distributed by these agencies is of course much smaller as can be seen from Table
1, so that on an aggregate level more aid clearly goes to countries with longer
colonial experience and closer geographically proximity to the centers of the
developed world.

Neumayer, Eric (2003b), Do Human Rights Matter in Bilateral Aid

Allocation? A Quantitative Analysis of 21 Donor Countries, in Social
Science Quarterly, Vol. 84, No. 3, pp. 650666.
Existing studies that look at the role of personal integrity rights in addition to
civil/political rights have focused on U.S. aid allocation. Studies looking at aid
allocation by other donors have not included personal integrity rights. This article
has attempted to fill this gap. Indeed, to the best of my knowledge, it is the first

30

study to comprehensively analyze the role of human rights in the allocation of aid of
all the 21 member countries of the OECDs Development Assistance Committee.
The results reported above convey a mixed picture of the role human rights play in
the allocation of aid. On the one hand, respect for civil/political rights is a
statistically significant determinant of whether a country is deemed eligible for the
receipt of aid for most donors. Respect for these rights thus clearly plays a role as a
gatekeeper for most donors. Respect for personal integrity rights, on the other
hand, is insignificant for most donors. At the level stage, respect for civil/political
rights and respect for personal integrity rights exert a positive influence on the
pattern of aid giving of only few donors. Table 3 compares our results at the level
stage to those of Svensson (1999) and Alesina and Dollar (2000), the only studies
addressing the impact of civil/political rights on aid allocation by donors other than
the United States. Our results with respect to the effect of civil/political rights on aid
allocation are consistent with at least one of these studies in the case of France,
Germany, Italy, Japan, the United Kingdom, the United States, the Netherlands, and
Norway. For Canada and Denmark, Svensson (1999) finds a positive effect of
civil/political rights. Our study suggests that it is personal integrity rights instead
that matter for these two donors, and that Svenssons result is due to model misspecification, given that he does not control for these rights. A similar argument
applies to Australia, for which Alesina and Dollar (2000) report a positive effect of
civil/political rights, whereas our results suggest again that it is personal integrity
rights that matter. Only in the case of Sweden does our study fail to find any
positive effect of human rights on aid allocation contrary to Svenssons (1999)
result. As concerns the United States, our results confirm Poe and Sirirangsis (1994)
finding that human rights matter at the aid eligibility stage and not at the level
stage, as suggested by Cingranelli and Pasquarello (1985).
One of the major results of this article is that the like-minded countries do not fare
better as a group than the other donors in spite of usually being portrayed (not the
least by themselves) as committed to the pursuit of human rights. This does stand
in contrast to Svensson (1999) and Alesina and Dollar (2000). What this article has
shown is that the impact of human rights on aid allocation by these countries is
much less consistent than the other studies would suggest. The Netherlands and
Norway indeed provide more aid to countries with higher respect for civil/political
rights, but also less aid to countries with higher respect for personal integrity rights.
Canada and Denmark provide more aid to countries with higher respect for personal
integrity rights, but not civil/political rights. Indeed, there are only two countries
(Japan and the United Kingdom) that give more aid to countries with greater respect
for both aspects of human rights, and they belong to the group of big aid donors,
not like-minded countries.
All in all, the results reported in this study are rather sobering from a normative
point of view. Respect for human rights does not exert a consistent influence on aid
allocation by most donors. There is inconsistency across the two stages of aid giving
as well as across the different aspects of human rights. There is not a single donor
that would consistently screen out countries with low respect for civil/political and
personal integrity rights and would give more aid to countries with higher respect
for both aspects of human rights. If donors want to appear less hypocritical about
their commitment to the pursuit of human rights, our analysis suggests that they
still have a long way to go.

30

Neumayer, Eric (2005), Is the Allocation of Food Aid Free from Donor
Interest Bias? in Journal of Development Studies, Vol. 41, No. 3, pp. 394411, Routledge Taylor & Francis Group.
Is food aid allocation free from donor interest? Not quite so, as the results of the
analysis here have shown. In particular, almost all donors give preference to
countries that are geographically close to the donor or to the US or Western Europe
in case of WFP and NGO aid. The geographical proximity bias need not be
interpreted strictly in terms of donor interest as the attempt to maintain a regional
sphere of influence. The plight of geographically closer countries is also more salient
in the public perception and those of policy-makers. In addition, in the case of the
US and the EU, the geographical bias could also imply that these donors are willing
to assume responsibility for their respective regions. Food aid seems to be used
sometimes to reward political allies as measured by similar UN general assembly
voting patterns. Perhaps more importantly, however, and contrary to general ODA,
food aid is not used to reward countries in which donors have economic export
interests. In non-reported sensitivity analysis it has been checked that this holds
true not only for food, but for exports of all other goods and services as well. Neither
do donors pursue military-strategic interests in food aid allocation. The only
exception to this is NGO aid at the level stage, where major recipients of US military
aid also receive more NGO food aid. This result could be down to chance of course.
Equally, no bias towards former Western colonies is apparent. This represents quite
an important result that stands in striking contrast to the allocation of general ODA.
Interestingly, there is no difference apparent between the US on the one hand and
the multilateral donors WFP and EU as well as NGOs on the other hand. This also
stands in contrast to the allocation of general ODA, for which the US together with
France is often found to promote vigorously its own interest [Neumayer, 2003a,
2003c].
One or the other aspect of recipient need impacts upon the food aid allocation of
almost all donors at both stages and with respect to both emergency and total food
aid. Not surprisingly, given the prominent humanitarian role of the WFP and NGOs in
relieving food aid needs in disaster situations, it is found that the number of
refugees hosted has a statistically significant impact at both levels and for both
emergency and total food aid of these donors. On the whole, EU food aid allocation
seems to take recipient need most comprehensively into account, whereas the
opposite is the case for US food aid allocation. Even in the case of US food aid,
however, it is only at the level stage of emergency aid that one or the other variable
of recipient need does not test significantly.
Some have suggested that WFP food aid is not well allocated with respect to
recipient need and have explained this with the fact that the WFP gives aid to a
great many countries.
The WFP has always followed a policy, as a UN agency, of the widest coverage
with its multilateral donations of the maximum number of countries eligible to
receive food aid, rather than concentrating its food resources in larger projects
and programmes [Cathie, 1997: 104].

30

Gabbert and Weikard [2000: 213] similarly argue that the widespread WFP delivery
of food aid is less effective, because it means that a large fraction of the aid goes
to countries not having the most urgent needs. However, our estimation results do
not back this claim and instead support the opposite findings of Barrett and Heisey
[2002] as WFP food aid allocation in the 1990s appears quite sensitive to recipient
need throughout and at both stages.
Population size has a positive impact upon food aid allocation almost throughout. At
the level stage, it is not surprising to find that more populous countries receive
more food. Given that both the dependent and the population size variables are in
natural logs, one can interpret the estimated coefficients as elasticities. With
estimated elasticities of below one in all cases evidence is found that the wellknown population bias of general ODA [Isenman, 1976] towards less populous
countries in terms of per capita aid allocated carries over to food aid as well. The
positive effect of population size at the food aid eligibility stage almost throughout
is more puzzling, however. The bias is probably due to the higher saliency of more
populous countries in the public mind and that of policy-makers alike. It also
represents some cause for concern, however, as there is no reason to presume that
less populous countries are any less in need of food aid than more populous ones.
All in all, the fact that food aid appears to be less biased towards donors interests is
to be welcomed from a normative point of view. Aid should be allocated on the basis
of recipient need, not of donor interest. The allocation of food aid in the 1990s
seems to comply with this requirement to a greater extent than general ODA. In
particular, the hard economic export and military-strategic interests that impact
upon much of the allocation of general ODA has no impact on the allocation of food
aid.
In future research, it might be interesting to do a similar analysis for the period
before 1990 to compare the results from before and after the end of the Cold War
more directly. Another direction worth taking would be to simulate what the
allocation pattern of food aid would look like if it was entirely free from donor
interest bias and to compare the results either with actual food allocations or the
ones predicted by the estimated models in this article. Such an analysis would shed
even more light on how important the impact of donor bias on food aid allocation
actually is.

Nitsch, Manfred (1982), Rich Country Interests and Third World

Development: The Federal Republic of Germany, in Cassen, Robert, Jolly,
Richard, Sewell, John, and Wood, Robert (eds.) Rich Country Interests and
Third World Development, pp. 215-247, London: Croom Helm.
The profile of German interests in Third World development can be grouped in four
fields: globalistic interests, Western bloc interests, control interests on the national
as well as the European level, and humanitarian interests in human rights and
overcoming poverty and marginality.
The resulting profile mirrors the Federal Republics role as the worlds leading
exporter of capital goods; globalistic economic interests are the most powerful,

30

articulating themselves in the doctrine of free trade and favourable investment

climate, which in turn tends to blur the line between global economic relations,
regardless of economic and social systems, and economic relations with the
Western bloc. The interests in a universal world order comprises all nations can thus
not be directly derived from narrow economic interests, but has to be related to
peace and development as paramount though rather abstract objectives of policy
which lack the backing of compact pressure groups.
When the profile of German interests is matched with the requirement of
development and its various facets and dynamic implications, only partial clear-cut
mutuality can be detected, though a large field of diffuse common interests waiting
for activation can be mapped out. Self-reliance in the articulation and the pursuit of
interests on the side of the Third World remains essential, since it is obvious that
German interests cannot be relied upon as strong enough for securing development
outside the borders of the Federal Republic of Germany and its larger political
economic unit, the European Community.

Nol, Alain and Therien, Jean-Philippe (1995), From Domestic to

International Justice: The Welfare State and Foreign Aid, in International
Organization, Vol. 49, No. 3, pp. 523553.
The end of the cold war gave much credence to the liberal critique of international
realism and to the call for a better understanding of the domestic sources of
international cooperation. The most fundamental international changes of our era,
noted Friedrich Kratochwil, resulted from domestic, not systemic, transformations;
concentrated on systemic interactions, realist scholars failed to explain, let alone
predict, these changes.85 As a result, international liberalism appeared reinforced, as
a research program that offered many plausible insights to understand
contemporary trends.86 Welfare, wrote one observer, not warfare, will shape the
rules of international politics.87
This study is inspired by the liberal perspective on two counts. First, it deals with the
power of values and principles in international politics. Second, it explores the
relevance of institutions and domestic politics for international cooperation. With
respect to foreign aid, at least, the liberal perspective appears vindicated. Welfare
principles institutionalized at the domestic level shape the participation of
developed countries in the international aid regime. Previous studies suggested
such a relationship. Imbeau, for instance, found a relationship between partisan
orientations and aid contributions; Lumsdaine linked social spending and foreign
aid; and Pratt and Stokke identified similar associations in case studies of the socalled like-minded countries. Our findings expand on these initial results. Because
socialist welfare attributes capture the logic of solidarity that prevails within a
society more directly than spending or partisan indicators, they best explain foreign
aid contributions. Such an institutional approach accounts not only for variations in
the volume of development assistance, but also for the fact that foreign aid
orientations change slowly.
Of course, foreign aid constitutes a peculiar domain of international politics. Some
would argue it is a minor, unrepresentative instance of international cooperation. In

30

fact, aid constitutes a fundamental, enduring aspect of north-south relations and a

major financial transfer. 88 It is also a critical case for the realist, neo-Marxist, and
liberal perspectives. Each approach has sought to interpret development assistance
in a manner consistent with its vision of world politics. Realists see aid as an
interested behavior, neo-Marxists as rooted in class relations and imperialism, and
liberals as a form of humanitarianism. Our conclusion gives credence to both the
liberal and the neo-Marxist points of view. Like liberals, we see aid as principled and
rooted in domestic values. Like neo-Marxists, we see state actions as anchored in
institutional arrangements that themselves result from class and partisan conflicts.
89

An obvious limitation of comparative, institutional explanations is their tendency to

take a static character. 90 Although welfare institutions are usually stable, they are
not immutable. New collective and political actions can change the rules of the
game. To go beyond comparative statics, institutional explanations must incorporate
social actors and conflicts and account for the emergence and transformation of
hitherto stable arrangements.91 In periods of change, however, conceptions of
justice should also play a major role, as they guide political movements and shape
political debates.92
In the end, one may also question the very distinction between a domestic and an
international order, increasingly challenged by global economic, political, and social
exchanges of all types. 93 With respect to liberal democracy, however, the distinction
remains operative. The domestic level is still the best arena for social movements
and political parties to impose and institutionalize distinctive and meaningful
conceptions of justice. One should keep in mind that while developed countries
dedicate 25 percent of their GNP to social programs, they collectively allocate no
more than 0.35 percent to development assistance. 94 Whether they concern
domestic welfare or foreign aid, conceptions of justice stand at the core of political
debates and conflicts, and they provide a key mechanism to make various
institutions and policies relatively coherent. Between the domestic and the
international arenas, however, the commitment to redistribute remains very
different.

OLeary, Michael Kent (1967), The Politics of American Foreign Aid, New
York: Atherton Press.
Chapter 1: Background to Foreign Aid
Many signpost point to Americas changing course in world affairs. Among the most
striking are Presidential responses to economic hardships abroad. In the 1920s, the
nations of Europe were in debt to the United States because of loans made during
World War I and were unable to make repayments largely because of American
trade restrictions. As they headed toward economic and ultimately political disaster,
the American mood was all too well expressed by President Calvin Coolidge, who
tartly dismissed suggestions that America render assistance with the observation,
They hired the money, didnt they? Less than forty years later, President John F.
Kennedy voiced a new mood in America response the economic plight of peoples
abroad when he not only affirmed Americas concern but also added a moral

30

commitment: To those peoples in the huts and villages of half the globe struggling
to break the bonds of mass misery, we pledge our best efforts to help them help
themselves, for whatever period is required because it is right.
This sharp about-face in American orientation toward world economic problems has,
understandably, been accompanied by doubt and criticisms. Yet the trend of policies
has been such that when Henry Hazlitt, a severe critic of foreign aid, facetiously
asks, Will dollars save the world? 1 there is at least a partial reply: The United
States Government has in fact become committed to the use of dollars to try to
save a world in which Americans can live with freedom and security.
Yet official government commitment is not enough. American foreign aid policy, like
many American policies since World War II, operates in a paradoxical context.
Officials have at their disposal physical and intellectual resources of a magnitude
unprecedented in the history of international relations. These stores of potential
power, however, can often accomplish very little by themselves. American officials
must, as never before, rely on the cooperation of others at home and abroad for
the successful conduct of policy. In our concern with what vast and fearful
consequences might ensue from the secret decisions of a small handful of officials,
we must not lose sight of how current national and international political forces
actually restrict the actions of policy-makers.
Foreign aid is a primary case in point. A successful policy requires both technical
knowledge to analyze problems and access to the material resources necessary to
solve the problems. More than this, assistance programs must be acceptable to
those for whom the aid is intended. They must also be actively supported by the
American public and Congress. The failures to satisfy this latter requirement, no less
than the others, can mean the failure of the entire program.
In the past, governments needed to mobilize widespread public support on foreign
policy matters only in times of war. Today, however, if the long twilight struggle
for economic development is to succeed, it must be constantly supported at every
level of American society. The best intentions of policy-makers, the shrewdest
analyses of experts, the immense national wealth will be useless if citizens turn
against officials who strive to provide assistance abroad, if experts are unwilling to
apply their skills overseas, or if Congress will not support the policies.
Any study of foreign aid must come to grips with the difficult problem of definitions.
The American governments economic policies range from permitting normal
commercial trade, to encouraging trade through various subsidies, to loans with
varying terms of repayment, to direct grants. Experts disagree as to where trade
leaves off and aid begins. Furthermore, the composition of aid involves everything
from surplus food to the skills of technicians, to military, industrial and consumer
goods, to direct dollar payments.
Much of the public malaise about foreign aid can be attributed to this ambiguity.
Unhappily, a search for the historic origins of foreign aid does not clarify matters. In
one sense, America has been in the business of foreign aid for its entire history.
When Thomas Paine said, The cause of America is the cause of all mankind, he
expressed a faith that has shaped American thought and action to this day. The
American experiment in politics and economics has been judged to be not only for

30

internal use; in the words of Charles Burton Marshall, Americans considered their
new nation an exemplar for all mankind a nation with a world mission, the
guide to a new Jerusalem.2 Such enthusiasms have transformed trade relations,
diplomatic recognition and exchange, and all other political intercourse into
opportunities for extending the American way of life as foreign aid to willing or
unwilling nations. []

Chapter 2: Foreign Aid and American Political Culture

We can best begin to appreciate American thinking about foreign aid by considering
the general culture and ideological environment in which public judgments and
evaluations are made. Foreign policy is physically and psychologically remote from
most people. Events are so complex and obscure that detailed understanding is
beyond the capabilities of all but the expert. As a substitute for sufficient knowledge
most people, occasionally even experts, will interpret events in terms analogous to
their own experiences, their own traditions, and their own previously established
judgments of right and wrong in matters of public policy. We laugh at the sign, My
mind is made up, dont confuse me with facts. Yet this is a slogan we all follow to
some degree in making comprehensible an otherwise intolerably complex and
uncertain world.1 We fashion judgments, especially about new policies, on the basis
of what we already know and believe.2
Our concern with the cultural underpinnings of opinion leads us to expect opinions
and attitudes to be formed not so much through deliberate thought and analysis as
through reactions to images or generalizations about foreign aid. We will
investigate, in other words, the affective rather than the effective bases for
judgments about foreign aid.3
Americans rely on three principal sets of criteria in evaluating foreign aid: whether
foreign aid policies are consistent with traditional American responses to the
international environment; the role of foreign aid in current diplomatic strategy; and
the place of foreign aid in the area of government economic policy.
Internationalism
It has been argued that the sentiment of the American people has historically
followed well-defined alternating moods in the degree to which internationalist
activity is favored.4 The present is clearly a period of extroversion characterized by
an initial presumption in favor of international activity. The frequently described
postwar revolution in American foreign policy consists in part of public
endorsement of increased economic, political, and military activity overseas. In
opinion surveys, the public has repeatedly placed questions of war and peace and
other international matters at or near the top of the list of the major problems
facing this country.5 Since the last years of World War II, approximately three-fourths
of those polled have acknowledged the need for America to take an active role in
world affairs.6
Approval has also been high for policies of economic assistance abroad. The
Marshall Plan enjoyed high levels of support, 7 and even aid for economic
development, the more controversial aspect of aid policy, has received more than

30

60 per cent approval as a general proposition.8 In the press and elsewhere, most
public comment presumes the need for some sort of aid, although, as we shall see,
there is little consensus as to the details of an optimum foreign aid program.
The exact reasons for this internationalist outlook are not easy to determine, but
perhaps a chief factor is the venerable ideal of an American mission throughout
the rest of the world. This attitude was born in the American Revolution and
nurtured in the geographical and economic expansion of the nineteenth century. It
reached an aggressive adolescence at the turn of the century and, having attained
a somewhat subdued maturity since 1900, it still operates to give strength to the
feeling that America can effect an uplifting of the quality of life in foreign nations.
Such an attitude does not necessarily imply support for any one type of foreign
policy. In some cases the notion of American uniqueness may even lead to a kind of
national parochialism calling for exclusion from contracts with the benighted
foreigners. But for the most part it helps create support for an activist, even
aggressive, style of foreign policy.
The concept of mission has included a strong dose of humanitarianism, a
component which lends support to certain forms of aid. The strength of this idealism
and humanitarianism can be surprising. On two occasions in 1943 over 80 per cent
of survey respondents indicated a willingness to remain on the despised rationing
system for another five years, ... to help feed the starving people in other
countries.9 In 1959, 73 per cent of poll respondents approved an idea to create a
Great White Fleet of unused Navy vessels fitted out as hospital ships, food supply
ships, training schools and the like for the benefit of poorer nations. 10 In March
1966, 61 per cent of a survey named building hospitals, training nurses and doctors,
and providing medicine as the kinds of foreign aid which they favored most. 11
Coupled with humanitarianism as a motivating force in the American missionary
ideal is the belief that the American way of life however variously that may be
defined can be exported to the advantage of the other nations. This feeling, based
on Americas self-image as a unique combination of economic power, intellectual
and practical genius, and moral vigor, 12 has contributed important, if selective,
support for aid regimes. It has helped lead to the high popularity of those aspects of
foreign aid which involve Americans in face-to-face relations with foreigners for
purposes of teaching, training, and instructing. Such a feeling helps explain the
results of the 1966 poll cited earlier, in which between 61 and 65 per cent of the
survey favored aid programs in the fields of education and agriculture assistance. 13
This feeling has meant continuing public support for the Point Four technical
assistance component of foreign aid which was more popular, in the view of at least
one government official, than even the Marshall Plan. 14
More recently, the American dedication to spreading Americanism has led to
enthusiastic support for the Peace Corps. 15 Popular approval is due in large measure
to the Peace Corps image as a means of sending abroad a host of selfless
Americans to work with backward peoples and thereby, in the phrase of Sargent
Shriver, the Peace Corps first director, to energize activity in the host country. 16
The Peace Corps also profits from the attraction of citizen diplomacy, which has
always been at least a minor theme of the patriotic missionary ideal. Indeed, the
two-year limit on the tour of the Peace Corps volunteers (with a slightly longer limit
for the staff) is an echo from the diplomatic style of a much earlier day, when the

30

tenets of Jacksonian democracy called for tenure of about two years in all diplomatic
posts.17
As we look closely at the characteristics of the American missionary spirit we can
see that it contains seeds of its own negation. If most Americans, as Geoffery Gorer
has argued, consider that taking part in an international undertaking means simply
extending American activities outside the boundaries of the United States, 18 it
follows that foreigners are often expected to reciprocate with appropriately
compliant behavior.
Most Americans can scarcely be said to apply close analysis to the detailed
consequences of aid policy. But there is evidence that many Americans nevertheless
share a general expectation that foreign aid will help sell or transmit Americanism
abroad. In 1949 the National Opinion Research Center asked a sample of the
population whether they thought foreign aid helped the United States. Those who
considered aid helpful (55 per cent of the sample) were then asked to give the
reasons for their opinions. Of this group, just under half gave answers classifiable as
helps us politically, which seemed to mean either that aid would make others like
the United States more, or that it would make them more like the United States:
builds good will, promotes friendly feelings toward us; theyll be on our side in
case of war; its good propaganda for democracy, capitalism. 19
Hans Morgenthau has noted the similarity between Wilsonianism and present-day
thinking about foreign aid:
Wilson wanted to bring the peace and order of America to the rest of the world
by exporting Americas democratic institutions. His contemporary heirs want to
bring the wealth and prosperity of America to the rest of the world through the
export of American capital and technology.20
We might amend this to say that many of his contemporary heirs want to outdo
Wilson by exporting political and economical institutions through foreign aid. 21
It should be easy to see how undependable is the support for foreign aid which
flows from the missionary spirit. Only frustration and disappointment can result
from expectations that aid recipients will mesh their foreign policy with Americas,
will come to resemble America in their political , economic, and social systems, or
even will feel more favorably disposed to America as their benefactors.
Indications of public sensitivity to inadequate foreign responses are not difficult to
find. As far back as the late 1940s, when public support for the Marshall Plan was
running between 56 per cent and 73 per cent of those interviewed, the NORC
uncovered a strong undercurrent of something less than enthusiasm over Europes
own part in the recovery program. On two occasions (December 1947 and April
1949) respondents were asked whether they thought Europeans were working as
hard as they could, or whether they were depending too much on the United States
for help. It was felt by 64 per cent and 58 per cent of those answering, respectively,
that the Europeans were overdependent on the United States. 22 Even earlier
soundings of opinion had discovered the same sort of feeling. In October 1945,
respondents were asked a two-part question: Should loans for recovery be made to
our three wartime allies England, Russia, and China? If loans were made, would
the countries repay them? The replies demonstrated two things about public

30

feeling: the chances for repayment were thought to be rather slim; and sentiment in
favor of such a loan to each country varied with the expectations that the country
would repay, with China receiving the most favored public judgment (see Table II-I).
The negative side of Americas response to international aid was illustrated in 1949
by a poll in which those who opposed aid to underdeveloped countries were asked
to give their reasons. Over 50 per cent indicated a fear that the psychological
rewards of aid would be insufficient that the recipients would not be grateful, or
that aid was in itself inconsistent with American traditions of self-help and minding
ones own business.28
A more recent example shows how this belief in a unique American mission works
both for and against foreign aid. In 1961 there was a brief period of public
discussion concerning the desirability of assisting the Ghanian government to build
a hydroelectric dam on the Volta River. Most of this discussion, both favorable and
unfavorable, was concerned scarcely at all with the economic or technical feasibility
of the project. Instead, concern was expressed at the time in Ghana, and about the
extent to which President Nkrumah was favorably disposed to the Communist Bloc.
Those who favored the project argued that American aid would make Ghanas
politics more free and stable. Many were opposed because they wondered, with the
Philadelphia Inquirer, if nations anywhere would see an advantage in practicing the
principles of democracy and freedom, and supporting the fight against
communism, since we would be giving money to a government which did neither
of these things.24
There is a final point about the twofold impact which the American missionary
attitude has upon the support of foreign aid. Negative feelings represent much more
simply a diminution of the base for positive reactions. As an aid program departs
from those characteristics which make it appear to be essentially American life
transplanted abroad, the idealism becomes dampened and the missionary feeling
may turn inward, rejecting foreign aid. The workings of this anti-aid syndrome can
be easily summarized: Americans tend to assume that other nations want the
essence of our political and economic institutions, and that they have the means to
obtain them. When this anticipated universal aspiration toward Americanism 25 is
not manifested in the nations that we help, American fears of being rejected and
exploited can lead to an abandonment of international cooperation. Every deviation
from American policy goals, every unfriendly gesture by Latin Americans, Africans,
or Asians, becomes new justification for cutting down or eliminating aid. 26 As Gorer
has summed up this attitude, People so perverse as to choose to remain foreign
deserve no help.27
Foreign Aid and Diplomacy
A second major aspect of opinion revolves around consideration of foreign aids role
in American diplomatic strategy, especially in cold-war competition with China and
the Soviet Union.
Foreign aid gains support insofar as it is seen as a potent anti-Communist weapon,
improving the living standards of others to make them less susceptible to
communism, and as an inducement or reward for nations allying themselves with
the United States against immediate or potential Communist aggression. Support

30

for the Marshall Plan can be traced in large measure to the widespread feeling not
only that American aid to Europe would help prevent the spread of Communism by
external aggression in Europe but also that in the absence of aid some of the
domestic politics of countries would probably become dominated by Communists. 28
The image of aid as a direct anti-Communist tool has also led to support for military
assistance. A series of polls since June 1950 has shown that 60 per cent or more of
the population has supported the general notion of military assistance to European
and Asian allies.29 As we shall see later, however, Americans have their doubts
about military aid, too.
The view of aid as a diplomatic tool likewise fails to evoke unmixed support. The
widespread simplifications involved in opinion-formation are nowhere more
apparent than in the case of diplomatic strategy. If aid is to be supported as a tool
against international communism, it therefore must not be used ambiguously. Thus,
assistance to Communist countries, or even neutrals, is highly inconsistent with the
general attitudes favoring aid.
This uncertainty or even antipathy toward aid to non-allies was clearly show in a
series of 1956 polls which asked whether we should continue to aid some countries
like India, which have not joined us as allies against the Communists. The
expressed sentiment was as much as 43-50 per cent against continuing such aid. 30
The American approach to foreign policy commonly distrusts any sharp and basic
disagreement with Americas conception of world affairs, and includes an active
sensitivity to being rejected or exploited by others. This is part of the reason for the
extreme bitterness of newspaper and other public reaction to Indias military seizure
of the Portuguese territory of Goa in 1961. This action was interpreted as an antiWestern and anti-American move just a short time after Prime Minister Nehru, who
had received much aid from the United States, had visited this country and had
received considerable editorial sympathy.
Another reason for the difficulty of reconciling the concept of aid as a means of
advancing the national interest with the policy of aid to nations which do not share
American purposes is the unwillingness of the American public to accept the
uncertainty of diplomacy the persistence of this problems and the tentativeness of
its opportunities. In arguing as to who should receive aid, public judgments tend
toward polar extremes: if a Sukarno or an Nkrumah initiate anti-American actions
they are impossible to deal with and wholly undeserving of aid. If they make the
slightest friendly gesture or, better yet, if they are overthrown, then things look
much rosier in that region of the world, and the foreign aid gamble is held to be
justified.31 The basic problem remains much the same now as when de Tocqueville,
in his study of America, noted that democracy appeared better adapted for the
conduct of society in time of peace, or for a sudden effort of remarkable vigor, than
for the prolonged endurance of the great [international] storms that beset the
political existence of nations.32
For whatever reasons, the American has typically reacted in extremes to foreign
policy challenges. He tends to wish to solve international problems by either
unentangling precept or short-term massive intervention. This approach is applied
to foreign aid as well as other foreign policies. In 1949, when sentiment was 70 per

30

cent or more in favor of aid to underdeveloped countries, a sample of those who

approved was asked if the United States should put up some of the money for this
purpose or just help in other ways. The division was even (46-46 per cent)
between those who were willing to expend money for this purpose and those who
selected the unspecified other ways, which probably seemed less costly and less
entangling.33
When the choice has been between economic and military aid the pattern has been
similar, though more complex. Between June 1948 and December 1952, the NORC
conducted seventeen polls which included questions regarding economic aid.
Favorable opinion averaged 62 per cent.34 During approximately the same period
(April 1948 through 1950) a series of questions was asked regarding military aid.
Support was about ten points lower, averaging 53 per cent. 35 Similarly, on seven
occasions in the 1950s, respondents were asked direct questions as to which they
would prefer sending, military or economic aid. In every case economic aid was
preferred over military, by margins averaging 36 per cent. 36 On the other hand,
after the outbreak of the Korean War support for military aid was much higher. From
July 1950 to November 1956 support for military assistance averaged 70 per cent in
a series of twelve questions.37
In early 1966 a survey showed that the more entangling forms of aid military
assistance, road buildings, and assistance for capital projects such as factories
were the least popular forms of aid. These forms were chosen by an average of 24
per cent, as opposed to the most popular item, educational assistance, which was
chosen by 64 per cent. 38 We are a task-oriented society, and will favor even
hazardous and expensive actions if they are measurably achieving some goal. But
in the absence of clear-cut goals and achievements, we are likely to limit our risks
as much as possible. As V. O. Key concluded, we show a strange mixture of verbal
toughness and of the trustfulness of a delighted puppy when treated in a friendly
manner.39
The increase in support for military assistance after the outbreak of the Korean War
was not simply a shift from pacifism to blind militarism, but rather a change in the
interpretation of the international situation. Previously, secondary means were
thought sufficient to meet the demands of the international situation; later, both the
wealth and the armed force of the United States were seen as necessary to
eliminate a state of affairs intolerable because of its threat and ambiguity. It must
be remembered that this proposed military assistance which received increased
support was not for Asia, where fighting was taking place, but for Europe, where the
need for the military was only potential.
The tendency to react in extremes can also be seen in the continuing public debate
concerning international aid to Communist countries such as Poland and Yugoslavia.
Opponents of such aid base their case on the assertion that Poland and Yugoslavia
still remain anti-American and pro-Russian in so many respects as to make them
unqualified to receive our aid. Those favoring aid do so on the grounds that in the
absence of our aid all is lost and that Yugoslav and Polish leaders will be forced to
go all the back to Moscow. 40
We can, in other words, speak of a widespread failure to appreciate that both the
gains and the losses of diplomacy often are limited and temporary. Americans

30

overestimate both the impact that aid can have on a given international situation
and also the degree of change that can be expected during any short period. This
trait has been well summarized by the economist Robert Asher, who has spoken of
the American tendency:
to oversimplify our problems , to shortcut our way to a solution. One year its
the Bretton Woods agreement that will solve our postwar economic problems;
another its the Marshall Plan; then its technical assistance; today [July 1953]
its trade not aid. We tend to overlook these slogans and, in doing so, to
blind ourselves to the complexity and the long-range character of our foreigneconomic problems.41
Foreign Aid as an Economic Question
Foreign aid, being to a large extent an economic policy, is also judged in terms of
economic assumptions and doctrines. As already noted, some of the support which
aid has received comes from the belief in the efficacy of a kind of international full
belly policy as a barrier to the growth of communism within nations. The polls
indicate that Americans associate high living standards in both Europe and Asia with
low levels of communism.42
Economic development has been favored not only as an anti-Communist device, but
also as one way in which America could export the economic aspects of
Americanism a healthy, affluent, and, most especially, free enterprise economic
system. The passage of time has shown how radically this goal differs from what is,
in fact, achievable. Anticipation of widespread imitation of American economic
practices no longer serves to back up support for foreign aid. 43
Polls in the 1940s show support for aid on the basis of more narrowly conceived
economic considerations. In the last year of World War II, 78 per cent of respondents
agreed with the proposition that well have the best chance of prosperity in this
country by helping other countries in the world get back on their feet and 57
per cent agreed that if our government keeps on sending lend-lease materials,
which we may not get paid for, to friendly countries for about three years after the
war this will mean more jobs for most Americans 44 In response to open-end
questions on reasons for liking the Marshall Plan after it was under way, 44 per cent
of respondents who favored the Plan volunteered their expectation that it would
help the United States economically. 45
Although, as we shall see in subsequent chapters, arguments are still made in
behalf of foreign aid on the basis of its favorable impact on the American economy,
such arguments are now sharply challenged. It may very well be that one of the
most potent arguments against foreign aid is now the economic one, in particular
that aid is too expensive.46
It must be pointed out that opposition to aid on the basis of cost, while important, is
a secondary phenomenon. The American citizen will support the spending of his tax
dollars for many different reasons altruism, national emergency, or narrow and
immediate self-interest. In the philosophical limbo in which foreign aid finds itself,
no consistent clear-cut rationale has been advanced to convince any large numbers
of people of the wisdom of spending several billions of dollars a year for aid.

30

The relative saliency of anti-foreign-aid opinions within the context of cost was
demonstrated in a 1959 Gallup Poll which asked whether it was preferable to cut
back on government spending or to increase taxes. To this vague proposition an
unsurprising 72 per cent chose to cut back on spending. This group was then asked
what things they would like to see cut back. Of a long list of activities considered
expendable, foreign aid was mentioned most frequently in 30 per cent of the
cases, twice as much as the second-place item.47 A 1949 NORC poll found that the
single most frequently objection to foreign aid was the cist especially the problems
of spending money overseas when things needed to be done at home. 48 A 1965
survey found that three times as many people feel we are giving too much aid as
we feel we are not giving enough.49
The anti-spending component of negative attitudes about foreign aid has continued
to be rather consistent over time, and is apparently independent of the changing
currents of political debate. In 1959, for example, the question of whether to raise
or lower the defense budget was being hotly debated in Washington. The Gallup
Poll, in order to find out what the public was thinking about this issue, asked
respondents to note the budget items for which they thought the government
should spend more or less money. In the list of things for which the government
should decrease spending, defense was in third place, named by 9 per cent of
respondents; leading this list was foreign aid, named by 17 per cent. 50
On the other hand, when respondents are asked open-ended questions about
governmental problems not in the context of spending, foreign aid does not invoke
the same high degree of negative response. In December 1959 the Gallup Poll
asked respondents what topics they would like to discuss in letters to their
congressmen. Cutting taxes (named by 14 per cent) and labor legislation (named by
10 per cent) headed the list after the 18 per cent who knew of nothing to write.
Opposition to foreign aid was far down the list, mentioned by only 2 per cent. 51
Interrelationships of Opinion
We can now inquire about the impact on public opinion of the many contrasting
images of foreign aid which might activate conflicting attitudes of the man in the
street: exporting the American way of life vs. dangerous and uncertain international
involvement; worthy assistance to people in need vs. undesirable governmental
spending; building bulwarks against communism vs. helping nations which seem all
too friendly to communism.
Some notion of current judgments of aid may be gained from a Gallup Poll of early
1966: In general, how do you feel about foreign aid, are you for it or against it? A
bare majority, 53 per cent, were in favor of foreign aid, 35 per cent were against it,
and 12 per cent had no or uncertain opinions. 52 Earlier polls show about the same
distribution of opinion, indicating the persistence of general opinion patterns. 53 This
consistency of the general response, coupled with the wide swings in responses to
variously worded questions, takes us back to the primary pint of this chapter.
Foreign aid means many things, some favored and some feared. To appreciate
public judgments more fully, we need to ask not only what factors influence opinion
about aid, but also what their relative strengths are.

30

To begin with, aid benefits simply from being an internationalist policy. Some
additional characteristics of aid which increase its public approval are: programs
which seem to export elements of American society and values (ideological aid);
programs which contain elements of humanitarianism; programs which support
international allies; programs which are low in cost. Conversely, other qualities of
aid programs increase the likelihood of opposition: programs which aid nations that
do not share the United States view of the cold war; programs which involve
relatively deep entanglement in international problems; and programs which are
costly.
Predictably, positive characteristics appearing together in an aid program intensify
support, while combinations of negative characteristics intensify opposition. The
Marshall Plan was directed toward a group of familiar countries which increasingly
came to be thought of as allies vis--vis the Communist world; Marshall aid also had
a more or less definite price tag and fairly well-defined goals and time limit. Aid to
underdeveloped nations, on the other hand, is directed toward a host of unfamiliar
peoples and societies whose international loyalties are uncertain at best, and is of
open-ended cost, uncertain ends, and indefinite duration.
Specific poll questions bear this out. In 1955 and 1956 the NORC asked a series of
questions concerning economic aid. These questions sought opinion on the
economic, and therefore relatively unentangling, form of aid and also aid to
countries that have agreed to stand with us against Communist aggression,
thereby stressing two of the positive factors mentioned above. The average rate of
approval for this type of aid was 83 per cent. At the same time the respondents
were asked about giving economic aid to countries like India, which have not joined
us as allies against Communists. The average approval of this proposition a
desirable type of aid to non-allies was only 49 per cent. 54
Similar evidence of the interaction of positive and negative forces can be found in
public comment on policies of giving food to people in Communist countries.
Opinion seems to be divided about evenly. Some, even among those who generally
oppose aid to Communist countries, say we should not use starvation as a weapon.
Others reply that sending food to starving peoples in Communist countries is doing
them no favor if it helps strengthen their oppressive governments. 55
It appears that elements affecting evaluations of foreign aid may be tightly
compartmentalized in the public mind. It will be recalled that in one previously cited
poll only 33 per cent of respondents approved of a loan to England when they were
asked about it within the context of cost, through a preliminary inquiry into whether
or not the loan would be repaid. In the same poll 82 per cent agreed that the
United States should continue to give relief to people in European countries that
were occupied by the enemy such as France and Greece. 56 It is possible, of
course, that the sharp difference in answers to these two questions is a result of
strong anti-British and pro-French and Greek feeling by the sample interviewed. But
it seems more reasonable to account for these differences by the wording of the
questions, one stressing the strong negative factors of cost and possible nonrepayment; the other stressing a positive factor-humanitarian assistance.
This compartmentalized thought also occurs in relation to other aspects of opinion
about foreign aid. In an investigation of the relationship between opinions on cutting

30

taxes and on supporting foreign aid, V. O. Key found that only one-fifth of those he
studied maintained a consistent position on both issues. It may be that only
about one-fifth of the population can be relied upon to give a consistently sensible
and firm support to interrelated policies of the kinds described. 57
Weighing Positive and Negative Factors
What are the relative weights of these positive and negative factors, or their ability
to influence opinion in one direction or another?
Some of the polling on foreign aid is helpful in this process. Many poll questions are
worded in such a way as to elicit opinion about different kinds of aid. By comparing
responses to poll questions on different aspects of the aid program we can make
inferences about the relative popularity or unpopularity of various kinds of aid. We
can make such comparisons most effectively when two conditions prevail: (1) A
given question pertains to two factors on which opinion seems to be based; (2) A
set of two or more such questions has one factor in common. We compare, for
example, the responses to a question regarding humanitarian aid to neutrals in
order to determine the ranking of the missionary and humanitarian factors. (See the
Appendix for a discussion of this complete process.)
Through this method we have obtained the rankings of four of the positive factors
and three of the negative. In order of the ability to provoke favorable response, the
positive factors are: ideological aid, humanitarianism and low involvement (of equal
weight), and aiding allies. The negative factors, in order of their importance in
influencing a negative response, are: aid to neutrals or non-allies, high cost, and
deep involvement.
The importance ascribed to ideological missionary feelings is to some extent borne
out empirically since this style of aid tends to rank not only as the strongest positive
factor but also as more influential than any of the three negative factors listed. Also,
the factors which can logically be paired aid to allies and aid to non-allies, low
involvement and great involvement do not have equal weight. The positive
influence exerted by aid to allies is less strong than the negative influence of aid to
non-allies. And low involvement is stronger than its negative equivalent.
Thus, an aid program which gave assistance to allies and non-allies would tend to
lack public support. Keys research has given indirect support to this point. Opinions
opposing aid to neutrals (non-allies) are held with an intensity more than two and
one-half times greater than opinions favoring such aid. 58
Similarly, if one segment of the population saw an aid program as requiring deep
involvement while an equal segment saw it as requiring little involvement, the
program would benefit in terms of popular support.
The reasons for these uneven rankings are not always clear. In the case of aid to
allies vs. non-allies, asymmetry may result from the general association of allies
with the negative concepts of deep involvement and possible high cost. In the same
way the negative strength of deep involvement may be weakened by its tendency
to be associated with either missionary or humanitarian activities.

30

The analysis also shows, however, that these factors cannot be given even ordinal
rakings which hold in every case. A humanitarian, aid to allies question and a
humanitarian, high cost question, for example, have the same level of public
approval. This presents a paradox in formal logic but not necessarily in social
psychology. It seems reasonable for a strongly held factor such as humanitarianism
either to cancel out negative factors with which it is associated or to make
accompanying positive factors irrelevant.

Chapter 3: The Political Distribution of Opinion

[] We can end this chapter by restating the point made at the beginning. The
values affecting opinion on foreign aid are interrelated in a wide variety of ways;
opinions themselves are widely diffused throughout American society. Partisan
electoral activities and pressure groups the standard political links between the
governed and the government fail, in the case of foreign aid, to have great
influence on policy-making. Foreign aid involves the American population directly
and indirectly in selling to the government, in working for it, in concern with
government spending, and in other controversial ways. Many groups pay some
attention to foreign aid. Yet both the making of policy and the relevant discussion
and debate on policy still come almost exclusively from the formal decision-makers
in Congress and the executive. Congress, as the ratifier of values and principal
policy-maker, will be our next concern.

Chapter 4: Congress and Foreign Aid

[] We conclude by noting that Congress may be part of America, but is not all of it.
It may be that part of America which feels the need to extend its power abroad but
is not sure how to do it; it may be that part which recognizes the need for
government activity, even while fearing the governments increase in power and
spending; it may be that part divided by images of what the world is like and
preferences as to what the world should be like; and it may be that part united to
some extent by party affiliations and regional attitudes. But if it is the America
which has met payrolls and carried precincts, it is not the America which has
observed the economic and political problems of underdevelopment, formulated
plans to counter these problems, and attempted to win approval for the plans. It is
to this latter task, the role of the executive branch in seeking support for foreign
aid, that we shall now turn.

Chapter 5: The Executive As Organizer of Attitudes

[] The principal difficulties elaborated in this chapter an uncertain rationale for
foreign aid and the organizational problems of disseminating effective publicity
further illustrate the political weakness of foreign aid. On the one hand these
difficulties indicate the importance of Presidential and other top-level support for
the program; on the other hand, they suggest some of the deficiencies in the
resources available to win support for foreign aid. Presidential activity in behalf of

30

foreign aid can best be discussed in terms of the political context created by public
and congressional reaction to foreign aid. The final chapter will summarize the
earlier descriptions of this political context, and will discuss Presidential attempts to
work within this context to maximize acceptance of foreign aid.

Chapter 6: Foreign Aid in the Political System

The responses of the public and Congress constitute the political environment within
which Presidents must work to secure continuation of an acceptable foreign aid
policy. Although this environment is frequently characterized by its hostility to
foreign aid, its over-all influence is both complex and diverse.
Foreign aid is evaluated by the public according to a series of contrasting and
contradictory standards. Aid is favorably received insofar as it appears to project
American values or practices abroad, furthers humanitarian aims avoids deep
involvement in the affairs of other nations, and assists cold-war allies. The public
and Congress view aid with disfavor to the degree that it offers assistance to
nations not allied with the United States, appears to be expensive, and results in
deep involvement in overseas problems.
On the whole, survey results have shown slight majorities favoring aid as a general
notion. Furthermore, above average support for aid is found among professionals,
white-collar workers, the better educated and the higher salaried those groups in
society which are generally the most active and articulate in promoting their
political views. This apparently favorable distribution of opinion is supplemented by
the fact that pressure groups supporting foreign aid far outnumber those opposed.
And for the past ten years, most spokesmen of the two major political parties have
endorsed continued American aid activities. There are, previously noted, definite
anti-aid pressures among the public as well, but a reading of opinion data would
seem to point to no worse than a balance between pro- and anti-aid sentiment.
In light of this, it is perplexing, but nevertheless true, that participants in foreign-aid
policy-making both congressmen and executive branch officials normally
perceive public opinion as working against foreign aid rather than for it. Many
congressmen who support aid policies frankly do so in opposition to the rough
indices of their constituents opinions; congressional opponents, on the other hand,
freely cite the demands of voters for their antagonistic positions. From the days of
the Marshall Plan to the present, Presidents and their advisers have felt it necessary
to engage in campaigns, appeals, studies, and reorganizations in the unfulfilled
hope of increasing public support for assistance programs.
Part of the reason for this paradox may be found in the attitudes from which opinion
is formed. While the aggregate of these attitudes may lead to approval of aid in
principle, there is actually no such thing as foreign aid in general. There are
instead many alternative means for pursuing specific goals in many disparate
environments throughout the world. Specific aid activities may fall far short of
activating positive reactions. Much aid policy, in fact, conjures up the very images
which create hostile feelings among American. Aid to Communist countries, to
unfriendly neutralists, and to nations with government-controlled economies all
clearly fail to measure up to widely held standards of approval. Even military

30

assistance to allies can provoke latent fears of undesirable long-term commitments.

The Peace Corps, which benefits from its low-cost, missionary aura, seems a clear
exception which proves the general rule. []
Such limiting of the purpose of foreign aid may seem to be denigrating the concept.
And it may prove harmful to public support for the program. As the Peace Corps
shows, the only really politically successful programs are those for which the public
can generate some enthusiastic emotion. But such limiting may also be a step in
closing the gap between what is expected of foreign aid and the means to fulfill
these expectations. The historical record shows that with skill, enough resources
and luck foreign aid can occasionally help promote increased per capita income,
progressive social change, or other aspects of development. Much of the
dissatisfaction with the program stems from its inability to achieve other purposes.
One might well ask whether we have not programmed failure into foreign aid by
demanding that it do things for which it has neither the quantitative nor qualitative
resources.
Cataloguing these answered questions and unresolved issues is an unsatisfactory,
but realistic, way to conclude this study. If this overview of the American response
to foreign aid has shown anything, it is that for all the billions of dollars spent, for all
the countless words uttered, for all the actual achievements attained, the American
view of foreign aid remains at an astonishingly primitive level. There is a truly
remarkable gap between the potential of foreign aid, the practice of foreign aid, and
the rhetoric with which aid is discussed. From one perspective the United States
has, in a tangle of necessity and design, embarked upon the unique international
experiment of genuine international problem-solving to eliminate the physical
deprivation which has been the lot of the majority of mankind since the dawn of
history. From another perspective this country has merely reacted to a series of
short-run problems with the minimum of insight or planning. The Marshall Plan, now
viewed as a kind of golden age of foreign aid, wedded remembrances of postWorld War I instability with current fears of Communist expansion; it was largely a
finesse which succeeded. President Trumans much-lauded Point Four Program was
essentially a last-minute public relations gesture designed to enliven an otherwise
uninspired inaugural address. 30 Its implications were apparently given very little
consideration before being announced to the world and to the Department of
State, where it was received with surprise, hostility, or both (the reports vary). 31 One
looks in vain at present for signs that the challenge and response within the political
system are producing a clearer vision of where we are going or, indeed, where we
now stand with regard to foreign aid. Even President Johnsons widely advertised
power to perform legislative miracles has had little impact in resolving doubts about
the program. He scored some statistical successes in minimizing budgetary
reductions as the bill went through Congress. But much of his achievement was
caused by the unprecedented, and temporary, large liberal majority in the 89 th
Congress, elected in the course of the monumental Republican defeat in 1964. Even
his 89th Congress, in its second session, revived the habit of cutting aid funds
sharply, adding numerous administrative restrictions, and seriously questioning the
basic premises of which the aid program was organized. That the impetus for these
attacks came from the normally friendly Senate, rather than from the House, merely
indicates the depth of doubt and hostility which the program attracts.

30

Clarification of these doubts is certainly not the responsibility of any one leader, any
one part of the government, any one political party, or any one faction of the
American people. The material and philosophical demands upon society are too
great, and the opportunities for accomplishment too broad, to permit a narrowlybased view of foreign aid. Reconciling foreign aid activities, if they can, in fact, be
reconciled, with traditional notions of national interest and evolving judgments of
national purpose requires fundamental decisions which can be reached in the only
way democracies know how by the continuing challenge and debate of all those
who care.

Palmer, Glenn, Wohlander, Scott B. and Morgan, T. Clifton (2002), Give or

Take: Foreign Aid and Foreign Policy Substitutability, in Journal of Peace
Research, Vol. 39, No. 1, pp. 5-26, London, Thousand Oaks, CA and New
Dehli: Sage Publications.
In this article, we have taken several steps toward an explanation for foreign aid. By
drawing from an established general theory of foreign policy, and addressing the
topic broadly and systematically, we hope to have made foreign aid less of a puzzle
and more understandable within the general context of foreign policy. The theory
explains foreign aid as a change-seeking behavior, directed toward encouraging
recipient states to behave in ways favorable to donors. That is, while foreign aid
may be applied toward the production of either change or maintenance, we argue
that it is more efficient, ceteris paribus, for change-seeking; therefore, states will
employ foreign aid in their foreign policy portfolios largely as a change-seeking
policy. Developmental assistance, in particular, exemplifies this argument and is the
focus of this article. Applying the theory to state donations of development
assistance yields two sets of implications.
First, the theory specifies the conditions under which states give aid, positing a
relationship between national capabilities and development assistance donations.
Empirical tests of this relationship showed support not only for the intuitive idea
that foreign aid donations are positively related to national capabilities, but also for
the more specific and novel proposition that foreign aid donations increase as an
increasing function of capabilities that is, increases in national capabilities lead to
even greater increases in development assistance donations.
Second, the theory posits a more complex but better-specified conception of foreign
policy substitutability, and links foreign aid with other foreign policy behaviors
states employ in their foreign policy portfolios. The theory posits that donations of
development assistance will be substitutable for other change-seeking behaviors,
but not for maintenance-seeking. Empirical tests of this proposition show that the
amount of foreign aid given by a state is negatively related to that states rate of
dispute initiation, its expenditure on change military, and the change it derives from
its alliance portfolio. We have found additional support for this conception of foreign
policy substitutability through a specific analysis of the effects of participation in
NATO on the foreign aid donations of member-states. Consistent with our
expectations, the weaker members of NATO, receiving maintenance from the
alliance, donate greater amounts of foreign aid than would otherwise be expected,

30

while stronger members, receiving change from the alliance, donate less foreign aid
than would otherwise be expected.
Putting all of this together, we believe this initial analysis has been largely
successful. Using a relatively simple approach, we have been able to derive a
number of interesting theoretical propositions, and these have found support in the
empirical analysis. This is not to suggest, however, that we now have a complete
theory of foreign aid rather, this initial analysis has only opened the door for
further theoretical development and research. Future research should continue to
develop and specify these ideas, generating insight about whether we are on the
right track and adding to our cumulative knowledge.

Patrick, Stewart and Brown, Kaysie (2006), Fragile States and US Foreign
Assistance: Show Me the Money, Center for Global Development Working
Paper No. 96.
The Bush administration has increasingly acknowledged that weak and failing states
represent the core of todays global development challenge. It has also recognized
that such states are potential threats to international peace and security. But
despite rhetoric, it has yet to formulate a coherent strategy around fragile states or
commit adequate resources towards engaging them. Excluding funding for Iraq,
Afghanistan, Pakistan, and HIV/AIDS, the administrations FY07 budget request
proposes to spend just $1.1 billion in direct bilateral assistance to fragile states
little more than a dollar per person per year. In this new working paper, CGD
research fellow Stewart Patrick and program associate Kaysie Brown urge US
policymakers to consider increasing aid to fragile states and to think creatively
about how and when to engage these troubled countries. The authors also call for
the policy community to integrate non-aid instruments into a more coherent
government strategy. To put its money where its mouth is, the US should treat aid to
weak and failing states as a form of venture capital, with high risk but potentially
high rewards.

Picard, Louis A. and Buss, Terry F. (2009), A Fragile Balance: Re-Examining

the History of Foreign Aid, Security and Diplomacy, Sterling: Kumarian
Press.
1: Foreign Aid Policy in the Twenty-First Century [pp. 3-12]
Our Approach
For the third time in a generation, the United states is embroiled in a war in a
developing country based on false information and faulty decision making. More
than forty years ago, the United States escalated its involvement in Vietnam. In
October 2001 and March 2003, the United States invaded Afghanistan, then Iraq,
respectively, becoming entangled in one of the longest military engagements in US
history. Commentators often note the uncanny similarities among the three
conflicts. Each shows the triangulation of foreign policy, then military intervention,

30

followed by foreign aid, all for the worse. In all three, though one hopes for a better
future, US diplomacy has taken a global beating that might take decades to repair;
the military faced a situation where it could not gain a decisive victory and became
mired in nonmilitary actions for which it was neither designed nor prepared to
execute; and aid found itself serving goals that were more supportive of military
objectives rather than development goals that were largely unattainable in a war
zone.
Our book examines US foreign aid from a public policy perspective. Our approach
concurs with the view of Vernon Ruttan, who states, Changes in US [foreign]
assistance policy respond to and are constrained by domestic political and
economic interests and concerns. 1 Our approach uses history as its methodology.
Understanding the history and context of foreign aid within foreign and security
policy is as important as understanding technical formulas or narrow calculations of
cost-benefit analysis.
The international assistance story is full of entertaining and penetrating
commentaries about the ironies as well as the historic failure of foreign aid. 2
Along with the irony, there is also a great deal of sadness and lost opportunity in the
enterprise. Our book analyzes failures and successes as lessons for future foreign
assistance approaches. Although we hoped to find more successes than failures,
that was not the case in foreign aid.
The book assesses US foreign aid policy at this critical juncture immediate postSeptember 11 to contribute to the policy debates about future US foreign and
security policy. It looks at decisions policies and processes, placing each in a
historical, social, and economic context. Our view is that foreign aid, foreign policy,
and security policy reflect broad political values of government and society, and
understanding these is not only an empirical exercise but also a normative one.
Richard Neustadt and Ernest May warn us about the danger of ignoring the past and
assuming that the world is new and that decisions in the public realm required only
reason or emotion, as preferred.3 Our approach places foreign aid within the
context of diplomacy, as well as foreign and security policy beginning in the
eighteenth century and extending to the post-September 11 world. Foreign aid
appeared to many observers to begin in 1948 as a blank canvas swept clean by the
carnage of World War II. In reality, what seemed a new approach carried excess
baggage from past events, values, and assumptions that originated centuries
earlier. Our books goal is to examine that baggage and link it to decisions made at
critical points in history, from the beginnings of the Cold War to post-September 11.
We do not intend for this book to be merely a work of abstract social science. 4 It
addresses both academic debate and practical perceptions as reflected in the
normative discussions about foreign aid. Rather than leaving foreign and security
policy to the purity of the academy, it takes political, journalistic, activist, and
normative debates seriously. It treats all sources as proximate, and, while social
science research is important, the approach here assumes that foreign and security
policies are to important to be relegated to armchair debates.
Motivated by the tragedies of Vietnam, Afghanistan, and Iraq, the focus of this book
is on US foreign aid policy and its relationship to foreign and security policy issues.

30

Foreign aid cannot be separated from either foreign or security policy, in spite of the
propensity of many analysts to do so; however, all three can be reconstructed in
ways that emphasize one over the other at any point in time. This is important in
light of the current emphasis on bringing together foreign, defense, and
international assistance policies (the so-called triangulation of US international
policy). Some have dubbed triangulation the three Ds: diplomacy, defense, and
development.5
Our goal is to examine various influences on foreign aid over time and discuss the
context and process of policy making on and implementation of aid policies and
their impact on international relations. A conceptual framework for understanding
foreign aid reflects on the search for an enlightened but realistic optimism that
deals equally with commercial, security, and humanitarian concerns in a manner
nonthreatening to nations receiving aid.
If there is a causal relationship involved in foreign policy and foreign aid, it is a
simple, if not profound, one: politics and implementation should be examined
historically because past events are always antecedents of future events. There is
no single explanation of foreign aid policy decisions in terms of realpolitik, economic
determinism, or religious obligation. Different elements weigh in differently at
different times. Neustadt and May call for the placement of events in a weighted
timeline to understand both patterns and processes of decision making. 6
We believe there is no single explanation for state behavior, whether it acts
diplomatically, militarily, or through international assistance. Foreign aid, like
foreign policy as whole, reflects a multitude of influences on group dynamics and
individuals decisions, cultural, social and economic, which combine over time to
influence the policy and implementation of international assistance. 7 Some aid
decisions are made by people in power; many are reflected in actions by people
working on the ground.
Our goal was to write a book accessible to students while also presenting new ideas,
debates, and information of interest to foreign policy specialists and informed
citizens. This book does not shy away from policy debates but tries to use them to
understand the diversity of the issues and our understanding of foreign aid at a time
when foreign policy choices may have gotten out of control.
Correctives are important, and self-correction is part of the process of policy
debate.8 Our book has been influenced by what Robert Cowley calls
counterfactual history, that is history that might have been but is not but which
can cast a reflective light on what did [occur]. 9 This book is a commentary and,
perhaps, a corrective.
Understanding Foreign Aid
Paul Mosley defines foreign aid correctly, though narrowly, as money transferred on
concessionary terms by the governments of rich countries to the governments of
poor countries.10 In this sense, there was some government financial or
humanitarian assistance prior to World War II, though the first broad transfer of
funds on a worldwide basis in peace time occurred with the Marshall Plan.

30

Unlike most writing on foreign aid, however, we look at the earlier period of
international assistance prior to 1948 because it defined values and boundaries of
contemporary foreign assistance and helped to establish processes under which it
would be granted.
The definition of aid is important when one places the United States within the
context of its isolationist and expansionist history represented in the nineteenth
century by the notion of Manifest Destiny. This, as we will see in the next several
chapters, resulted in a messianism defined by isolationism prior to World War II and
unilateralism in the late twentieth and early twenty-first century, with the United
States increasingly willing to go it alone in foreign and security policy after 1989.
Foreign aid is one tool for achieving foreign policy goals. In addition to foreign aid,
this pool of potential actions includes:

Threat and use of force

Cover operations and proxy interventions

Intelligence gathering and information dissemination

Diplomacy

Propaganda

Cultural exchanges (visits and exchanges)

Economic threats and promise and trade policies (sanctions and tariffs)

Foreign aid should be seen in the context of historical patterns and international
assistance private or public.11 International assistance is the transfer of any
resources (grants of money and concessionary less than market rate loans), the
provision of goods and services, and technical assistance, including military
assistance (in 2007, the Department of Defense and its Defense Security
Cooperation Agency administered one-fifth of US assistance). Some observers also
include debt forgiveness in foreign assistance. International assistance comes from
private foundations and philanthropists, as well as publicly funded assistance:
government-to-government and government-to-nongovernmental organizations
(NGOs).
Use of the term foreign aid, as a subset of international assistance here, means the
subset of government (donor) economic and financial transfers directly or
indirectly. Foreign aid as it evolved after 1948 was an extension of diplomacy and an
alternative to sanctions, conflict, intervention, and war. 12 Along with Carol Lancaster,
we see foreign aid as a voluntary transfer of public resources, from a government
to another independent government, to an NGO, or to an international organization
with at least a 25 percent grant element.13
Technical assistance is the provision of expert assistance more often than not on a
temporary basis to government agencies (and sometimes to NGOs). 14 This includes
technical assistance provided to the private sector or NGOs and interest

30

associations. Technical assistance includes consulting, service support, education,

and training.15
Specifically, such technical assistances provides technical specialists, civilian and
sometimes military, on direct contract with government agencies or with private
businesses and NGOs or foundations that provide services. Often technical
assistance concerns institution or capacity building. Consulting, both long- and
short-term, constitute the heart of technical assistance. The technical assistance
expert is responsible to the client, but it is not always clear who the client is: the
host country, its leadership and its program managers, or the donor agency and its
contracting and program officers.
This book tries to demonstrate and simplify the complex world of foreign aid with all
its diversity and meanings. Given the complexity of aid, discussion is necessarily
selective and incomplete. In the end, foreign aid, like trade, defense, and security
policy may productively be viewed as a microcosm of nation-states broader efforts
in foreign affairs.16
The most common form of international aid is the transfer of economic resources for
political, social, and economic development. Often incorporated into foreign aid is
international technical assistance. Military and security assistance is also a subset
of foreign aid in some cases as is eradicating illegal drugs exports and interdiction
of illegal migrants boat people. Traditionally, foreign aid focuses on at least four
primary objectives:

Broadly based economic growth

An effective attack on poverty and disease

An end to the destruction of the physical environment of the world

The promotion of democracy and governance (increasingly common since the

end of the Cold War)17

Following from this there are four components to foreign aid policy visible through
time:

Physical infrastructure development

Support for social and economic development

Humanitarian and security assistance

Support for good governance, conflict resolution, and political development

Democratic governance and political development have become particularly

important in the last fifteen years. As early as 1950, advocates made it clear that
democratic governance was essential for development aid to succeed. 18 Increasingly
since 1989, there is concern for the establishment of legitimacy for democracy and
good governance, which predominates, at least conceptually, in aid debates;
however, if aid is inappropriately provided, this can make governance problems

30

much worse. Funding opposition political parties with assistance may create political
instability for example.
In the twentieth, foreign assistance served a multiplicity of purposes: diplomatic,
security, cultural, developmental, humanitarian relief, and promotion of commerce.
After the Cold War, promotion of economic and social transitions in former socialist
countries, the support for democratic governances, mediating conflicts, managing
postconflict transitions, addressing environmental and fighting international terror
are increasingly important.
Our book has a point of view: foreign aid can be used to provide social services,
develop human resources, and promote democratic institutions, but it is not in itself
the best tool to promote economic growth or redistribution of resources. Again, if
used injudiciously, aid can also do great damage.
While not always an independent policy, foreign aid is a tool of foreign and security
policy, and it also serves as a strong symbol and signal to the international
community. Since the 1950s, foreign aid and technical assistance were established
on the premise that the developed world possessed both the talent and the capital
for helping backward countries to development. 19 Since 2000, observers have
questioned the validity of that assumption. []

2: International Assistance, Foreign Policy, and Security Policy [pp.13-20]

Several factors have had an impact on the foreign aid process during the last two
hundred years. Going back to the origins of the nation-state, there was always
statecraft and commercial motives involved in international humanitarian
assistance. In international relations, there are both a realist paradigm in
international relations theory and cosmopolitan, cooperative, or altruistic strains
based on idealism, which operate in tandem. 16
There are two broadly defined schools of foreign policy and foreign aid: a hard
school and a soft school. The hard school focuses on security assistance and
commercial concerns, and it is both costly and politically risky. The soft school takes
the classical path of foreign aid with soft power being more effective than the use
or threat of force in securing influence in international relationships. 17
Soft power calls on well-endowed states to improve public health and education;
introduce modern agricultural technologies; encourage small-scale industries; and
carry out a wide range of agrarian reform, from land redistribution through the
organization of cooperatives and provision of rural credit and farm inputs.
Foreign aid humanitarian and development goals sometimes become distorted
through the use of aid by donor countries for commercial, military, and other
political purposes. Prior to 1989, foreign aid, in large part, centered on Cold War
influences between and among the super-powers. In the post Cold-War period,
foreign aid often was offered as a carrot to tempt conflicting sides in civil strife into
accepting mediation or as a component of the war on terror.

30

Beyond security concerns, all nations, large and small, have links between foreign
aid and trade policies, and the private sector plays an important role in providing
both commodities and services to foreign aid recipients. Humanitarian, and even
moral arguments, justified foreign aid, but in the end, it was systems of
international intercourse that framed the parameters of foreign aid. All of these
factors, as perceived by political leaders, interests groups, and administrators in the
field, helped define foreign aid into the twenty-first century.
For almost 500 years, it was the imperial system that began in fifteenth century and
the industrial revolution beginning in 1800 that defined global international relations
and political economy. We turn to these issues next. []

3: Historical Antecedents [pp.21-36]

Government and administration in most of the countries of Asia and Africa and
more distantly, Latin America, [were] conditioned by their colonial pasts. 43
Colonialism defined authority in most of what we call the developing world until well
after the 1960s and much of the practice of foreign aid and technical assistance
grew out of that heritage. Understanding that legacy is important to any attempt to
define the mixed legacy and the moral ambiguities that frame international
assistance after 1960. These values remain an important factor in influencing
foreign aid.
It is our contention that many of the characteristics of the colonial period in terms
of administration, development policy and normative values, some for better, many
for worse carried over to both bilateral and multilateral aid programs.
Our book does not argue that a history of colonialism and imperialism is the only
driver of aid, security, and diplomacy in the twenty-first century. Much would occur
in the evolution of foreign aid policy that was not a product of that history. Yet, to
reiterate: three components of international assistance economic exchange,
commercial development, and religion-based humanitarian impulses converged in
the 1850s as the European powers, along with Japan and the United States, created
world-wide empires. To what extent this convergence continues to define world
governance is a focal point here.
Also at issue is to what extent there are similarities between Britain in the early
twentieth century and the United States since 2000. In the latter case, the United
States was overloaded with misused foreign aid and was made a pawn of its
attempts to secure that indefinable and ultimately unattainable thing [called]
national security.44 We will revisit this issue at various points in this book. []

Part II: Epochs of Aid, Diplomacy, and Security Policy

4: Manifest Destiny and American Expansionism [pp. 37-64]
One can learn much about foreign aid policy during the period prior to 1948. Its all
there: missionaries, concern with terms of trade, professional specialists, idealism,

30

balance-of-power calculations, and even military support. Technical assistance

played an important role in US involvement in international assistance prior to 1940.
Motives were varied: technical specialists were sometimes missionaries, sometimes
had commercial ties, and often defined their roles in moral and even ethical terms.
What was not there was the volume of financial transfers that would come into
being after 1948 with the Marshall Plan and Trumans Point Four Program. Nor would
one find the bureaucratization and projectization that would all but eliminate
flexibility and creativity as components of US foreign aid. Both would begin in the
postwar period with the announcement of the Point Four Program.
What preceded World War II and the beginning of the Cold War were the
developmental dilemmas and moral ambiguities built into the Western
modernization concept, pushed by both colonialists and developmentalists alike. It
was these dilemmas that would deepen as the United States entered the period of
modern foreign aid after 1945. The development of modern state-sponsored foreign
aid and technical assistance was ultimately, however, a product of two World Wars
and the Cold War sequel. It is to these developments that we now turn. []

5: The Impact of Two World Wars [pp. 65-82]

While foreign aid and technical assistance in its modern form is only sixty years old,
their antecedents go back well into the 1800s. The move to massive government-togovernment aid represented a major shift in international assistance after World
War II. Patterns of international assistance, however, did have their roots in the
nineteenth and the first half of the twentieth century.
The Marshall Plans legacy can still be seen in the world today. Most importantly, the
aid scheme marked the beginning of a time when the United States first became
permanently involved in the world. Ironically, for all its success, the Plan would
become a reminder of US timidity in foreign aid terms as the Cold War dragged on.
It became a marker of bolder times.
After 1948, for the first time, governments in more-developed countries assumed
that the redistribution of wealth internationally was part of their responsibility. While
private funds remained important, by 1970 voluntary private transfers of resources
accounted for only 3 percent of the flow of resources into developing countries. We
discuss creation of a more formalized foreign aid program in the postwar period,
emanating from the Marshall assumption, in Chapter 6. []

6: Point Four, USAID, and the Cold War [pp. 83-102]

There is a tendency among Americans to believe that their values and needs are
universal. On the whole, Americans have remained an optimistic society.
Internationalism since the 1950s meant historical commitment, compromise, and
recognition of the inherently political nature of the international process. This
remained difficult for many policymakers who may see moral choices in interaction.

30

This perception can lead to difficulties in distinguishing between that which a

country declares and that which is real.
During the immediate postwar period, the purpose of foreign aid was to restore war
torn countries, strengthen the military and political defenses of free nations, and
weaken the appeal of communism. There was a messianic element to the
enterprise. By the end of the 1960s, however, foreign aid as reform had lost its
evangelistic tone and taken on a legal flavor. 61
The shift toward government-to-government aid represented a major change in
international assistance after World War II and was defined in the period between
1948 and 1961. Now, at least in theory, governments assumed that some
redistribution of wealth internationally was part of their responsibility. The goal of
policymakers in the 1950 was to create a foreign aid system that included a unified
administration and policy formulation, long-term planning and financing, and
integrated country-level programming.
Perceptions of foreign aid failure originated in strategic rather than developmental
considerations during the Cold War. There may be a lesson here for those who see
foreign aid as a part of a war on terrorism. As a result, it is not unlikely that there
may be similar perceptions of failure in future as the US reaches into the twentyfirst century. []

7: The Vietnam War [pp. 103-118]

With the end of the Vietnam War and the related collapse of Iran on February 5,
1979,55 foreign aid concerns toward basic needs although still influenced by many of
the assumptions of established in Southeast Asia. The United States began
withdrawing rather than expanding foreign aid and technical assistance, a
withdrawal that would continue until September 11, 2001. This shrinkage was the
first time that had occurred since the end of World War II.
Vietnams legacy for the Third World was to solidify, in the minds of LDC
intellectuals and elites, an image of the West that made no distinction between the
United States and the West European former colonial powers. Both Europe and the
United States were seen as colonial exploiters, rich and white. As the Vietnam War
illustrated, in both isolationism and interventionism, the United States has need an
evangelical vision and a moral role in reforming and developing the lesser
developed parts of the world.
As a result of Vietnam, both in terms of foreign and development policy, the United
States veered away from the very concept of playing a global role a s country,
leaving much of foreign aid in the hands of international organizations and a handful
of European nations. Withdrawal would have significant consequences, and debate
as to whether Vietnam was a foreign policy or military defeat would continue
through the end of the twentieth century.
With a much less global foreign aid policy, LDC elites became suspicious of the twin
goals of stability and modernization that had defined foreign aid through so much of

30

the Cold War. The fateful events of September 11 would restore US concern for
international affairs, if not development management concerns. []

8: Basic Needs, Structural Adjustment, and the Cold Wars End [pp. 119-154]
Throughout the 1990s under structural adjustment, the United States and other
donors increased support to promote in their bilateral programs politically sensitive,
restrictive, and intrusive policies and actions that would encourage conservation
measures, such as energy efficiency, renewable energy, and forest management.
Such action often advocated policies that would not be acceptable to the United
States and other countries at home. As Severigne Rugumamy has noted, the
institutional and organizational capacities of the recipient states [came to be]
considered as critical intervening variables in explaining the aid relationship. 129
Throughout much of the developing world there existed a continuous tension
between the humanitarian functions of foreign aid in trying to improve social
welfare conditions in LDCs and the narrower imperatives of self-interest. In 2000,
neither concern appeared to be important to the American public. During the 2000
presidential campaign, foreign aid had reached its nadir. Candidate George W. Bush
would attack nation-building and overseas assistance. Bush wanted to focus on
domestic affairs.
Overall, as the millennium approached, interest in foreign aid waned. Except for a
few bankrupt African countries, USAID no longer represented a significant transfer
of resources to LDCs relative to the size of their economy. By the end of the
twentieth century, the path to apathy about international development was clear.
Despite the acceptance of structural adjustment by many LDCs, by the mid-1990s,
foreign assistance levels continued to plunge.
September 11, however, would change all of that: policymakers became concerned
that impoverished people fed by fundamentalist religions and living in failed states
would offer sanctuary and become a breeding ground for terrorists. As a result,
foreign aid budgets would surge with allocations, more than doubling in ten years.
We will turn to those developments in the next two chapters. []

9: September 11 and the Iraq War [pp.155-172]

The fallout from September 11 demonstrated the limits of multilateralism and the
dangers of unilateralism in foreign aid, security, and foreign policy. There was still
an absence of a clear strategy to deal with some fifty or so weak and fragile states
that were not Iraq.74 With a new administrator of USAID in early 2006, the concept
of fragile states was dropped as concern increased over short-term conflict
resolution. The fragile and collapsed states metaphors may have reminded the
political leadership too much of the problems in Iraq and Afghanistan.
In late 2008, the Iraq story remained unfinished. The popularity of President Bush
was at an all-time low, 33 percent or less. The Iraq Study Group had released its
devastating critical report. Rumsfeld had resigned. Midterm elections in 2006 had

30

returned the Democrats to power in the House of Representatives and Senate, and
on November 4, 2008, Barak Obama won the presidency.
Yet despite all of the criticism, focus in Iraq remained on the military situation and
the success or failure of the surge. Much more needed to be understood of the longterm consequences of foreign aid and security assistance policy in the postSeptember 11 era. Unilateralism had, at least for the moment, been debunked. But
could the United States return to the multilateralism that had allowed it to muddle
through the Cold War? It is to these issues that we turn in the next chapter. []

10: Reconstruction, Civic Action, and AFRICOM [pp. 173-192]

Despite the challenges of underdevelopment, there is a rich track record of over
forty years of success in reducing infant and child mortality, raising agricultural
production through scientific innovations, and spurring economic growth and the
building of democracies in many regions of the world. 57 These success created
market opportunities and strategic alliances for the United States during the Cold
War; however, the question is whether armed social work can contribute to foreign
policy and the foreign aid agenda, and, of course, help to win the peace in Africa.
These changes likely require a staged process of public service reform, both lengthy
and planned over time to avoid the distortions of a donor-funded, postconflict
situation with its parallel administrative structures. 58 A primary lesson derived
from US support for civil society and civic-action activities is that institutions and
institutional processes matter. This perspective may not be reflected in the
geographical command approach developed by the United States in Africa.
Historically, the focus of much of foreign assistance was on the support of civil
society organizations that can undertake civic-action development projects,
including community-based sanitation and cleanup efforts, rebuilding schools and
clinics, installation of water pumps, and establishment of community health service
delivery. The purpose is to combat the hostility of ethnic, ideological, and/or
religious-based grassroots organizations, NGOs, and other financial institutions that
run counter to US interests. 59
At issues is the extent to which AFRICOMs creation was more than a change of
bureaucratic structures, reflecting a different methodology toward nonmilitary
reconstruction and stability support for fragile and collapsed states, or whether it
represented business as usual for Defense. Civilian involvement in AFRICOM
assumes there is a link between poverty and terrorism. This remains unproven.
Much of the leadership in religious terrorist groups is middle class, sometimes
educated in Western Europe.
AFRICOM focuses on governance: physical security, political institutional
development, economic management, and social service delivery. Most of the
assistance will be civilian in nature. Yet to be determined is the extent to which the
civilian structures blend with the military leadership in Defense. []

30

Picard, Louis A., Groelsema, Robert and Buss, Terry F. (eds.) (2008),
Foreign Aid and Foreign Policy: Lessons for the Next Half Century, New
York: M. E. Sharpe, Inc.

Picard, Louis A. and Groelsema, Robert (2008), U.S. Foreign Aid

Priorities: Goals For the Twenty-First Century, in Picard, Louis A.,
Groelsema, Robert and Buss, Terry F. (eds.) (2008), Foreign Aid and
Foreign Policy: Lessons for the Next Half Century, pp. 3-26, New York: M.
E. Sharpe, Inc.
Foreign aid and technical assistance, however, ultimately are vehicles of a countrys
foreign policy (Sogge 2002). Aid agencies are part of an institutional framework
that continues to fall short of its potentials. [Aid is] about politics and, crucially, the
relationship between donors and recipients not only at the higher echelons, but at
all levels of contact (Wedel 1998, 6). According to Montgomery (1962, 9), foreign
aid a political instrument of U.S. policy is here to stay because of its usefulness and
flexibility. Foreign aid is about states and individuals.
To conclude, if not to caution, we can go back to Smuckler and Bergs (1988, 1) wise
words: The world of the 1990s, and that of the Twenty-first century, will be
substantially different from one in which a worldwide enterprise known as foreign
aid was launched forty years ago. New circumstances make the concept of foreign
aid less appropriate. To much of Asia and Latin America, the concept of cooperation
for development fits better. By developmental cooperation, we mean that we share
responsibilities widely and appropriately.

Poe, Steven C. (1990), Human Rights and US Foreign Aid: A Review of

Quantitative Studies and Suggestions for Future Research, in Human
Rights Quarterly, Vol. 12, No. 4, pp. 499-512.
In this review serious problems were pointed out in quantitative studies which focus
on the linkage between human rights and foreign aid, leading their findings to be
suspect. Solutions to these problems were suggested in the hope that future
research will not exhibit the same weaknesses, thus allowing better estimates of the
importance of human rights variables. In the future researchers should strive for a
more sophisticated model of foreign aid decisionmaking processes which takes into
account the effects of organizations and bureaucrats thus making possible a much
more complete understanding of the linkage between human rights and foreign aid.

Powell, Andrew and Bobba, Matteo (2006), Multilateral Intermediation of

Foreign Aid: What is the Trade-Off for Donor Countries?, Inter-American
Development Bank Research Department Working Paper No. 594,
Washington, DC: Inter-American Development Bank.

30

Our general view is that donor countries may face a trade-off regarding whether to
channel aid bilaterally or use the intermediary of a multilateral. On the one hand a
multilateral may bring benefits in terms of leverage and enhanced coordination, but
on the other hand a multilateral may dilute the individual objectives of bilateral
donors.
In keeping with the previous literature, we find that for direct bilateral assistance,
politics matters. We find that with fixed effects added we cannot reject the
hypothesis that politics influences different bilateral donors in the same way, and
the relevant pooled coefficient is positive and significant. We also find strong
evidence for an aid fragmentation effect. Where aid is more concentrated, then
controlling for other factors, recipients receive more aid. Finally, if anything, we find
evidence that aid packages from different donors are strategic complements
consistent with an aid-for-favor type game.
Multilaterals intermediate in two ways, first financing aid from their own resources
built upon the capital initially invested by bilaterals and second more directly
through the medium of trust funds and other vehicles that bilaterals may finance
but that are managed by the multilaterals. For aid financed by multilaterals we find
some evidence for dilution of the effect of politics, especially with reference to
World Bank aid. We find little evidence for the dilution of politics in aid
intermediated through trust funds and the like, perhaps due to the conditions that
are applied to the use of these resources. We find strong evidence that multilaterals
solve problems of coordination and of strategic interactions between donors. In
short, intermediating through multilaterals may enhance donor coordination, but at
some cost in terms of individual bilateral (political) objectives, which is consistent
with the idea of a trade-off.
There is much more to be done in this area of research. We have suggested a set of
tradeoffs, but as yet there is no good theoretical model that captures all of the ideas
mentioned. This is an obvious area for future research. As suggested in the
introduction, we also believe that there is a link between the determinants of the
pattern of aid and its effectiveness. In particular, bilateral aid allocated according to
colonial ties or politics may also imply ineffective aid, whereas aid extended due to
other donor characteristics may suggest more altruistic motives and perhaps more
effectiveness. Finally, aid fragmentation may also lead to less effective aid. These
all appear to be interesting avenues for future analysis.

Pratt, Cranford (1989), Chapter 1: Humane Internationalism: Its

Significance and Its Variants, in Pratt, Cranford (ed.), Internationalism
Under Strain: The North-South Policies of Canada, the Netherlands,
Norway, and Sweden, pp. 3-23, Toronto, Buffalo and London: University of
Toronto Press.
We have used the phrase humane internationalism to identify the ethical
component which has to a varying but significant degree distinguished the attitude
towards Third World development in the postwar political cultures of Canada, the
Netherlands, Norway, and Sweden and which has influenced their policies on NorthSouth issues. The major component of humane internationalism can be easily

30

identified. At its core is an acceptance by the citizens of the industrialized states

that they have ethical obligations towards those beyond their border and that these
in turn impose obligations upon their governments. The emergence of this
responsiveness to cosmopolitan values8 as a politically significant phenomenon
does not relate solely to the Third World and the needs of its poor. Indeed, one of
the earliest international obligations to be widely acknowledged, the obligation to
eschew international obligations the use of force in the pursuit of national goals,
was initially seen as relevant to the major powers in particular, west or east.
Another cosmopolitan value that is now being championed with increasing vigour is
respect for human rights. It, too, is as relevant to the developed countries as to the
LDCs.
Nevertheless in the last several decades a responsiveness to the development
needs of the Third World has become an important extension of humane
internationalism endorsed by many in the developed countries. As popular
awareness of the acuteness of the suffering of many in the Third World grew, and as
the Norths economic and political links with these countries increased, there
emerged in our four countries and elsewhere in the North and increased sensitivity
to the common humanity which unites the global community. That sensitivity gave
rise, in turn, to an acceptance of new and wider obligations relating to global
poverty. This is the first and primary feature of humane internationalism as it has
been extended to North-South relations. This claim being made here is carefully
circumscribed. It is not suggested that cosmopolitan values have become the
dominant determinant of the responsiveness of the citizens and governments of
these four countries to international issues. For almost everyone in these countries,
obligations regarding the welfare of fellow citizens remain far more strongly
acknowledged. Moreover, it is recognized that governments have many other
legitimate concerns pressing upon them. These concerns frequently minimize the
impact which cosmopolitan values have on policy. Nevertheless, however fragile
and often overwhelmed by more worldly considerations, a sensitivity to the
development needs of the Third World has been widespread in these countries,
providing an important ethical underpinning for government policies that are seen
as helping to meet those needs.
A second feature of humane internationalism is that it has tended very much to
meld what it accepts as an ethical obligation and what it regards as the real longterm interests of the rich countries. This melding of the ethical and the selfinterested is most obvious in regard to the obligation to refrain from the use of force
to secure advantages from neighboring states. An acceptance of this obligation
encompasses both a respect for the sovereignty of other states and a recognition
that if this obligation is universally accepted it will be directly advantageous to
ones own country. A similar reconciliation of ethical and self-interested motivations
typically occurs in regard to the obligations toward s the worlds poor which humane
internationalism propounds. The poor countries, it is typically assumed, would be
more stable, less likely to be threatening, more likely to be democratic, and
altogether more attractive as trading partners and outlets for investment if they
could experience high rates of growth over a long period. Should the rich countries
actively pursue humane internationalist policies, the result would therefore be a
world which would be to the advantage of the rich countries, economically and
politically.

30

This coincidence of what is felt to be morally correct and what is viewed as selfinterest truly perceived is, of course, a common feature, of much traditional ethical
philosophy and, indeed, expresses a deep wisdom. Individuals and states are likely
to be more at peace, more satisfied with their roles, and less inclined to pursue
destructive, unfulfilling, and unachievable objectives if they take account of the
needs of others. This fact does not diminish or cheapen the primarily moral thrust of
the response to the challenge posed by global poverty. It does not suggest that
responding to the development needs of the LDCs is but a self-righteous pose
concealing motivations that are basically self-interested. Nevertheless this melding
of the moral and that which is in ones long-term self-interest has meant that
amongst the advocates of policies that are responsive to Third World needs, there
have been (and still are) some who primarily emphasize the compelling ethical
obligation to help the less developed countries and others whose arguments are
primarily based on the long-term overall interests of the rich countries.
A third characteristic of humane internationalism in the political cultures of these
four countries can be more swiftly identified. This internationalism is a natural and
uncomplicated extension to the wider world of the broad network of national and
social welfare programmes in these societies. Obligations towards those in other
countries who suffer severely as less strongly felt than obligations to fellow citizens,
and the duties they are understood to entail less extensive. But once links have
been established with other peoples, even if these links are primarily economic, and
once their suffering is known, it would be hard for any who accept the legitimacy of
the obligations typical within modern welfare states to hold that neither they nor
their governments need to be concerned about the well-being of these poles. The
basic values of these societies, the values on which their social welfare systems are
based, are not thought of as national or racial or ethnic, but as having a universal
validity. The normal assumption has been that while they generate duties primarily
towards fellow citizens, they also imply obligations beyond state borders. A far more
complex argument would be required to give a semblance of reasonableness to the
notion that these values have relevance only to those within national border. For a
great many, it would surely be unconvincing. For them, a commitment to effective
and comprehensive welfare services and full employment and a commitment to a
foreign policy that is responsive to the development needs of Third World societies
are natural, appropriate, and mutually consistent components of a single social
ethic.
These then are the three central components of the humane internationalism that
has been a prominent feature of the political cultures of these four countries as it
relates to the Third World: an acceptance of an obligation to alleviate global poverty
and to promote development in LDCs; a conviction that a more equitable world
would be in their real long-term interests; and an assumption that the meeting of
these international responsibilities is compatible with the maintenance of socially
responsible national economic and social welfare policies.
Humane internationalism stands in stark contrast to international realism which is
the main alternative world-view that shapes perceptions of North-South
relationships. International realism suggests that all states do in fact pursue their
own national interests in international relations and that to do otherwise would be
ineffective and probably costly. The logic of this position rests on the undeniable
fact that there is no international authority superior to the power of states which

30

can ensure that each state complies with international laws and undertakes its fair
share of the burden of humanitarian international actions. As a consequence,
national leaders, whose obligations are to the civil societies they govern, are
thereby severely constrained from accepting ethical obligations towards those
beyond their borders. This absence of any supra-state authority also leads
international realists to doubt that inter-state negotiations are likely to be able to
produce stable and lasting arrangements that will be beneficial to all parties, in
contrast to humane internationalists who do believe that international institutions
and co-operative international actions offer the world a real prospect of peaceful
and equitable international relations. International realism thus rejects the first and
the third characteristics of the humane internationalism that became a part of the
dominant political culture of our selected countries in the 1960s.
While humane internationalism in an adequate description of an important ethical
component of the postwar political cultures of our countries, it has always been
much more a cluster of related but not always totally compatible attitudes and ideas
rather than a single and homogenous viewpoint. There were in consequence always
a number of separate strands to this humane internationalism as it related to the
Third World, even in the years before 1975 when it seemed most homogenous. All
strands shared the core component the acceptance of an ethical obligation to
alleviate global poverty and to assist the development of the less developed
countries but each varied in the extent to which and the manner in which it shared
in other two components which characterized humane internationalism in the period
from 1955 to 1975 and which remain powerful to this day. By 1975 these different
strands had become three distinct expressions of humane internationalism which
we will call liberal internationalism, reform internationalism, and radical
internationalism. They constitute the three most important dominant tendencies
relating to global poverty and Third World development within the ranks of those
who acknowledge the claims of cosmopolitan values.
Liberal internationalism combines the core component of humane internationalism,
an acceptance of an ethical obligation towards the poor of the Third World, with a
strong commitment to an open multilateral trading system. It is able to support
substantial development assistance and emergency relief programmes because it
recognizes that the benefits and advantages of international trade are greater when
all the economies participating in it are economically healthy and growing. Liberal
internationalism is in effect a limited international Keynesian perspective.
Domestically, a Keynesian perspective permits and indeed calls for extensive social
welfare and countrycyclical measures, seeing them as contributing to the stability
and prosperity of a capitalist economy. Liberal internationalism similarly views the
development assistance programmes of the rich countries as positive contributions
to the stability and prosperity of the internationalist capitalist economic order. It is,
however, a limited Keynesian perspective because it rejects any international
equivalent of the market interventions represented by countrycyclical public
spending.
Within a liberal internationalist perspective, support for an open international
economic system is not incompatible with the ethical obligations that are integral to
humane internationalism. Those who view the world in this way are confident that
such an international economic system is in the economic interest of all who
participate in it. As an extension of that position and as a deduction from actual

30

international experience, they also believe that direct international interventions in

the operation of the international economic order will in fact not be likely to produce
economic benefits for the poorest countries or the poorest people within the Third
World more generally.
Liberal internationalists believe, as do international realists, that all states are
motivated by (usually immediate) economic and national security interests.
However they go on to argue that there is a sufficient mutuality of these interest
between rich and poor states to permit these states to co-operate successfully in
their pursuit. Because of, first, an international co-operation built upon these mutual
interests, second, generous development assistance programmes supported by the
rich countries, and, third, the beneficent operation of a liberal international
economic order, liberal internationalists in the 1960s and early 1970s were able to
be optimistic that the challenges of world poverty could be met in a morally
tolerable period of time and with a manageable expenditure of effort and resources
by the rich countries.
These views received their classic expression in Partners for Development, the
report of the Commission on International Development chaired by Lester Pearson
in 1968-9.9 They were endorsed in the 1960s as much by the social democratic
governments of Sweden and Norway as by the liberal Canadian government. The
conviction that assistance to the less developed countries is also in the interests of
the rich countries and the assumption that the newly acknowledged ethical
obligations in regard to global poverty and development can be met without threat
to the economies and the national welfare policies of the rich countries became
enduring components of humane internationalism largely because of the dominance
of liberal internationalist views. Along with a commitment to a liberal international
economic order, each is a prominent feature of the liberal internationalism which
continues to be a major strand in the political cultures of Canada, the Netherlands,
Norway, and Sweden.
Liberal internationalists have shed some of their earlier more nave expectations.
They no longer expect that global poverty can largely be eliminated within a
generation, and they are much more aware of the obstacles to a global acceptance
of an open multilateral trading system. Much of the self-confidence of liberal
internationalists in their limited response to the needs of the Third World was
gradually undermined by harsh reality. The gap between the rich countries and most
of the poor countries continued to widen. There were fewer and fewer grounds for
any reasonable hope that absolute poverty could be largely eliminated within a
generation. Projections of the numbers of people who would be living in extreme
poverty in 2000 would exceed the numbers in the year the projections were made. 10
At the same time, the Third World became increasingly assertive in its demands for
major reforms to the international economic order. These changes, which were
intended greatly to increase the benefits received by the LDCs from international
trade, were strongly interventionist and counter to liberal international economics.
As these realities pressed in upon the consciousness (and consciences) of those
individuals, non-governmental organizations, public officials, and political leaders
who were particularly concerned with Third World issues, greater attention began to
be paid to alternative schools of thought on international economics. In particular,
the structural economists, such as Gunnar Myrdal, Ral Prebisch, Dudley Seers, and

30

Keith Griffin, and the increasingly powerful dependency school in its several
expressions became more and more influential. By 1975, reform internationalism
had become a second significant perspective among those who sought to
understand North-South relations and to define the obligations which states of the
North ought to accept.
Reform internationalism shares with liberal internationalism an acknowledgement
that rich countries have an obligation to seek to alleviate abject poverty in the less
developed countries. However, reform internationalism believes that an open
international economic system operates to the comparative disadvantage of weak
and poor countries in persistent and significant ways. Equity between rich countries
and poor countries as well as effective action to alleviate global poverty therefore
requires a fairer distribution of power within international financial, monetary, trade,
and development institutions and a range of state and inter-state interventions to
correct the inequities and to alleviate the poverty that international capitalism
otherwise perpetuates. If liberal internationalism is timid Keynesianism writ
internationally, reform internationalism is social democracy applied internationally.
Reform internationalism is more pessimistic about the social consequences of
unguided market forces than is liberal internationalism and more optimistic that
international interventions can correct the adverse distributional and other socially
undesirable consequences of uncontrolled market forces. Reform internationalism is
not, however, merely international altruism. Central to the reformist position is the
conviction that a more equitable and just international economic order is also in the
interests of the rich countries when these interests are seen in sufficiently broad
terms and within a longer time horizon. It thus embraces the international
Keynesian idea that economic development in the Third World will be to the
economic advantage to the rich countries. Moreover, it suggests that there are also
many non-economic reasons for the rich countries to alleviate global poverty, to
promote development, and to achieve a more just international order. Reform
internationalism, as is clear from its classic statement in the Brandt Report, hopes
that these considerations as well as more purely ethical considerations may induce
the developed states to support a wide range of international reforms that will
promote development in the LDCs.
Radical internationalism is the third major perspective on North-South relations
which emerged by 1975 as a strand of the humane internationalism of the political
cultures of Canada, the Netherlands, Norway, and Sweden. It is distinguished by a
primary emphasis upon an obligation to show solidarity with the poor of other lands.
In its purest form this solidarity with the poor replaces any narrower interest in the
further advancement of the living standards of the already rich. Indeed, radical
internationalism is often accompanied by a hostility to consumerism and the ethics
of capitalism. Typically, while reform internationalists are concerned to support
those Third World societies that they regard as sensitive to the needs of their own
poor, radical internationalists favour support for states that are striving to be as
autonomous of world capitalism as they can manage and that have separated
themselves politically from the major Western powers. They are very suspicious of
the policies of the major Western capitalist countries and of the internationalist
capitalist system. They are equally skeptical of the social commitment of the civilian
bourgeoisies and the military that control so many Third World governments.

30

By and large adherents of radical internationalism do not devote a great deal of

energy to public policy issues. In their view, any structure that is integral to the
economic or political system is so tainted by dominant capitalist interests that little
of value can be accomplished through it. As a result, they are usually hostile
towards the bilateral aid agencies and such international trade and aid structures as
the General Agreement on Tariffs and Trade (GATT) and the World Bank, believing
that the activities of such organizations serve to tie the LDCs more closely to the
international capitalist system. They favour sending aid only to the few regimes
they accept as adequately revolutionary and to social groups and forces in other
societies that are likely to become agents of radical change.
The identification of these three strands of human (sic) internationalism is no mere
intellectual exercise. It permits a number of clarifying generalizations about the
sectors and structures in our chosen societies in which these different perspectives
tend to predominate. In effect, it permits a socio-political typography of these
attitudes. To illustrate, within the politicized community of non-governmental
organizations concerned with Third World issues, both radical internationalism and
reform internationalism are strongly represented. Most of those in this community
are probably still reformers but many have moved to a radical position. Church
activists in particular are quite sharply divided between radicals and reformers.
Within what used to be called the development community, that is, those
professionally involved either in the study of development or in the organization and
management of development-related activities, the important division is between
reformers, who continue to insist upon the need for changes that go beyond
anything that the North would accept as in its own interests, and liberal
internationalists, who seek to identify significant mutually shared interests which
can provide a basis for greater collaboration and a truer partnership. While the
reformist view is still widely shared within the NGO and academic communities,
liberal internationalist sentiments have come to predominate in most national and
international official aid agencies. Finally, within the bureaucracies of these
countries, an internationalist realist perspective, though always influential, was
often held in check by liberal internationalist ideas, especially in regard to the
United Nations and its family of institutions and to development assistance. More
recently, international realism appears to be more influential. These generalizations
are, I think, borne out in the country studies which follow. They are introduced at
this point not to persuade readers of their validity but to demonstrate the
usefulness of the strands of internationalism that have been defined.
The perspectives also permit generalizations about the positions which are typically
taken by the main political parties in our selected countries. Left socialist and
communist parties tend to be radical. Social democratic parties, typically, are
reform internationalists but with both radical and liberal wings. Christian parties and
liberal parties with strong capitalist support are likely to be liberal internationalist
with a strong emphasis on humanitarian aid, and, as one moves to the right of the
political spectrum, liberal economics is joined more frequently with an international
realist perspective.
This conceptualization of different types of internationalism also facilitates fruitful
comparisons. For example, within some but perhaps not all of the governments of
the four states, the main struggle on North-South issues in recent years has been
between a liberal internationalist emphasis on more open, global, multilateral

30

trading relations and a realist concern to protect immediate economic interests by

initiatives that would however undermine the commitment to multilateralism. As will
become clear in the country essays, reform internationalism was an influential view
within, in particular, the Norwegian, Swedish, and Netherlands governments in the
period between 1975 and 1981, but in Canada it hardly penetrated policy-making
circles. In all four countries, reform internationalism was influential in varying
degrees in the legislature, in Christian and in social democratic political parties, in
the NGO communities, in the churches, and in the universities. Radical
internationalism, however, has been less influential. On a few issues such as the
choice of countries to be major recipients of aid and the value to the LDCs of
international trade, radical ideas had some impact upon the social democratic
governments of Norway and Sweden in the mid to late 1070s. In the main, however,
radical internationalism has never seriously penetrated decision-making circles in
any of these countries.11
These categories, finally, permit us to give additional clarity to the questions that
have motivated this project. What explains the strength of humane internationalist
sentiments in these societies and the marked variation therein of the influence of
reform internationalist ideas? What constraints have limited the influence of these
ideas? How resilient have these traditions been in the years since the advent of the
global recession and since the recognition that the principal industrial powers were
not going to permit any significant reforms to the international order or to increase
greatly the transfer of the concessional resources to the poorer countries of the
Third World? Has liberal internationalism become the preferred stance of these
states in more recent years? Are there as well important structural factors related to
new technologies and the rise of the newly industrialized countries which constrain
the internationalism (both reform and radical) of these middle powers? Are many of
the specific ideas of middle power internationalism now dated? Is there a need for a
fresh definition of the international policies required by reform internationalism and
a fresh appraisal of the assumption of liberal internationalism that a predominantly
open international market can serve the interests of both rich and poor countries?
The primary task is to understand the internationalism of each of these four
countries. Only then can we hope to discuss the prospects of middle power
internationalism. The next four chapters address this primary task with reference in
turn to Canada, the Netherlands, Norway, and Sweden. A concluding chapter then
offers some comparative and more general comments on the determinants of the
internationalism of these middle powers, on its strengths and its limitations, and on
whether and with what emphasis it may yet become a significant force for more
humane relations between rich and poor countries.

Pratt, Cranford (1989), Chapter 6: Middle Power Internationalism and

North-South Issues: Comparisons and Prognosis, in Pratt, Cranford (ed.),
Internationalism Under Strain: The North-South Policies of Canada, the
Netherlands, Norway, and Sweden, pp. 193-220, Toronto, Buffalo and
London: University of Toronto Press.
Sources of Humane Internationalism in Canada, the Netherlands, Norway, and
Sweden

30

It is not at all self-evident why Canada, the Netherlands, Norway, and Sweden
should have chosen to play particularly active roles in regard to North-South issues.
Their societies were, of course, influenced by that greater sensitivity to the
dimensions of global poverty and to the pain and misery it causes which the media
and, in particular, television have brought to the attention of most the people of the
industrialized world. Nevertheless, on the face of it, a number of factors might well
have operated to minimize the interest of these countries in the development
problems of the Third World.
With the important exception of the Netherlands, none of these countries has been
a colonial power. They therefore lack the links of sentiment and interest which are
the particular legacy of the Western powers that had previously ruled most of the
Third World. Moreover, their trade relations with the less developed countries (LDCs)
have been significantly less important for their economies than has been true of
many other industrialized countries. Finally, contemporary perceptions of their
security requirements and the unavoidable consequences of their respective
geographic locations have meant that their relations with the major Western
countries are unavoidably seen as vastly more important than their relations with
the Third World. With the exception of Sweden, these countries are linked in a
security alliance the North Atlantic Treaty Organization (NATO) with the United
States and the major European powers, while in each case their proximity either to
the European powers or, in the case of Canada, to the United States has made the
management of that relationship a central foreign policy concern.
Nevertheless there emerged in each of these countries a more than average
sensitivity to the aspirations and development needs of the LDCs. The four country
studies provide a variety of convincing and mutually reinforcing explanations of why
this happened despite the various factors that might have made it otherwise. These
fall under the three general headings: the first relates to the internationalist
orientation of their policies, the second to their responsiveness to cosmopolitan
values, and the third to political considerations that helped to increase the
importance these countries attached to their relations with the South.
A Strong Commitment to a Constructive International Role
After 1945, the political leadership, the senior civil service, and most citizens active
and informed about public affairs in each of the four countries concluded that their
nations must seek a positive role in the building of a new and peaceful international
order. The 1930s and the war years had made it clear in each country that the
shaping of international politics must not be left entirely to the major powers. The
four countries did not all take the same decisions. Sweden, for example, joined
neither NATO nor the European Economic Community while the Netherlands joined
both, and Norway and Canada joined only NATO. Nevertheless, each was
determined to play a role in international affairs. Three of them had been involved
in the Second World War, Canada as a primary combatant and the Netherlands and
Norway as occupied countries overwhelmed by the military power of Nazi Germany.
From that experience cam a powerful commitment to the creation and
strengthening of the United Nations system as a source of collective security, an
international instrument with which to promote shared objectives, and a mechanism
for the peaceful settlement of inter-state disputes. Despite its long history of
neutrality and a continuing determination to stay outside any defence alliance,

30

Sweden had nevertheless clearly drawn the same message from history and has
been as a vigorous supporter of the United Nations as the others.
Economic factors reinforced this determination to play an active international role
rather than to stay quietly in the background, preoccupied with purely domestic
concerns, and leave the shaping of international affairs to those more powerful than
themselves. The point has been made before, and is repeated in the country
studies, that it is very much in the interests of middle powers, particularly those
dependent upon trade, to contribute to the development of international trade,
financial, and monetary regimes which would negotiate and enforce common rules
and standards.
A number of country-specific factors reinforced the commitment of the governments
concerned to assert themselves in international affairs. In Canada, a self-confident
and greatly expanded Department of External Affairs was determined to maintain
the important role which it had played in the negotiations of the mid to late 19040s
leading to the creation of the United Nations, the new financial institutions, and
NATO. In Sweden, as Sdersten suggest, there was an upsurge of pride and selfconfidence in the moral and economic superiority of its democratic socialist middle
way. Pratt and Hveem suggest that the internationalism of Canada and Norway,
respectively, in the late 1950s was also a response to prodding from the United
States and the United Kingdom that other Western states share the burden of
development assistance as part of a general Western effort to contain
communism.
All these factors combined to create a remarkably wide consensus in each country
that it should seek to play a conciliatory role in international affairs and to support
actively the major international institutions and regimes. This consensus did not
necessarily encompass a particular concern for issues relating to poorer countries,
but without this disposition towards responsible internationalism, humane
internationalist policies towards the South could hardly have developed at all.
A Widely Shared Sensitivity to Cosmopolitan Values
[] To summarize the argument being offered here. In each of these four countries
the values of the dominant political culture support extensive domestic social
welfare systems which assist those unable to find employment and those
involuntarily distressed. These same cultures, by extension, have supported
humane internationalist measures to assist the very poor of the Third World. The
breadth of this support is demonstrated by the fact that parties of the right and the
centre, as well as of the left, have endorsed the high levels of aid that have been a
feature of government policy in these countries. Within these same political
cultures, Christian and social democratic influences have sought to generate
support for international interventions to promote greater equity and to conciliate
the demands of the LDCs. Within these same cultures more radical sentiments have
also been promoted. Where the Christian and social democratic components have
been strong, as in the Netherlands and the Scandinavian countries, these reform
internationalist ideas have had an impact on government policies, as have more
radical ideas to a lesser extent. Where they are weaker, as in Canada, the ideas of
reform internationalism have remained outside the consensus supporting the
government. They have been prevalent in the NGO community, in the churches, and

30

in the universities in Canada, but have had little, if any, influence upon policy.
Radical internationalism has been even more of a minority view.
The Political Advantages of Humane Internationalism
Several contributors, and other commentators as well, have stated that our middle
powers also secured significant domestic and international political advantages by
taking an altruistic stand on a range of international issues. For example, Canadas
substantial aid programme has helped it to win the good will of Third World
countries and thereby to be more influential within la Francophonie and the
Commonwealth. The prominent support given by the Netherlands and Scandinavian
governments to the United Nations Development Programme has secured a
sympathetic hearing for them on other issues from Third World countries. The point
can surely be generalized. Canada, the Netherlands, Norway, and Sweden have
been anxious to play a significant role in the major international political and
economic institutions. Their ability to win favourable response to the positions they
take has been aided by the reputation which they have acquired as sensitive to
Third World issues and responsive to Third World needs.
Domestic political gains have also been a consequence of their internationalist
policies. Hveem comments that the Norwegian government found a substantial aid
programme was domestically the most acceptable way to demonstrate its active
involvement with the efforts of its allies to contain communism. This point, too, can
be generalized. Except for Sweden, these countries are formally tied to major
Western powers in various ways. Yet their citizens would not easily accept the
adoption of a purely peripheral or satellite role as junior partner in either NATO or
the European Community. Strong and independent initiatives relating to Third World
development that expresses the humane values of their political cultures have been
an important way for the governments of these countries to reassure their
electorates that they have lost neither the capacity nor the will to take independent
initiatives in international affairs.
It is perhaps these factors which open these governments to the accusation that
they are tempted sometimes to become free riders, indulging in more responsive
posturing on Third World issues when they know there is no chance that the
majority of the OECD countries will support what they advocate. Cooper and
Verloren van Themaat suggest that the Netherlands government may thus be glad
to have the European Community take the new protectionist decisions which it
favours but which conflict with the more responsive internationalist image of which
it is proud. Hveem, more mischievous still, refers to a possible Peer Gynt syndrome
in Norway, whereby Norway joins the rest of the OECD members in measures that
discriminate against LDC imports while affirming its preference for quite different
and more generous policies. That these accusations are offered primarily by
nationals of these countries suggests that there is a near inevitable gap between
public positions which would fully express the humane internationalist components
of the political culture of these countries and the more self-interested measures that
those in power are happy to accept. It may well be that as long as these political
cultures have a solid humanitarian component, there will be domestic political
advantages as well as international advantages for the governments of these
countries to cast their policies in an altruistic light. No doubt there are rhetorical
exaggerations and distressing gaps between affirmed principles and concrete

30

policies. But the strength of humane internationalism within the dominant political
culture has had its impact on more than merely the tone and style of their policies.
It has helped to ensure the selection of policies which the government can honestly
present as humanitarian. The aid programme of the Netherlands, Norway, and
Sweden illustrate this in quite a dramatic fashion. There is evidence also that it has
contributed to some extent to their selection of more responsible North-South
policies. It can also reasonably be assumed that the strength of humane
internationalist sentiments within the Canadian political culture contributed to the
decision of the Canadian cabinet in 1980 to reject the advice it received from its
Department of Finance that Canada settle for a ceiling on its aid expenditures of
0.35 per cent of GNP.
The Limited Influence of Humane Internationalism of North-South Policies
A major initiating interest of this project had been to identify the constraints that
have limited the responsiveness of Western powers to the ethical obligations posed
by global poverty and the development needs of the Third World. It was proposed in
the opening chapter that these constraints have been very significant even in
countries with a reputation for humane internationalism. The evidence from the
country studies suggests that this has indeed been the case in Canada, the
Netherlands, Norway, and Sweden.
While the impact of humane internationalism on the North-South policies of these
countries has been limited, it has not been negligible. In the Netherlands, Norway,
and Sweden, and, to a much lesser extent, in Canada, humane internationalist
concerns have proven strong and resilient in one policy area, that of development
assistance. The Canadian chapter argues that humane internationalist
considerations have always had to struggle against commercial and political
considerations for prominence in the shaping of Canadian development assistance
programmes. It suggests that since 1975, narrowly commercial considerations have
had an increasingly important impact on Canadian aid policies. It is clear from the
other country studies that the aid agencies in these countries have not been free of
commercial and political influences. Readers need only to recall, for example,
Hveems telling discussion of the use of aid funds to assist the Norwegian
shipbuilding industry, Sderstens identification of the political dynamics behind the
Swedish aid programmes to Vietnam and Cuba, and the greater care being taken in
all four countries to ensure that a higher proportion of formally untied aid is
nonetheless spent on goods and services from the donor country.
Nevertheless, in the Netherlands, Norway, and Sweden those responsible for the aid
programmes have been able to contain, if not quite to minimize, the undermining
impact of pressures to secure greater immediate benefits for domestic economic
interests from aid programmes. From the perspective of Third World development
and the alleviation of poverty, the record of the aid programmes of these countries
is far superior to those of other countries. 5 This is true in regard to the tying of aid,
to country selection, to the allocation of funds to multilateral aid institutions, to the
sectors assisted, to the use of programme support, and to responsiveness to
immediate crises. This superiority is above all illustrated by the fact that these three
countries have, in comparison to other OECD countries, sustained far higher levels
of per-capita budget allocations to their aid programmes.

30

Ral Lavergne uses with effect the argument that development assistance is above
all an international public good, that is, that many of the benefits which it brings to
the rich countries are indiscriminately enjoyed by all of them, be they large aid
donors or small donors.6 The pressures are therefore understandably great that the
cost of such a public good should be equitably shared by the states that benefit
from it. A major preoccupation in the Development Assistance Committee of the
OECD and in the international negotiations which fix the national contributions to
the various international financial and development institutions has been an
equitable sharing of the aid burden. The willingness of the Netherlands, Norway,
and Sweden to sustain their aid programmes at such high levels is thus all the more
exceptional. This can surely be taken to reflect the breadth of the popular
commitment to these high levels of development assistance, the influence within
these societies of the non-governmental organizations (NGOs) that champion the
needs of the Third World, and the solidity of the inter-party parliamentary support
for substantial aid programmes. []
Since 1981 the momentum has largely gone from the efforts of the Scandinavian
and Netherlands governments to win Western support for reforms to the
international system in the interests of international equity and development. Their
initial effort to that end has been a response to demands from the South. Once that
pressure had dissipated, the advocates of reform internationalism lost their agenda.
Reform internationalism has not totally disappeared from the public positions taken
by these countries. Nevertheless, they no longer advocate many of the original
proposals such as the Common Fund and the Integrated Programme for
Commodities. Nor do they vigorously promote new proposals for international
initiatives with regard to, say, Third World debt or the disastrous state of so many of
the economies of the less developed countries that would give contemporary
expression to a concern for greater equity in the international economic order and a
rapid amelioration of the condition of those in absolute poverty. Even the more
limited ideas of liberal internationalism are less influential, as protectionism in its
various guises becomes for prevalent.
Humane internationalism in its several forms is clearly disheartened and under
siege. Hveem writes of Norway having adopted a more self-interested and
conformist Third World policy; Sdersten identifies the end of a flower-power
period in North-South policies and a return to pragmatic policies in Sweden; Cooper
and Verloren van Themaat characterize Netherlands policy in recent years as
pragmatic internationalism and social morality tempered by a realistic but
usually unobtrusive concern for Dutch interests without being at all reformist.
Pratt refers to a bureaucratic consensus in Canada that represents a marked shift of
basic attitudes away from liberal internationalism and towards a realism that is
narrowly national, preoccupied with economic objectives, and little interested in the
Third World.
These are depressing observations. The final section considers why the humane
internationalist ideas of the 1970s and early 1980s had so limited an impact on
policy even in those countries where these ideas constituted a substantial
component of the predominant political culture. []
Why Was the Impact of Humane Internationalism so Limited?

30

[] Our answer, in fact, embraces eight different factors. The first three are major
exogenous factors, the next three relate to political and ideological influences that
directly impinge upon senior policy-makers, and the final two are weaknesses within
the humane internationalist community which have diminished its impact on policy.
1. The greater preoccupation with immediate economic objectives which has been
nearly universal since the advent of the global recession has lessened the
responsiveness of government to humane internationalist considerations. []
2. Once it was clear that the principal OECD powers were rejecting any move
towards the NIEO, were becoming increasingly protectionist, and were either
cutting their official development assistance or at least not significantly
increasing it, the governments of Canada, the Netherlands, Norway, and Sweden
were bound to reconsider their own more internationalist positions. []
3. The growing challenge of manufactured exports from the newly industrialized
countries has also weakened the responsiveness of these governments to
humane internationalist values. []
4. Loyalties, a sense of community, and an ethical responsiveness that are national
in character are still vastly stronger within each of these countries than are the
newer ties and obligations which a responsiveness to cosmopolitan values has
generated.[]
5. Reform internationalist values and attitudes are less widely shared and less
securely anchored within the political cultures of these countries than is the
humanitarian concern which supports the substantial aid programmes. []
6. The senior foreign policy decision-makers of these four countries have held a
world-view which does not easily accommodate an important humane
international component. []
7. The specific international policies recommended by reform internationalism
were often ill conceived and unlikely to accomplish the humanitarian and equity
objectives on the basis of which they were being supported. []
8. Finally, the groups and sectors within these four countries that have been critical
of their North-South policies have been divided and therefore less effective
politically than they might otherwise have been. []

Putnam, Robert D. (1988), Diplomacy and Domestic Politics: The Logic of

the Two-Level Games, in International Organization, Vol. 42, No. 3, pp.
427-460.
The most portentous development in the fields of comparative politics and
international relations in recent years is the dawning recognition among
practitioners in each field of the need to take into account entanglements between
the two. Empirical illustrations of reciprocal influence between domestic and
international affairs abound. What we need now are concepts and theories that will
help us organize and extend our empirical observations.

30

Analysis in terms of two-level games offers a promising response to this challenge.

Unlike state-centric theories, the two-level approach recognizes the inevitability of
domestic conflict about what the national interest requires. Unlike the Second
Image or the Second Image Reversed, the two-level approach recognizes that
central decision-makers strive to reconcile domestic and international imperatives
simultaneously. As we have seen, statesmen in this predicament face distinctive
strategic opportunities and strategic dilemmas.
This theoretical approach highlights several significant features of the links between
diplomacy and domestic politics, including:

the important distinction between voluntary and involuntary defection from

international agreements;

the contrast between issues on which domestic interests are homogeneous,

simply pitting hawks against doves, and issues on which domestic interests
are more heterogeneous, so that domestic cleavage may actually foster
international cooperation;

the possibility of synergistic issue linkage, in which strategic moves at one

game-table facilitate unexpected coalitions at the second table;

the paradoxical fact that institutional arrangements which strengthen

decision-makers at home may weaken their international bargaining position,
and vice versa;

the importance of targeting international threats, offers, and side-payments

with an eye towards their domestic incidence at home and abroad;

the strategic uses of uncertainty about domestic politics, and the special
utility of kinky win-sets;

the potential reverberation of international pressures within the domestic

arena;

the divergences of interest between a national leader and those on whose

behalf he is negotiating, and in particular, the international implications of his
fixed investments in domestic politics.

Two-level games seem a ubiquitous feature of social life, from Western economic
summitry to diplomacy in the Balkans and from coalition politics in Sri Lanka to
legislative maneuvering on Capitol Hill. Far-ranging empirical research is needed
now to test and deepen our understanding of how such games are played.

Rai, Kul B. (1972), Foreign Policy and Voting in the UN General

Assembly, in International Organization, Vol. 26, No. 3, pp. 589-594,
University of Wisconsin Press.

30

The findings of this research indicate that certain aspects of foreign policy and
voting in the General Assembly are closely related. No causal relationship between
foreign policy indicators and voting in the General Assembly is either asserted or
implied in the above discussion. The discussion of causality needs more evidence
than the results of the regression analysis in this study can supply.

Rai, Kul B. (1980), Foreign Aid and Voting in the UN General Assembly,
1967-1976, in Journal of Peace Research, Vol. 17, No. 3, pp. 269-277,
Sage Publications, Ltd.
In the case of American foreign aid, our findings support the first hypothesis on the
use of aid as an inducement more than the second hypothesis on the use of aid as a
reward or a punishment. In the case of the Soviet foreign aid, there is greater
evidence in support of the second hypothesis than the first hypothesis. The
American aid has certainly been more effective as an inducement to the recipients
to vote similarly with the United States in the period 1967-76, or rather 1970-75,
than was the case in 1961-65 (see my studies, 1970 and 1972). It has been,
however, used less effectively as a reward or a punishment in this period than in
1963-66 (see Wittkopf, 1973). The findings on the Soviet aid support the behavior
patterns of the Soviet Union and its aid recipients in the General Assembly
discerned in 1961-65 also (my studies, 1970 and 1972).
Causality cannot be concluded from correlations, even if they are quite high, and
causality between foreign aid and the General Assembly votes is not even implied in
this paper. However, the correlations discussed in this study do suggest the
consideration of foreign aid and the General Assembly votes in relation to each
other by the decision-makers in the donor as well as the recipient countries. Further
research on such consideration would bring us closer to establishing causality
between foreign aid and the General Assembly votes, if indeed it exists

Riddell, Roger C. (2008), Does Foreign Aid Really Work?, Oxford: Oxford
University Press.
6. The Political and Commercial Dimensions of Aid
[] The clear conclusion of this chapter is that political, commercial and other
criteria than the developmental and humanitarian motives for providing aid matter
greatly. The ways that aid is allocated and the tying of aid have profound effects on
the overall contribution of aid to development and welfare goals. Aid always has
been, and still is, provided for non-developmental purposes, contributing to and
shaping the way that it has been allocated, and the forms in which it is provided.
Overall, the evidence forcibly shows, although not as rigorously as one might like,
that these influences have reduced and continue to reduce aids potential
development and welfare effects. In many cases, political influences have also
accentuated the volatility of aid-giving, reducing its potential impact still further. In
a recent study, Collier, Goderis and Hoeffler (2006) find that political shocks are

30

more damaging to poor countries than natural shocks. The politics of aid remains
central to any discussion of whether and how aid works.

7. Public Support for Aid

[] The title of this book, Does Foreign Aid Really Work?, is based on the premise
that the impact of aid is an issue of major importance: what aid achieves really
matters. But what is the link between public support for aid and their views on the
impact of aid? A widely shared assumption is that support for aid is closely
correlated with its impact: support for aid rises to the extent it is known to work,
and falls to the extent that there is evidence that it doesnt. Opinion poll data
frequently seem to confirm this. For instance, in a 2003 poll on aid to Africa, 33 per
cent of Americans said they believed aid to the continent to be higher than it is.
When asked whether they though aid to Africa should be increased if they had more
confidence that it would really help those who needed it, support for increasing aid
more than doubled to reach 08 per cent of those polled (PIPA 2003: 5-6).
Official donors and NGOs and many aid researchers take it as given that support for
aid is not only based upon, but needs to be based upon, evidence of its success.
Reflecting this view, in a major study of the political economy of aid, Hopkins argues
that a major condition for sustainability of future aid is the belief in its efficacy
(2000: 445). More controversially, this belief has all too often been used by donors
as a motive for giving prominent publicity to stories of aids successes, in the hope
that this will boost support for aid, regardless of whether these stories are
representative of all aid. The importance of the relationship between aid impact and
support for aid was well expressed in the 1986 OECD/DAC annual report reviewing
225 years of aid-giving, which stated boldly, and without qualification, that
maintaining and strengthening public support for aid can be facilitated by more
effective communication of the successes that aid has achieved (OECD 1986:
63). In contrast, as discussed at length in Part III of this book, the evidence of aids
impact is decidedly mixed: the impact of aid is usually dependent upon the context
in which it is given and the commitment and ability of the recipient to use it
effectively. In reality, while some aid does work, a significant proportion of aid does
not achieve its objectives, and most aid is less effective than both donors and
recipients would wish.
Against the reality of the impact of aid, donors could adopt three different
approaches to providing information to the public:
1. Try to convince the public that some aid does indeed work.
2. Try to convince the public that steps are being taken to enhance the impact
of aid, by trying to reduce the number of cases where it does not work well.
3. Try to nurture, extend and deepen support for aid, acknowledging that a
significant part of it is clearly ineffective, and sharing knowledge about aids
failures as well as its evident successes.
In practice, both official donors and NGOs have focused their efforts overwhelmingly
on the first two approaches. They have deliberately avoided addressing the third

30

challenge almost entirely. Donors have never really thought about coming forward
and providing the public with a rounded view of the evidence of its impact,
presumably believing that evidence of failure will undermine public support for aid. 10
What is therefore of particular interest is that one of the clear and consistent
findings of public opinion polls on foreign aid across almost all donor countries is the
high degree of support there is for foreign aid among people who believe that aid is
failing to achieve its objectives. Contrary to the common-sense view and some
opinion poll data which suggest that support for aid is dependent on evidence that it
works, there is a significant group of people who would appear to be supportive of
aid even when they know, or believe, that it has not been working well. If the views
expressed by these people and reflected in these polls accurately reflect wider
public opinion, then aid failure is not the kiss of death to public support for aid that
donors believe and dread.
Table 7.1 presents evidence which shows this, summarizing recent poll data for the
leading 22 OECD/DAC donor countries. It does this by placing the overall level of
support for aid (column A) alongside the percentage of people who do not believe
that aid achieves its objectives (column B). The figures in column C are derived by
subtracting the proportion of those who do not support aid at all (100 minus the
figures in Column A) from the proportion of people who judge aid to be a failure
(Column B).11 This proportion of people who support aid but judge it a failure is
termed the Gap. As is clearly shown, in every donor country except New Zealand
(comparable data for Norway could not be found), there is a greater percentage of
people who believe aid is not effective than who are not in favor of foreign aid. 12 In
eight countries Belgium, Canada, Italy, Greece, Japan, Spain, the United Kingdom
and the United States more than 20 per cent of the population who are supportive
of aid believe it is not effective; and in the case of four of these eight countries
Canada, Spain, the UK and the US the figure is 30 per cent or higher. 13
There is other evidence which not merely confirms this finding but suggests that
these figures could well underestimate the phenomenon. 14 For instance, in
Denmark, where public knowledge about aid issues is amongst the highest of all
countries, polls suggest that almost 50 per cent of people believe that aid doesnt
work yet, consistently over time, 75 per cent and more of the public remain
supportive of aid (OECD 2001: 24-5). Likewise, in Norway in the 1980s, widespread
publicity highly critical of Norwegian aid was spread across the Norwegian media
but support for aid remained high (Bs 2002: 4).
Most researchers who have commented on the phenomenon of people supporting
aid when they believe it is ineffective have referred to it as an anomaly, a
contradiction or a paradox, in some cases suggesting that it is an indicator of the
shallowness of public understanding of foreign aid. But why should this be so? Why
not take the findings at face value? Might it not be that a significant proportion of
people do indeed support the giving of aid even when they know it is highly likely
that it may not be effective?15 Contrary to the mainstream view, some have
suggested that this is the case. For example, in his review of support for aid in the
United States, Rice observes that in spite of aid being widely perceived as
ineffective and wasted, this opinion does not dissuade many Americans from
supporting assistance efforts (1996: 74).

30

If significant numbers of people do support aid-giving when they know much of it

doesnt work, we need to try to understand why. It is likely that for many, this could
have something to do with their understanding of the moral case for providing aid.
It is to this issue that we now turn.

8. Charity or Duty? The Moral Case for Aid

There is a strong moral case for providing aid. This has been continually and
repeatedly argued since aid was first given. Most non-governmental organizations
(NGOs) believe that aid should be provided almost entirely for moral reasons, while
practically all individuals, companies and foundations who give voluntarily to
support the work of humanitarian and development charities do so because of some
sense of responsibility or duty to help people suffering and in need. Perhaps not so
widely known is that governments have also repeatedly stated that they provide aid
for moral reasons. Consequently, ethics is central to any discussion of aid and why it
is given.
The purpose of this chapter and the next is too look closely at the moral case for
giving aid, by holding up to scrutiny the different elements which constitute the
moral case for aid. What precisely is meant by the claim that aid should be provided
for moral reasons? Does it mean that governments and people should give and
respond to the needs merely out of the kindness of their hearts? In other words,
should aid-giving be viewed solely as an act of charity, where the giver feels good in
giving, but there is no particular requirement to give, and no link to any rights that
those who receive aid might have? Or does it mean that there is a moral duty or
obligation to provide aid? Further, if governments in contrast to individuals have
obligations and responsibilities to provide aid, what precisely is the nature of these
obligations? If individuals and governments have obligations to provide aid, how
much needs to be provided to satisfy that obligation? How do government
obligations to provide aid rank in relation to other obligations and responsibilities
that governments have within their own countries? What moral obligations do NGOs
have in providing aid? Perhaps most crucially and controversially, to what extent do
the obligations or responsibilities or rich governments to provide aid require them to
work together to ensure sufficient aid is provided? What happens to the duty of
give if aid is not used for the purpose intended?
These are all important questions; a number are quite complex and have been
given a range of different answers. They extend the discussion about aid to the
disciplines of moral and political philosophy, and also to the field of international
relations, where a number of answers to these questions are keenly debated and
remain contested. Increasingly over the past 20 years, the ethical dimensions of
aid-giving, and aid-receiving, have been the focus of attention of scholars working in
the relatively new area of the ethics of development. 1 Against the backdrop of a
large and growing literature, the ambitions of this chapter and the next are modest:
more to provide an overview of the key issues involved in making the moral case for
aid than to engage in an in-depth discussion of the merits of all the different
arguments. That would require a book in itself. The next chapter looks at the
reasons that governments and individuals give in arguing the moral case for
providing aid, and hold these up to scrutiny. The present chapter prepares the

30

ground for that discussion by examining the different elements which contribute to
making the moral case for aid.
At the heart of the discourse about the moral basis for aid-giving lies the notion of
obligation. However, most theories of and approaches to obligation skip over, take
as read, or simply assume that aid is needed, and that it works. This chapter takes a
more holistic approach. First, it discusses, briefly, the basic facts on the ground
upon which almost all theories of obligation to provide aid are based. It then looks
at the different ethical theories, theories of justice, and perspectives based on a
human-rights framework which have been used to argue the moral case for
providing aid. []

9. The Moral Case for Governments and Individuals to Provide Aid

This chapter examines the ways that governments, individuals and nongovernmental organizations (NGOs) explain why they believe there is a moral
obligation for them to provide aid. The bulk of the chapter focuses on the moral
case for governments to provide aid. It starts by summarizing the explanations that
different governments have given to explain why they believe they have a moral
obligation to provide aid. It then holds up these statements to scrutiny, assessing
them both against the different theories and approaches discussed in Chapter 8 and
against the changes taking place in the world. It discusses ways in which thinking
about governments, aid and mortality are shifting, and perhaps being
fundamentally altered, as a result of changes in global politics and international
relations, and of changes in approaches to human rights. The last section of the
chapter moves the focus away governments to look at the ethics of individuals aidgiving and some of the new moral questions and dilemmas that voluntary agencies
and NGOs are having to face.
Donor Governments: Current and Evolving Values
Most governments claim that there is a moral reason for them to provide aid. Many
official donors have also explicitly stated that they have some sort of obligation or
responsibility to provide aid, thus moving the discussion about aid and mortality
well beyond the narrower confines of charitable giving. 1 If there is amoral case for
providing aid, there must be a moral problem, or set of moral problems, which the
provision of aid is meant to address. 2 Contrary to what one might at first suppose,
however, both among themselves and over time, donors have differed in their
articulation of the core problems and sets of issues from which they conclude that
they have a responsibility, duty or obligation to provide aid.
For Scandinavian donors, the notion of solidarity has been a particularly important
and prominent reason for providing aid. Some forty years ago, in 1962, when its
parliament authorized Sweden to provide official aid, it needed no other motivation
than moral duty and international solidarity (Andersson 1986: 29). 3 These motives
still have strong resonance today. Recently, Denmark stated its acceptance of
responsibility for supporting development, demonstrated in its solidarity with
millions of people in the world whose lives are marked by poverty. 4 For Finland,
moral obligation is linked to distributive justice and based on a cosmopolitan view of
the world, where rich countries have a particular responsibility for the well-being of

30

citizens in poorer countries. Also for Finland, distribution issues are important: given
the growing wealth of the world it would be morally indefensible to make no effort
to tackle these inequalities, and for this reason rich countries give money to
development co-operation.5
Likewise for the Netherlands, a fair distribution of wealth, social justice, and nondiscrimination are presented as important factors explaining why aid is given, while,
for the Irish aid programme, absolute priority is given to the reduction of poverty,
inequality and exclusion in developing countries. For the United Kingdom the
objectives of international development are embraced by the government because
it is right to do so: Every generation has a moral duty to reach out to the poor and
needy and to try to create a more just world (DFID 1997: 16). World poverty, says
Tony Blair, is one of the greatest moral challenges we face (DFID 2006c: ii).
Beyond the European Union, similar, sometimes strong assertions have also been
made about the moral obligation to provide aid. These have also been explained in
different ways. For Norway, development policy is not about charity: the fight for
poverty is a fight for justice. As one of the richest nations, Norway accepts its moral
responsibility not only to combat justice and promote development, but to make a
difference, playing its role in speeding up reforms to reduce poverty, and allocating
resources to fulfill its obligations. 6 In North America, both Canada and the United
States have continuously expressed the view that providing humanitarian aid, in
particular, is a moral imperative.7 In the case of the United States, the government
has pledged to provide humanitarian assistance solely on the basis of urgent need,
reflecting the concern for saving lives and alleviating suffering, regardless of the
character of their governments (USAID 2004: 20). The moral obligation to provide
development aid was, perhaps, most clearly articulated by President Kennedy,
whose words are still prominently displayed on the USAID website: Why, then,
should the United States continue a foreign economic assistance program? The
answer is that there is no escaping our obligations: our moral obligations as a wise
leader and good neighbor in the interdependent community of free nations; our
economic obligations as the wealthiest people in a world of largely poor people To
fail to meet those obligations now would be disastrous. 8
Historically, extreme poverty, dire need and human suffering, contrasted with
growing wealth, widening inequalities and the ability to help, have provided the
main cluster of reasons for donors to suggest or assert that they have a moral
obligation to assist, and provide aid. In recent years, these reasons have been
linked to, and in some cases eclipsed or replaced by, an explicit focus on human
rights, complementing and, in some ways, recasting the way that the moral case for
providing aid is understood. The rights-based perspective in aid-giving has been
particularly prominent in the justifications articulated by Switzerland, Finland,
Germany, Norway, and Sweden. For example, Germany has recently stated that all
its development work, including its aid-giving, now takes place within a human
rights framework, the core objective of which is the respect, protection and
fulfillment of rights (of poor people), for which the international community,
including Germany, is partly responsible. Indeed, Germany has asserted that human
rights not only the moral, but also the legal basis for development. For Norway, the
fight for justice is, in essence, a human rights agenda, with Norway contributing to
the realization of economic, social and cultural as well as civil and political rights.
For Finland, a justice-based approach to development implies that the fulfillment of

30

rights defined in human rights agreements provides the starting point for its
support. For Switzerland, aid-giving is part of a process of helping in the realization
of basic rights, with human rights providing the framework through which its work
on addressing problems of poverty is approached. Switzerland has committed itself
to using binding human rights treaties and mechanism as the basis for its work at
both the bilateral and multilateral level.9
Box 9.1 summarizes the different reasons that donors have given to explain why
they believe there are moral grounds for them to provide aid.
BOX 9.2 MORAL EXPLANATIONS GIVEN BY DONOR GOVERNMENTS FOR PROVIDING
AID

On the basis of solidarity.

In response to human suffering: the humanitarian imperative.
In response to extreme poverty, need, marginalization and exclusion.
In order to enhance human freedoms, and to contribute to human
development, and to the realization of capabilities.
In order to extend and enhance the fulfillment of human rights, especially
core or basic rights.
Because of inequalities, notably wide and widening, or growing relative wealth
compared with those living in extreme poverty.
For reasons of distributive or social justice and fairness, to contribute to the
fairer distribution of wealth.
To secure a safer, more secure and peaceful world, including for the donors
own citizens.a

It is sometimes claimed that the moral case for providing aid is different from that for
providing aid for self-interested reasons. However, this is too narrow a view. There can
(often) be strong moral reasons for counties to ensure the long-term interests of their
citizens.

It is not only governments which have evoked morality as the basis for giving aid. In
presenting the case for aid, and after posing the question why rich countries
should provide aid, the World Banks response was that human being have a basic
responsibility to alleviate suffering and to prevent the needless deaths of other
human beings. They not only have a moral obligation to share their good fortune
with others, but failure to take action is deemed to be morally reprehensible
(Stern 2002: 15-16). Similarly, in 2004, the Managing Director of the IMF asserted
that the rich countries bear the greatest responsibilities for achieving the goals of
poverty reduction as encapsulated in the Millennium Development Goals (MDGs), by
meeting their commitments to provide higher levels of aid (quoted in UN Millennium
Project 2005: 197). In 2005, the 22 member states of the European Union signed
the European Consensus on Development, agreeing not only that combating
poverty is a moral obligation, but that progress in eradicating poverty will help to
build a more interdependent world where we would not allow one billion people to
struggle on less than one dollar a day. 10
Aid and the Nature of Governments Moral Obligations
Governments say aid is a moral issue and say they provide aid because it is morally
right to do so. But in what sense do governments have a moral obligation to provide

30

aid? If governments do have an obligation to provide aid, what does that obligation
entail: precisely how should they respond to the problems of extreme poverty
against the backdrop of their large and growing wealth and the widening gulf
between rich and poor sketched out in Chapter 8? If governments have moral
obligations to provide aid, are these obligations which apply solely to individual
donors, or are there wider obligations which extend beyond the confines of the
choices that individual governments make in isolation? These are fundamentally
important questions, but they remain insufficiently discussed and examined.
A key issue in determining whether governments have obligations to the distant
needy revolves around the question of the moral unit around which the discussion
is cast. While to cosmopolitans it is clear and self-evident that the basic moral unit
is the world, for many others, this is self-evidently wrong. Indeed, it would seem to
be at variance with one of the most fundamental tenets of international relations
and the way that governments have thought about issues of morality and
obligation. For many people, that fact that we inhabit a world consisting of different
nation states, and that there is no world government and no state wants one,
means that moral obligations need to be framed within the prevailing state-based
system. Consequently, it is the state which constitutes the core moral unit around
which obligations and potential obligations evolve. 11 As governments views the
world through the lens of states, we will begin the discussion on governments,
morality and aid-giving by considering the core moral unit to be the state, and
states, though the discussion will subsequently be broadened to the international
system of states, not least because this is what states themselves increasingly
have been doing.
Against this backdrop, we now look in turn at governments, aid and morality
through three different lenses. The first, which we will call the narrow absolutist
perspective, assumes that governments only have moral obligations to their own
citizens. The second, called the mixed perspective, assumes that donor
governments have some moral obligations to the poor beyond their borders but
these obligations are weak and can usually be trumped by moral obligations at
home. The third, called an evolving international perspective, assumes that the
moral obligations of states are in part formed and shaped by factors and decisions
beyond their borders which, in turn, influence the traditional mix of obligations
between citizens and non-citizens. []

Roeder, Philip G. (1985), The Ties that Bind: Aid, Trade, and Political
Compliance in Soviet-Third World Relationships, in International Studies
Quarterly, Vol. 29, No. 2, pp. 191-216.
The findings of this study suggest a complex relationship among aid, trade, and
political compliance in Soviet-Third World relations. It has long been noted that the
Soviet Union uses aid as a direct instrument of influence, by seeking to induce Third
World states to adopt policies favorable to the Soviet Union. On the one hand, in
order to encourage Third World states to adopt anti-Western or pro-Soviet policies,
the Soviets have offered assistance (Walters, 1970:33). On the other hand, the
Soviet Union has demonstrated a willingness to cancel credits abruptly or exert

30

severe economic pressure on countries of importance to the USSR which adopt antiSoviet policies (Walters, 1970:167; Dawisha, 1979:181).
Yet, this direct use of Soviet aid appears to be only part of a more complex causal
nexus. According to the theory of Soviet-centered dependence and the results
presented here, Soviet aid apparently can also induce compliant behavior indirectly
through the creation of trade dependence. Indeed, specific features of the Soviet aid
programs appear designed to accentuate their trade dependence effect. First,
almost all Soviet aid has been tied, in the strictest sense, to purchases of Soviet
machinery and equipment. This enhances the import dependence effect. Second,
the Soviets have permitted many Third World recipients of arms and economic aid
to repay these loans with local currencies or commodities (Cooper and Fogarty,
1979:650; Stevens, 1976:78). This enhances the export dependence effect.
The results of this study suggest that while the importance of the Soviet arms
program as a direct instrument of influence has grown, its importance as a tool for
creating trade dependence among recipients has declined. The diminished export
dependence effect of Soviet arms assistance may result from the shift in Soviet
arms sales policy toward commercial terms with repayment in hard currency.
Originally, the Soviet Union was likely to offer liberal terms of repayment, including
a repayment period of eight to ten years at 2 per cent and, importantly for its
export dependence effect, repayment in commodities. In the 1970s, the Soviets
increasingly required repayment in hard currencies (Cooper and Fogarty, 1979:650).
Ericson and Miller (1979:214), both of the Central Intelligence Agency's Office of
Economic Research, estimate that hard currency receipts rose from about 10 per
cent of total arms deliveries in 1970-1972 to about 43 per cent in 1976-1978. This
has meant that recipients, on average, are less likely to redirect their exports to the
Soviet Union in order to pay for Soviet arms. 17 In short, while Soviet arms transfers
appear to have accentuated the growth of Third World trade dependence on the
Soviet Union in the 1960s, they do not appear to have slowed its decline in the
1970s.
Conversely, the results suggest that the offer or threatened loss of Soviet economic
assistance has not directly increased compliant behavior among recipients, but that
the Soviet economic assistance program has increased in importance as a tool for
building trade dependence among recipients. The second may be a result of
important shifts in Soviet policies since the fall of Khrushchev away from his
political approach to development (Valkenier, 1970:424). Specifically, the growing
export and import dependence effect of Soviet economic assistance may be the
consequence of more effective administration as well as growing pragmatism and
commercialism in the Soviet program. Improved administration institutionalized in
such practices as extensive long-term planning through joint permanent
commissions with individual recipients (Valkenier, 1970:417-418) means that
projects are more likely to be completed successfully and efficiently (Cooper and
Fogarty, 1979:653; see also Walters, 1970:116). Growing pragmatism has meant
fewer showy projects that are unproductive or uneconomical. It has been reflected
in a less dogmatic approach to questions of nationalization, agricultural
development, and state planning within Third World economies (Valkenier,
1970:423-431). The greater commercialism of Soviet economic assistance policy
has meant that the Soviet Union gives closer attention to projects that promise
production that complements the Soviet economy. Indeed, some Soviet analysts

30

have viewed aid-giving primarily as an alternative to domestic investment and

argued that it would be cheaper for the USSR to import certain goods and materials
than to produce them at home (Valkenier, 1970:416-417; cf US Central Intelligence
Agency, 1980:8; Pockney, 1981 :54). These shifts in policy seem to have increased
the import and export dependence effect of Soviet economic aid.
This apparent difference in effect between the two aid programs suggests that the
relative importance of the two forms of Soviet aid as instruments of influence varies
with time. That is, in the short term Soviet arms appear to be the more significant
instrument; in the longer term, economic assistance may be the more
consequential. This difference implies that in a broader Soviet strategy its aid
instruments can complement one another in the Third World. A rational Soviet
strategy concerned with building political influence in the Third World can balance
both forms of aid, using economic assistance to build longer-term ties that bind
Third World states to the Soviet Union for political purposes, while using arms
transfers as a more immediate inducement of favorable policies (cf Albright,
1982:301-302).
Finally, the findings of this study raise questions about the claim of the theory of
Soviet-centered dependence that the longer-term Soviet objective behind its aid
programs is to build an international socialist division of labor. This theory argues
that the ultimate Soviet objective in building trade dependence is to integrate LDC
economies with the socialist system and to deny those sources of raw materials and
markets to the capitalist economies.
If this is, indeed, the Soviet objective, the findings of this study argue that the
Soviet Union is failing. While Soviet economic aid has been associated with
increasing trade dependence on the Soviet Union, its effect has not been enough to
overcome those forces that are eroding that dependence. As noted above, the
proportion of Third World trade with the Soviet Union has been declining among
recipients of Soviet aid as well as non-recipients. In our study of 62 Third World
states, only 18 saw the proportion of their exports going to the Soviet Union grow
between the beginning and the end of the 1970s and only three saw this grow by
more than five percentage points (Argentina, 14.4 percentage points; Ethiopia, 8.7;
and Ghana, 5.6). In this period, only 24 states saw the proportion of their imports
coming from the Soviet Union grow and only one saw this grow by five percentage
points or more (Ethiopia, 6.9 percentage points). Of these three states, only Ethiopia
was a major recipient of aid in the 1970s. Pockney (1981 :3) notes:
The 1976 Report of the United Nations Conference on Trade and Development
shows that whilst the trade of the USSR has expanded in physical and
monetary terms, as has the trade of most developing countries, the proportion
of the world Import-Export market each group has taken has been falling for
most of the years since 1960. The importance of this cannot be overemphasized. Even with all the problems of oil prices, inflation, stagflation, and
the biggest depression in the trade cycle since 1945, the developed market
economies have been taking, together with OPEC countries, larger shares of an
expanding world market turnover (emphasis in original).

30

In short, the growth in Soviet-LDC trade has failed to keep pace with the far more
dynamic growth of Western trade. It would appear that in the aggregate Third World
trade dependence on the Soviet Union is declining.
In fact, this claim by the theory of Soviet-centered dependence may be based on a
misunderstanding of both Soviet and Third World objectives. First, this theory may
fail to understand Third World intentions in opening economic ties with the Soviet
Union. Stevens (1976:38) argues that in Black Africa commercial relations with the
East have been thought of. . . not as an alternative to Western markets but as an
adjunct to them. Third World states, for the most part, have remained interested in
trade with the West, which earns them hard currency and provides commodities of
higher quality. Yet they cannot continue to expand their sales of primary products to
the West without depressing the prices they receive. To avoid such gluts that might
jeopardize their trading relations with the West, many Third World states have
turned to the Soviet Union and the East as a second-best market to which they can
sell their primary products without depressing the world market price. In short, Third
World states oftentimes turn to the East not to redirect their trade from the West but
to protect that trade. This limits Soviet opportunities to build trade dependencies
and build a separate international socialist division of labor.
Second, the claims of this theory may be based on Soviet theories that are now
dated and have been revised. Valkeniers research (1970, 1979) into Soviet foreign
economic policies points out that the Soviet view of the international division of
labor has changed fundamentally. She argues persuasively (Valkenier, 1979:17)
that:
The new trends in aid and trade policies and much of the attendant discussion
suggest that the aim is not so much the displacement of the existing economic
order as its modification to create appropriate conditions for greater and more
advantageous Soviet participation. Instead of trying to enlist less developed
countries (LDCs) of the Third World in an international socialist division of labor
. . . the Soviets are increasingly discussing and instituting new forms of
economic exchanges wherein mutual advantage, modified market forces,
multilateralization, and commercial gain will benefit not only the LDCs and the
socialist bloc but the West as well, with all three categories considered and
treated as parts of an interdependent world (cf Albright, 1982: 302).
The decline in Third World trade dependence on the Soviet Union may be closely
tied to this change in policies. In particular, the Soviet Union, in its commercial
relations with the LDCs, may increasingly be seeking to complement its growing
trade with the West by earning hard currency and attempting to support economic
development at home by satisfying consumer demands and providing primary
products more economically. With this shift in purpose, the Soviet Union is less
concerned with building a separate international socialist division of labor.
Taken as a whole these findings suggest a second policy implication: the Soviet
Union, in seeking political influence, may find reliance on military, rather than
economic, assistance more profitable in the future. The apparent continued value of
arms assistance as a direct inducement to political compliance (just as economic
assistance seems not to have had that value) gives priority to the first in the short
run. The inability of economic assistance (even with an apparent increase in its

30

ability to build trade dependence) to compensate fully for all those forces eroding
the proportionate position of Soviet trade in the Third World may lead the Soviets to
question the value of economic assistance for even long-term political purposes.
Indeed, the growing economic rationality in Soviet economic assistance programs
may, in part, be a reflection of the growing recognition that these programs have
only limited political value. And the rise of Soviet military involvement in the Third
World during the last ten years may be a manifestation of growing Soviet
recognition that they are unable to extract great political value from economic
asistance [sic] or to build an international socialist division of labor (cf Albright,
1982:301).
Stripped of its sometimes apocalyptic fears, such as the denial of raw materials to
the West and the inevitable crisis of capitalism, the theory of Soviet-centered
dependence describes consequences of military and economic aid that are not
unique to the Soviet programs. While this theory and other studies of aid,
dependence, and compliance have largely developed independently of one another,
each posits a set of relationships that might be argued to exist for all great powers.
The effort here has been limited to formulating the theory of Soviet-centered
dependence as a series of hypotheses, testing those hypotheses, and drawing
parallels to the extant literature on dependence in a manner that is faithful to the
original, albeit inchoate, theory. Yet, the parallels found to exist in the empirical
evidence suggest that future research on either Soviet or Western aid, dependence,
and compliance must consider the effect of competing efforts by other great powers
dispensing aid, expanding trade, and building political influence.

Roodman, David (2004), The Anarchy of Numbers: Aid, Development, and

Cross-country Empirics, Working Paper 32, Center for Global
Development.
Each of the papers examined here embodies a set of choices about model
specification and data. Aid is measured a certain way. A certain epoch is studied.
Periods have a certain length. And so on. Some of these choices imply certain
assumptions about the world, such as, say, that aid is not endogenous to growth. All
limit the scope of a strict interpretation of the results.
To wit, the Burnside and Dollar results can be stated more precisely as follows:
Aid was associated with higher GDP growth in a good policy environment
during 197093, on average, in countries and periods where the necessary
data was collected, except for outliers (unless aid 2policy is included to allow
for diminishing returns to aid), when aid is defined as Effective Development
Assistance as a share of real GDP and polices are defined by inflation, budget
deficit, and the complex Sachs-Warner openness variable, controlling for log
of initial real GDP/capita, assassinations per capita, ethno-linguistic
fractionalization, the product of those two, money supply/GDP, and period
effects, assuming that no unobserved country-specific effects simultaneously
and substantially influence aid, policies, and growth, and no variables other
than aid aidpolicy are endogenous to growth.

30

This is not quite aid has a positive effect on growth in a good policy
environment. In fairness, such qualifiers could be tacked on to the conclusion of
any study in the cross-country literature on aid and development, or in
econometrics more generally (though perhaps not always quite so many).
Moreover, Burnside and Dollar did test some of their assumptions, such as the
exogeneity of the policy variables. Nevertheless, a question of great scientific and
practical importance remains, and it is how many of such implied qualifiers in
studies of aid and growth can be dropped without harming the conclusions. This
study attempts to contribute to answering that question.
The test results reported here suggest that the fragility found in Easterly et al.
(2004) for the case of Burnside and Dollar is common in the cross-country aid
effectiveness literature.
In surveying the results, it is tempting to ask which results are robust and which are
not. But the test data are best seen in shades of grey. The results tested here break
roughly into five groups, ranging from weakest to strongest. The weakest group
consists of the results on aidpolicy in the Burnside and Dollar, Collier and Dollar,
and Collier and Dehn regressions, which lose significance at 0.05 in all but the
weakest tests. In the second division I put the Collier and Dehn result on
aidnegative shock, which passes more tests but is quite sensitive to changes in
the control set, as well as to removal of a minority of the negative shocks in the
sample. The Collier and Hoeffler result on post-conflict 1aidpolicy (or the
collinear post-conflict 1aid), the Hansen and Tarp results on aid and aid 2, and
Guillaumont and Chauvet result on aidenvironment seem stronger. They generally
pass the whimsy-based tests at or near 0.05. Most survive the sample-expansion
test, but with autocorrelationand then fail the AR-robust test meant to address
this problem. The Guillaumont and Chauvet result could not be put to the sampleexpansion tests, so the degree of its robustness is less certain and I add it to this
middle category.
In the fourth and fifth categories are the GMM results of Hansen and Tarp and
Dalgaard et al., respectively. Both fare well under the sample expansion. The
Hansen and Tarp GMM results, especially those on aid and lagged aid, generally
persist through the test suite, though not always significantly at 0.05. The only test
that completely eliminates the Hansen and Tarp GMM results is that of defining aid
as EDA/real GDP, but this is a misleading measure of aid. As for the Dalgaard et al.
results, they come through powerfully in all the tests but the 12-year aggregation
that reduces the sample size to 116.
Does this mean that the statistically weaker stories of aid effectiveness should be
dismissed? Are recipient policies, exogenous economic factors, and post-conflict
status irrelevant to aid effectiveness? No. There can be no doubt that aid sometimes
finances investment (Hansen and Tarp, 2001), and that domestic policies,
governance, external conditions, and historical circumstances influence the
productivity of investment. Why then do such stories of aid effectiveness not shine
more clearly through the numbers? The reasons are several. Aid is probably not a
fundamentally decisive factor for development, not as important as, say, domestic
savings, inequality, and governance. Moreover, foreign assistance is not
homogenous. It consists of everything from in-kind food aid to famine-struck

30

countries and technical advice on building judiciaries to loans for paving roads. And
some aid is poorly used. Thus the statistical noise nearly drowns out the signal.
If there is one strong conclusion from this literature it is that on average aid works
well outside the tropics but not in them. But just as it would be a mistake to
conclude that the other stories of aid effectiveness contain no truth, it would also be
mistaken to conclude that this result is the wholly, simply true. Indeed, the Dalgaard
et al. result is more of a question than an answer. Presumably distance from the
poles is not a direct determinant of aid effectiveness. Rather, the causal pathways
are complex, and so it cannot be assumed that no kind of aid will work well in the
tropics. Much the same can be said about the more optimistic, but somewhat less
robust, Hansen and Tarp result on the overall positive effect of aid on growth. Even
accepting it as true, it gives little guidance about where aid ought to be sent, and in
what forms.
Perhaps further econometric work will disaggregate aid by types of program and
recipient and unearth more robust answers to the fundamental questions of aid
policy. Or perhaps re-searchers have hit the limits of what cross-country empirics
can reveal about aid. The search for truth may need to rely more on the
particularistic case study approach. Van de Walle and Johns-ton (1996), for example,
synthesize conclusions from case studies on the use and effects of aid in seven
African countries, each jointly conducted by researchers from donor and recipient
countries. Of course, the lessons that emerge from case studies are particular to the
country studied. But they can be generalized. Killick (1998) provides an excellent
example by conducting a systematic survey of case studies that feeds into a
trenchant analysis of the effects of IMF conditionality. Nevertheless, robust
generalizations will not come easily.

Roodman, David (2007), The Anarchy of Numbers: Aid, Development, and

Cross-country Empirics, in The World Bank Economic Review, Vol. 21, No.
2, pp. 255-277.
The results reported here suggest that the fragility found in Easterly, Levine, and
Roodman (2004) for Burnside and Dollar (2000) is the norm in the cross-country aidgrowth literature. Indeed, in a counterpoint to the focus of Leamer (1983), Levine
and Renelt (1992), and Sala-i-Martin (1997) on the choice of controls as a source of
fragility, it turns out that modifying the sample generally affects results the most.
For example, in the Collier and Dollar (2002) regression, half of the specificationmodifying tests leave the t statistic at 1.49 or higher and two more lower it to near
1.00 (see table 5). But adding more years sends it to 0.19and, after dropping
outliers, to 0.81 (see table 6).
Does this mean that the various stories of aid effectiveness should be summarily
dismissed? Are recipient policies, exogenous economic factors, and postconflict
status irrelevant to aid effectiveness? Are there no diminishing returns to aid? Is
helping the neediest countries a hopeless task? No. There can be no doubt that
some aid finances investment and that domestic policies, governance, external
conditions, and other factors these authors study influence the productivity of
investment.

30

Why then do such stories of aid effectiveness not shine through more clearly? Aid is
probably not a fundamentally decisive factor for development, not as important,
say, as domestic savings, inequality, or governance. Moreover, foreign assistance is
not homogeneous. It consists of everything from food aid for famine-struck
countries to technical advice on building judiciaries to loans for paving roads. And
much aid is poorly usedor, like venture capital, is like good bets gone bad. Thus
the statistical noise tends to drown out the signal.
Perhaps researchers will yet unearth more robust answers to the fundamental
questions of aid policy. Or perhaps they have hit the limits of cross-country empirics.
Either way, robust, valid generalizations have not and will not come easily. Despite
decades of trying, cross-country growth empirics have yet to teach us much about
whether and when aid works.

Rothchild, Donald S. (2001), The US Foreign Policy Trajectory on Africa,

in SAIS Review, Vol. 21, No. 1, pp. 179-211, John Hopkins University Press.
Despite an activist foreign policy orientation, the U.S. trajectory on Africa has, on
the whole, tended toward low-profile involvement. 77 To be sure, there have been
notable exceptions, such as the 1986 Comprehensive Anti-Apartheid Act, the 1988
mediation of the Angola-Namibia accords, and the humanitarian intervention in
Somalia. In general, however, U.S. administrations, Republican and Democratic
alike, have been cautious in their engagement with Africa. The Clinton
administration, despite its rhetoric on partnership, held firm to the post-World War II
trend of limited involvement. Its initiatives on enlarging democracy, promoting
trade, backing a debt write-off, and sponsoring ACRI [African Crisis Response
Initiative] represent low-cost and low-risk efforts that reflect U.S. interests and
values. Its record on foreign economic assistance and peacekeeping are not what
one would expect of a great power. By acting pragmatically, the Clinton
administration had to limit its foreign policy objectives to what was acceptable to
Congress and the public.
Under these circumstances, what can be done to promote a change in the United
States trajectory toward a more constructive and life-affirming interaction with
Africa? We do not want an activist foreign policy that does not respect Africas
desire for autonomy and self-reliance, but rather one that supplements responsible
African decision-making to achieve Africas own goals and purposes. Such a spirit of
self-effacing cooperation and enlightened self-interest may be essential to achieve
long-term African and U.S. interests, but it will not be easy to cultivate. To do this, it
will be necessary for political leaders to commit greater energies to encourage an
increased public understanding of Africas needs and aspirations, and for a stronger
U.S. constituency on Africa to emerge. Only a concerned U.S. leadership and
domestic constituency for Africa will be sufficient to overcome the trend toward drift
and detachment that has marked U.S. policy toward Africa.

Ruttan, Vernon W. (1989), Why Foreign Economic Assistance? in

Economic Development and Cultural Change, Vol. 37, No. 2, pp. 411-424.

30

The first conclusion that emerges from this review is the weakness of the selfinterest argument for foreign assistance. The individual (or group) self-interest
arguments, after careful examination, often represent a hidden agenda for domestic
rather than international resource transfers. The political realists have not been
able, or have not thought it worthwhile, to demonstrate the presumed political and
security benefits from the strategic assistance component of the aid budget.
Rawlsian contractarian theory does provide a basis for ethical responsibility toward
the poor in poor countries that goes beyond the traditional religious and moral
obligations of charity. It also provides a basis for making judgments about the
degree of inequality that is ethically acceptable.
But the contractarian argument cannot stand by itself. Its credibility is weakened if,
in fact, the transfers do not achieve the desired consequences. Failures of analysis
or design can produce worse consequences than if no assistance had been
undertaken.51 There is no obligation to transfer resources that do not generate
either immediate welfare gains or growth in the capacity of poor states to meet the
needs of their citizens. It becomes important, therefore, to evaluate the
consequences of development assistance and to consider the policy interventions
that can lead to more effective development assistance programs.
Since the 1950s our understanding of the development process has made major
advances. But we can never fully understand the consequences of any assistance
activity or of intervention into complex and interdependent social systems. Our
limited knowledge about how to give and use aid to contribute most effectively to
development does not, however, protect us from an obligation to assess the
consequences of our strategic or development assistance and to advance our
capacity to understand the role of external assistance in the development process.

Ruttan, Vernon (1996), The Domestic Sources of Foreign Assistance

Policy, in Ruttan, Vernon, United States Development Assistance Policy:
The Domestic Politics of Foreign Economic Aid, pp. 1-18, Baltimore: Johns
Hopkins University Press.
My basic premise in approaching the study of U.S. foreign economic assistance
policy is that domestic sources have been more important in determining the size
and direction of assistance than has the international economic and political
environment the assistance is intended to influence. In this chapter I have outlined
a three-level context in which to test this premise against the history of U.S.
development assistance policy.
At the macropolitical level I emphasize the persistent aspects of U.S. political
culture: the tendency to vacillate between the two offspring of American
exceptionalism the liberal doctrine, which emphasizes cooperation in international
relations, and the realist doctrine, which emphasizes the need for political
dominance by the United States. At the policy formation level, I emphasize the role
of American economic and political power, a reactive style of policy formation, and
popular anticommunist ideology. At the micropolitical level the level of program
direction and design I emphasize the role of the several constituencies and
interest groups that bring their influence to bear on the process of policy formation

30

and program design and project administration. In subsequent chapters I assess the
role of these domestic macro- and micropolitical factors they impinge on the actors
or agents involved in assistance policy formation and program design.

Ruttan, Vernon (1996), Economic Assistance for Strategic Objectives, in

Ruttan, Vernon, United States Development Assistance Policy: The
Domestic Politics of Foreign Economic Aid, pp. 253-332, Baltimore: Johns
Hopkins University Press.
Activities programmed under the ESF budget declined steadily after the mid-1980s
(Chap. 7). The growth of the ESF during the late 1970s and early 1980s reflected, in
large part, the more activist approach of the late Carter and Reagan administrations
to contain actual and presumed Soviet political penetration of Southwest Asia,
Central America, and Africa. It also reflected an effort to circumvent what the
administration viewed as excessive congressional earmarking of resources allocated
under development assistance in the foreign aid budget. One effect of the dramatic
increase in the number of countries that received ESF aid was to erode the separate
rationale of the development assistance and ESF programs. The collapse of the
Soviet empire further weakened the rationale of economic assistance for strategic
purposes. In draft legislation submitted to Congress late in 1993, the Clinton
administration proposed eliminating ESF as a separate item in the AID budget. But
elimination of ESF as a budget item will not eliminate the use of economic
assistance for strategic purposes.
What lessons should be drawn from the history of economic assistance for strategic
purposes? The lesson from earlier experience in Latin America, Western Europe,
Greece, China, and Korea did not provide useful guides to our experience in
Vietnam. Nor have the lessons that were drawn from Vietnam protected the United
States from devoting excessive resources to the defense of presumed national
interests in other areas of little strategic significance, such as Nicaragua and El
Salvador. The lesson from assistance to Egypt that economic assistance to
strategically important countries typically produces little in the way of economic
development had been learned earlier in Turkey. The lesson that we have learned
from assistance to Israel is that domestic political pressure can be mobilized to force
an allocation of assistance resources that are clearly inconsistent with an incumbent
administrations definitions of broader U.S. strategic interests. One of the most
difficult lessons to accept from the history of economic assistance for strategic
purposes is that, in the area of foreign policy, American presidents and their senior
advisors cannot be expected to be honest with the American people or their
representatives in Congress. 229 Each president from Eisenhower to Nixon tried to
plant both feet firmly on both sides of the Vietnamese issue, promising to minimize
American commitment to Vietnam while exaggerating the significance of Vietnam to
American society. And each president since Eisenhower shamelessly lied to
Congress and the American people about the commitments being made in Vietnam.
Peace proposals were advanced with the objective of sustaining domestic support
for the war rather than with any realistic expectation that they could be accepted by
North Vietnam. The art of dissembling to the public and to Congress was practiced
with particular skill and deliberation by Henry Kissinger during his term as national
security adviser and as secretary of state. It was practiced with at least as much

30

deliberation, but with somewhat less skill, by President Reagan and his national
security staff in defending U.S. policy toward Nicaragua and El Salvador and during
the Iran-Contra controversy.
The acceptance of this practice by the establishment press has been particularly
disturbing. Joseph Kraft of the New York Times commented about Kissinger, While
he almost certainly lied, the untruths are matters of little consequence when
weighted against his service to the state. I cannot be so generous as Kraft. Lack of
honesty in dealing with the American people destroys the credibility of the policies
that are being advanced and of the institutions the policies are designed to protect.
I am not able to go as far as the iconoclastic journalist I. F. Stone, Every
government is run by liars, and nothing they say should be believed. 230 But I do
insist that we have been taught to look behind every policy pronouncement to ask
not what was said but why it was said.
The failure to deal openly with the American people and with Congress on issues of
national security has been costly. In his introduction to the Tower commission report,
R. W. Apple argued that Lyndon B. Johnson was shouldered into retirement by
massive disenchantment with the war in Vietnam. Richard M. Nixon was sunk by
Watergate and resigned in the face of probable impeachment. Gerald R. Ford was
doomed by the pardoning of his predecessor. Jimmy Carter ran aground on the
shoals of Iran.231 From the perspective of the mid-1990s, one might add that Ronald
Reagans incapacity for governance was revealed by the Iran-Contra affair and that
the legacy of George Bushs presidency was severely tarnished by his failure to
dislodge Saddam Hussain from power in concluding the 1990-91 war with Iraq and
by his effort to deflect attention from his role in the Iran-Contra affair.
I see little hope, however, that the lessons from the past will provide substantial
guidelines in considering the use of economic assistance in a post-Cold War
environment. The power of the American government to act in the national interest
is so influenced by parochial interests and by cycles in popular sentiment that the
capacity to pursue longer-term national interests lies effectively outside the
competence of those charged with the shaping and execution of foreign policy.
I argued earlier that the tendency to vacillate between the two offspring of
American exceptionalism between idealist and realist doctrine has been a
persistent aspect of U.S. political culture (Chap. 2). The tension between these two
poles has been a continuing theme in the political dialogue on economic assistance
for strategic purposes. Liberal politicians and their constituents have found it
difficult to support economic assistance that could not be rationalized in terms of
the well-being of aid recipients. Conservatives have typically insisted that economic
assistance be justified in terms of U.S. economic or strategic self-interest.
From the end of World War II to the mid-1960s, liberals found it easy to support
foreign economic assistance because of a presumed convergence between moral
purpose and strategic interest; a more prosperous world would also be a safer
world. In contrast, conservatives typically opposed foreign assistance. They could
find little political or ethical justification for taxing Americans to do good for
foreigners (Chap. 2).

30

By the late 1960s positions had reversed. Liberals found the moral costs of the
Vietnamese war the human and material costs to both Vietnam and the United
States too large to continue to rationalize when measured against the limited
strategic value of South Vietnam to the United States. In contrast, conservatives
came to view success, or at least peace with honor, in Vietnam as a test of
Americas credibility in its effort to contain communism. By the 1980s, this same
test was being applied in Nicaragua and El Salvador.
By the 1980s liberal and conservative roles again began to reverse positions. 232 In
the 1992 presidential campaign, there were calls by conservatives, in both the
Republican and the Democratic parties, for disengagement from international
responsibilities. But the breakup of the Soviet empire, followed by an eruption of
genocide in former Yugoslavia, and the breakdown of civil order in Somalia provided
a moral rationale, acceptable to liberals and even some conservatives, for
humanitarian assistance to parts of the world of little economic or strategic value to
the United States.
It is now time for the United States to undertake a thoroughgoing reassessment of
its strategic interests in a post-Cold War world and of the use of economic
assistance for strategic purposes. I argued earlier (Chap. 2) that ethical
considerations require, at a minimum, that foreign assistance do no harm to
recipients. The history of our use of economic assistance for strategic purposes
suggests that this minimum criterion has seldom been met when U.S. assistance
has been given for strategic purposes.

Schraeder, Peter J., Hook, Steven W. and Taylor, Bruce (1998), Clarifying
the Foreign Aid Puzzle: A Comparison of American, Japanese, French, and
Swedish Aid Flows, in World Politics, Vol. 50, No. 2, pp. 294323.
The cross-national analysis clearly demonstrates that the origins of the foreign aid
policies of the northern industrialized democracies are complex and varied. Despite
the fact that the four donor states under review maintained shared democratic
values and a common industrial base of development, notable differences as
concerns historical backgrounds (for example, French colonialism in Africa) and
positions within the international system (for example, the U.S. as a strategic
hegemon and Sweden as a middle power) ensured that foreign aid policies were
influenced by different combinations of foreign policy interests. No two cases were
alike, a fact that reinforces the need for detailed scrutiny of the individual cases.
Yet empirical patterns that emerged in three of our four cases allow us to draw
some general conclusions about the nature of the foreign aid regime of the final
cold war decade. First, the results clearly reject the rhetorical statements of
policymakers within the industrialized North who publicly assert that foreign aid is
an altruistic tool of foreign policy. Rather than demonstrating a positive relationship
between foreign aid and recipient social-welfare factors, our findings discounted the
role of humanitarian need in the aid policies of these industrialized democracies. In
the cases of France, Japan, and the United States, the fact that foreign aid does not
stem from altruism is hardly a new finding despite vigorous past efforts on the part
of French, Japanese, and American policy makers to project such an image abroad.

30

Indeed, in the case of Japan, aid was targeted toward countries with relatively high
levels of life expectancy, the opposite of what one would expect if humanitarian
interests were operative. However, the lack of a relationship between foreign aid
levels and humanitarian need in the case of Sweden cast doubt on the
preponderant view that Sweden and other middle powers, most notably Canada and
the other Nordic countries, were exceptional in this regard. Specifically, our findings
call for a thorough reexamination of the prevailing assumption within the aid
community that the Nordic countries and other middle powers maintained a unique,
humanitarian based set of policies within the foreign aid regime of the 1980s. 67
The second cross-national trend confirmed that ideology played an important role in
the foreign aid regime of the 1980s. In the American, Japanese, and Swedish cases,
there existed a positive relationship between foreign aid levels and the ideological
posture of African regimes. Whereas U.S. foreign aid policies were targeted toward
capitalist regimes willing to support Washington's containment policies, Swedish
policymakers were particularly interested in strengthening like-minded progressive
regimes in Southern African and Japanese aid policies favored capitalist over Marxist
regimes. The French case emerged as an anomaly. Yet despite the fact that
ideological factors as conceptualized in this study ultimately did not influence
French policies toward Africa, French policymakers approached the necessity of
ensuring the spread of French culture with the same ideological fervor adopted by
U.S. policymakers to prevent the spread of communism during the cold war era. In
this regard, la francophonie could be characterized as a culturally based ideology
that strongly influenced all other French interests in Africa.
A related yet less pervasive cross-national trend was the importance of strategic
interests in the foreign aid regime of the 1980s. As correctly surmised in the
qualitative case study literature, neither Japanese nor Swedish policymakers based
their foreign aid policies on the strategic importance of recipient states, although
Japan did pursue a foreign aid relationship with Tanzania based not on economic
self-interest but on calculations of Tanzanias regional diplomatic influence. Only
among American and French policymakers representing states with aspirations to
global political leadership did security interests play an important role in foreign
aid calculations. In the case of the U.S., these pretensions emerged in the form of
security alliances with strategic allies willing to join Washington in its quest to
contain communist and revolutionary expansion throughout Africa. In the case of
France, aid supported growing local military forces designed to keep pro-French
elites in power and therefore ensure continuation of the status quo.
A fourth cross-national trend evident in all four cases was a negative relationship
between aid levels and GNP per capita, clearly rejecting the expectation that
northern donors favored those recipients that represented the most powerful
economies in their region. Taken at face value, these results could be interpreted as
verifying the importance of humanitarian need in the calculations of foreign aid
administrators. Specifically, although GNP per capita is utilized as an economic
variable, its inclusion as a humanitarian interest variable could suggest that aid has
been targeted toward the neediest countries (that is, those with a low GNP per
capita). However, a careful reading of the case study literatures and a
comprehensive view of the statistical relationships suggest that factors other than
humanitarian need explain this possibility. In the case of the U.S., for example, the
top recipients of U.S. foreign aid were anticommunist, authoritarian regimes that,

30

like those regimes supported by Japan, France, and Sweden (albeit for different
reasons), were confronted with the ongoing deterioration of economies marked by
corruption and the negative repercussions of externally imposed structural
adjustment policies.68
Perhaps the most surprising cross-national trend was the emergence of trade as an
important determinant of northern aid policies. Whereas this result was anticipated
in the case of Japan, it clearly confounded the conventional wisdom concerning
American and Swedish foreign aid policies. However, when one focuses on the
evolution of domestic politics in each of our four cases during what was earlier
referred to as the hinge decade of the 1980s, the emergence of trade interests in
retrospect is more understandable. Even with Sweden, long recognized by foreign
aid opponents and proponents alike as a special case within the global foreign aid
regime, increasingly vocal domestic actors were demanding a positive linkage
between foreign aid and the promotion of the Swedish economy, most notably in
terms of trade. According to the OECD, this trend was prevalent throughout the
industrialized northern democracies by the end of the 1980s. 69 In this regard, the
end of the cold war merely laid bare the growing importance of trade in a foreign
aid regime that was already being readjusted to meet the new economic challenges
of the 1990s.
The findings of this study not only help to clarify the foreign aid regime of the 1980s
but also provide us with a base from which to undertake further analyses of earlier
cold war decades and particularly the post-cold war decade of the 1990s. For
example, the decline of the majority of Marxist and socialist regimes throughout the
African continent in the aftermath of the fall of the Berlin Wall in 1989 will almost
certainly lessen the impact of the role of ideology in foreign aid calculations, most
notably in the cases of the U.S. and Sweden. In the case of France, the devaluation
of the CFA franc in 1994 the first such devaluation since the creation of the Franc
Zone perhaps suggests a decline in the overriding importance of culture and the
beginning of greater French concern with economic issues in an increasingly
competitive post-cold war economic environment. One would therefore expect trade
interests to become more salient in French foreign aid calculations during the
1990s. Indeed, it is likely that the statistical importance of trade as seen during the
1980s regardless of whether this decade was unique during the cold war era or
constituted part of an ongoing trend will intensify in the post-cold war era.
A final note is required concerning the generalizability of our results beyond the
African subset of the global donor-recipient foreign aid regime. Our study was based
on the assumption that countries constituting a specific region such as Africa share
certain characteristics that differentiate that subsystem from other geographical
regions and therefore potentially affect northern aid policies differently. For
example, will the interests driving French policy be different if the region of analysis
(for example, Central America) is not part of what France historically has considered
to be part of its African chasse garde (private hunting ground)? Similarly, will U.S.
policy be driven by different interests if, rather than focusing on a region considered
peripheral to U.S. foreign policy interests (for example, Africa), the region of analysis
constitutes part of what those policymakers historically have considered to be part
of the U.S. backyard (for example, Central America and the Caribbean)? Definitive
answers to these questions will be possible only when further empirical research

30

focuses on donor-recipient relations in other regions of the developing South during

both the cold war and post cold war eras.

Schraeder, Peter J. (2001), Forget the Rhetoric and Boost the

Geopolitics: Emerging Trends in the Bush Administrations Policy Towards
Africa 2001, in African Affairs, Vol.100, pp. 387-404.
This article assesses the Bush administration's selfproclaimed realist policy
towards Africa, the essential thrust of which is captured by the motto: Forget the
rhetoric and boost the geopolitics. Three essential elements of this approach
include the strategic imperative of cultivating strong links with Africa's leading
regional powers, most notably Nigeria and South Africa, harkening back to the Nixon
administration's strategy of relying on such powers to ensure regional stability;
building upon the Clinton administration's success in promoting US trade and
investment with African countries, with a special focus on oilproducing countries;
and underscoring the need for Africans to do more for themselves in the realm of
conflict resolution, suggesting a lowprofile Bush administration approach to
involvement in either peacekeeping or peacemaking operations. Emerging trends
are analyzed by treating the US policymaking establishment as a series of three
concentric circles: the inner circle of the White House; a second circle comprising
the bureaucracies of the executive branch; and an outer circle inclusive of the US
Congress and the larger African affairs constituency. An important result of White
House and Congressional neglect of Africa is that the Bush administration's foreign
policy towards Africa, perhaps more so than that directed towards any other region
of the world, essentially will be delegated to the highlevel bureaucrats and political
appointees within the executive branch, leading to an outcome best characterized
as bureaucratic incrementalism in which continuity rather than change will mark
the administration's policies towards Africa.

Schweinberger, Albert G. and Lahiri, Sajal (2006), On the Provision of

Official and Private Foreign Aid: A Political Economy Approach, in Journal
of Development Economics, Vol. 80, No.1, pp. 179197.
The main purpose has been to explain the striking differences in the provision of
official relative to private aid among donor countries. To this end we have developed
a politicaleconomic model of official and private aid provision. To endogenize the
public provision of foreign aid we have made use of a political support function. Also
we assume except in Section 5 that a group of households is not altruistic toward
the recipients. Furthermore we allow for the fact that government may not be able
to credibly commit itself to a certain level of foreign aid.
One of the key features of our model is that an increase in the income tax rate
creates a conflict of interest between donors and non-donors: the welfare of the
donor households rises and the welfare of the non-donors falls. Private foreign aid is
reduced and therefore there is an increase in the underprovision from the donors'
point of view. This decline implies, ceteris paribus, a decline in the welfare of
donors. However there is also a transfer effect, i.e. an implicit transfer of income

30

from the non-donors to the donors. In our model the latter positive effect on donor's
welfare dominates the negative crowding out effect.
Initially we treat official aid exogenously and derive several crowding out results in
the sense that an increase in official aid reduces private aid (see Section 2). These
preliminary results enable us to integrate our approach with the received literature
on the official and private provision of public goods. They also appear to be relevant
to the explanation of the differences between official and private aid provision in
countries such as Japan and the USA. We generalize the main results of our
benchmark model in three directions: (a) we allow for official aid from a third
country, (b) the assumption that official and private aid are perfect substitutes is
relaxed and (c) we drop the assumption that the utility functions of the donor
households are separable in consumption expenditure and aid provision.
We proceed to endogenize official foreign aid in Section 2.2. Proposition 1 in Section
2 represents our first main result. We show that, contrary to intuition, total aid
provision is lower in a country where the government can credibly commit itself to
official aid. In deriving Propositions 3 and 4) we treat the government and the donor
households as players in a simultaneous game. The effect of differences in country
size and household composition on total aid and official aid raised from each
household is analyzed. It is shown, for example, that in more populous countries
official aid raised from each household is lower than in less populous countries.
Proposition 3 and 4 can explain differences in the provision of official aid raised from
each household in large countries such as the USA and Japan on the one hand and
smaller economies such as the Scandinavian countries on the other hand. It can
also explain the fact that the five countries which provided (per one million of
inhabitants) more than one hundred million US dollars of total foreign aid in 1998
are all relatively small countries: Denmark, Norway, Luxembourg, Sweden and the
Netherlands.
In Section 4 we allow for the provision of official foreign aid from a third country (see
Proposition 5). It is shown that official foreign aid from a third country crowds out
official foreign aid from the home country. If the number of non-donor households is
relatively large there may even be a crowding out of private aid.
Proposition 6 of Section 5 focuses on differences in the distribution of income
between the two donor types in different countries as a cause for different levels of
total aid provision. In this section, we allow the non-donors to be altruistic as well,
and the fact that they are non-donors is treated endogenously. We derive a
counterintuitive result: if the distribution of income favors the more altruistic
household total aid is lower. This again appears to be relevant to a comparison of
aid provision between countries like the USA and Sweden.
In our view the modeling framework put forward in this paper could be extended in
three directions. First, one should allow for the disincentive effects of income
taxation. Second, one may argue that warm glow effects are important; i.e., that an
increase in the contribution per se increases the utility of the donors because of joy
of giving. Third, one could allow for the interaction of official aid provision between
two or more donor countries by endogenizing the provision of official foreign aid
making use of political support functions. The latter may, of course, be different in
the various donor countries.

30

Sewell, John and Mathieson, John (1982), The United States and the Third
World, in Cassen, Robert, Jolly, Richard, Sewell, John, and Wood, Robert
(eds.) Rich Country Interests and Third World Development, pp. 41-93,
London: Croom Helm.
At the beginning of the 1980s, Americas relations with the developing countries
seem to have come almost full circle since the 1950s. Over the past three decades,
US policies towards the countries that comprise the Third World have gone through
several phases. First there was a concern with alliances and aid designed to
contain the Soviet Union. In the 1960s the emphasis shifted towards nationbuilding and winning the hearts and minds of people in the Third World. The 1970s
was a period of relative neglect as the United States focused on domestic problems,
tempered only by a dawning awareness of dependence on certain countries most
notably for petroleum and a sense that interdependence was strengthening the
links between developed and developing countries and at the same time making
conduct of American foreign policy more difficult. Most recently the primary concern
seems to have swung back to the activities of the Soviet Union and its allies.
The Regan Administration, which came into office committed to restoring Americas
relative economic and military power and pursuing Americas national interests
vigorously overseas, has been slow to define its policies towards the developing
countries. Renewed worries over the strategic intentions and military capability of
the Soviet Union is dominant along with growing anxiety about US resource
dependence, most marked in the case of oil, but not negligible in the case of some
other raw materials. Once again the developing countries are viewed largely as an
arena for East-West competition reminiscent of the Cold War era, as a drain on
scarce US budgetary resources, and as potentially unstable sources of key materials
needed in the United States.
The preparation for participation in the Cancun summit provided the stimulus that
helped the Regan Administration develop its basic approach towards development
issues and US-Third World relations. This approach, essentially a variant of the
administrations domestic programs, attaches great importance to the role of the
private sector as opposed to government and lays great stress on the need for
developing countries to adopt a proper set of domestic policies, rather than to
attempt to change the rules of the international economic game. Within this
framework, efforts to inaugurate global negotiations on North-South economic
issues are viewed great scepticism by the Administration, as is the possibility of new
government initiatives, whether bilateral or multilateral, to improve the economic
prospects of the developing countries. By the end of 1981, however, the Regan
Administrations approach still lacked specifics and many issues remained to be
decided.
Yet the world in which these new concerns are being addressed is very different
from the bipolar world of the 1950s and the 1960s, in which US economic and
political pre-eminence as well as military power was unmatched. The position of the
United States in the worlds economy has changed considerably. The US now shares
its formerly dominant position in the world economy not only with the other
industrial countries, which have greatly increased their economic competitiveness in

30

the post-Second World War period, but also with a number of developing countries
that have emerged in recent years as major actors in international economic
transactions. As a corollary development, the United States is no longer immune to
external economic shocks. Floating exchange rates, import penetration, commodity
shortages (with resulting inflationary pressures) and oil price rises have all signalled
the end of the relative economic independence of the United States. These
developments have in turn given rise to a growing unease among many Americans.
Moreover, most industrial nations are now beset with a combination of slow growth,
high unemployment and high inflation, and only marginal improvements in
economic performance can be anticipated. Most economists agree that a return to
the historically spectacular growth rates experienced by much of the world in the
1950s and 1960s is unlikely at least for the first half of this decade. In this
environment and particularly in the absence of greater co-operation the
prospects for dampened growth in trade (along with increasing pressures for
restrictions), continued financial imbalances and instability and uncertainties in the
supply price of major commodities such as food and oil.
The international system has also become far more complex because of the greatly
increased number of nations which are asserting [] in effect designed by only two
countries, the United States and the United Kingdom, and for several decades was
managed almost exclusively by the United States. In contrast, the Law of the Sea
negotiations include representatives of 154 independent countries. In 1959 there
were only 92 independent countries; by the beginning of the 1980s, the number of
independent countries had grown to 164, and all of the new entrants were
developing countries. These numbers alone could complicate management of any
international problem, but in addition, the actions of the developing countries, in
some cases individually and certainly collectively, now can affect the interests of
the United States in significant ways.
The developing have for some time called for reforms in international economic and
political systems, which are seen by the Third World nations to be providing
inequitable representation and opportunity. Their proposals referred to as the New
International Economic Order call for comprehensive changes in existing rules and
institutions, and are being advanced in practically every international meeting and
forum. One of the remarkable features of the 1970s was the surprising unity of the
developing countries in pressing for these changes despite their disparate levels of
economic and social development.
The historic North-South summit meeting of the leaders of the governments of 22
developed and developing countries who met at Cancun, Mexico in October 1981
underlines the new importance of relations between the rich and poor countries and
sets the stage for a reassessment of American relations with the Third World.
American policy-makers, and those concerned with US foreign policy, therefore need
to identify US economic as well as political and strategic interests in the
development of the Third World nations and US relations with them, in light of the
changes that have taken place over the last three decades both in the developing
world and in the international environment in which those relations will be carried
out. This paper is designed to contribute to that process.

30

Sexton, Edwin A. and Decker, Terrence N. (1992), US Foreign Aid: Is It for

Friends, Development or Politics? in Journal of Social, Political and
Economic Studies, Vol. 17, pp. 303-315.
The history of American economic assistance is a troubled one because foreign aid
has not always achieved its two primary objectives: support for US policy and
successful economic development in Third World nations. One of the clearest
indicators of the failings of the first objective can be seen in the voting records of
the UN Security Council. The second objective is glaringly faulty because no
recipient of US aid has become a truly developed nation since World War II.

Smith, Rogers M. (1989), Morality, Humanitarianism, and Foreign Policy:

A Purposive View, in Loescher, Gil J. and Nichols, Bruce (eds.), pp. 41-60,
The Moral Nation: Humanitarianism and US Foreign Policy Today, Notre
Dame: University of Notre Dame Press.
What should be the relationship between humanitarianism and American foreign
policy, and between humanitarian agencies of the United States government? These
questions are embedded in the perennial debate over the proper relationship
between morality and the national interest. In that debate, many stances can be
discerned, but two cast the longest shadows.
The orthodoxy in government, perhaps in academia, surely remains some version of
the disenchanted realism advanced in the postwar years by George Kennan, Hans
Morgenthau, and others. Realism soberly admonishes us not to make too much of
morality in international dealings. It often sanctions the harnessing of humanitarian
ideals and agencies to other, more hard-hearted governmental objectives.
Especially since the mid-1970s, many academic writers have therefore rejected
such realism as cynical selfishness. They have instead called on us to strive to
heed morality, and humanitarian organizations and advocates, in international
affairs. Most of these writers have identified morality with cosmopolitan
perspectives derived from the idealism of Immanuel Kant and sometimes from
universalistic religious outlooks, as Henry Shue did, for example, in his noted book
Basic Rights, and as he continues to do in his contribution to this collection. 1
While these two positions, the realist and the cosmopolitan neo-Kantian, come
down on different sides, in many respects they depict the relationship of morality to
national interest similarly. Morality is held to express the grand aspiration to do right
by all humanity. Although it may sometimes be taken as an element of national
policies, it is at heart distinct from, and in tension with, purely national interests.
Those interests are not thought of as chiefly moral, but as pragmatic or political.
By these terms writers usually mean that national interests center on preserving if
not enhancing the wealth and power of a nations government and people. Hence
both camps agree: morality is fundamentally something apart from national
interests, so that however often the two may coincide in practice, sooner or later
morality must be subordinated to national claims, or vice-versa.

30

Neither side, let me stress, maintains this distinction absolutely. Realists often
contend that avoiding excessive moralism in foreign policy leads to more moral
results. Neo-Kantian moralists often stress, as Shue does, that certain moral
considerations are part of the very definition of, at least, American national
interests. Both are points on which I will build, especially the latter, for I believe that
writers like Shue have done a service in arguing persistently for the relevance of
morality to American foreign policy and international affairs. But the neo-Kantian
moralists have not fully captured the genuine wisdom about practical possibilities
contained in realism.
Consequently, in this essay I will argue for an understanding of the relationship of
morality to national interests, and of the proper substance of American national
morality, that differs from each of these dominant camps. Instead of taking our
bearings from the somberly amoral worldview of realpolitik or cosmopolitan
idealism, I will suggest we adopt a more consequentialist view of liberal morality,
traceable to one dimension of John Lockes pragmatic, yet morally directed, political
philosophy.
In brief, this view goes beyond the neo-Kantians critique of realism by arguing that
certain moral principles are not merely intertwined with American national interests.
They constitute the very core of those interests. Indeed, they give moral standing to
imperatives to provide for national welfare and defense so long as the nation does
not permanently abandon the precepts that give its existence moral value. Those
precepts are not best understood, however, as embodying transcendentally based
universal principles of social justice. Rather, they express the nations reflectively
chosen moral goals to respect human liberties throughout the world and to
advance them, initially and especially, at home. This view encompasses the
concerns for actual consequences, and recognition of certain national claims, which
form the strengths of the realist perspective, without sanctioning the dismissiveness
toward morality realism can foster. And while it does not overcome the real
differences in private and public perspectives on humanitarianism and national
claims, it does clarify those differences and their moral appropriateness in ways that
may make healthy dialogue and cooperation between governmental and private
agencies more feasible.

Sogge, David (2002), TWO: Who Is Aiding Whom?, in Sogge, David, Give
and Take: Whats the Matter with Foreign Aid?, pp. 24-39, London & New
York: Zed Books.
Foreign aid is full of ambiguities and double bottoms. It does not fit neatly into any
one of the three ways people are said to go about their material transactions:
coercion, exchange and gift-giving.2 Being tied with geo-politics, trade and banking,
foreign aid cant be classified as purely gift-giving. Giving and getting have shadow
sides, where even in daily life they can mask exchange or coercion. Across culture,
people have been wary of gifts. In some Western and non-Western languages, words
for gift share the same root as words for poison. 3
Aid is routinely portrayed as high-minded beneficence. But a little probing around
an aid deal will usually expose a lively intermingling of high and low intentions. The

30

bigger the stakes, the greasier the fingerprints of commerce, geo-politics and
ideological crusading. Newcomers to the foreign aid business embody this. Public
figures in industries as diverse as oil prospecting, media networks, computer
software and popular entertainment want to be donors. Not only do they hand over
cash, they also study the subject, swap ideas with experts and busy themselves in
the details of aid provision. The New Rich, like those with Old Money whose privately
endowed foundations were among forerunners to the modern aid system, have
learned that noble expenditure is among the best means of self-defiance in the
court of public opinion.4 As long as some rich people and firms can portray their kind
as beneficent, the day of reckoning with normal progressive taxation can be
postponed for ever. The gratifications of giving are many, including a better bottom
line.
The case of taxes and their avoidance recalls the fact that beyond coercion,
exchange and gift-giving there is a fourth type of transaction, that based on
obligation. Progressive taxation is a main example. It is self-imposed, and accepted
by huge majorities as both fair and a good idea. It makes possible the provision of
public goods and the combat of public bads. Still other kinds of public policy are
based on obligation. Think of health insurance companies duties (in some welfare
states) to provide insurance cover to persons regardless of risk. Yet foreign aid is
only rarely grounded in obligation. The duties of the International Committee of the
Red Cross and the UN High Commissioner for Refugees are established in law and
practice, but elsewhere in the aid system, no one is a duty-bearer.
GIVING AND TAKING: INSEPERABLE TWINS Aid has deep and tangled roots in the
history of Western expansion. Needing a respectable rationale for imperial rule in
Africa and Asia, British ideologists came up with the notion of a Dual Mandate. One
face of the mandate was trusteeship: Britain had paternal obligations toward its
subject peoples; it had to take decisions on their behalf, protect them and guide
them. The other face was accumulation: the colonial power had to develop the
colonies economies for profit and insert them into the world system run by the
West. The unspoken rationale of the aid regime strikingly resembles the Dual
Mandate.
Guiding the USA was a vision of an open frontier. 5 France pursued a mission
civilsatrice. Detectable in these and other colonial ideologies were two drives: giving
and taking. To legitimize those two purposes trusteeship for others and
accumulation for ones self colonial power elaborated doctrines of modernization
and development. To manage the territories politically, they imposed systems of
indirect rule via local potentates. In the end, however, colonialism was too costly.
The trustee and mercantile rationales could not be sustained, at least under one
imperial flag.
As people in the South asserted rights to speak for themselves and manage their
own affairs and resources, Western powers had to drop their talk about civilizing
missions and mandates towards backwards areas. Former overseas dominions
were repackaged as exclusive clubs: Americas Good Neighbors in Latin America,
Britains Commonwealth, Frances francophine, Europes ex-colonies assembled as
the Lom group, and Japans flock of flying geese in Asia. 6 Northern officials
collaborated with the new ex-colonial leaders, cultivating them through elite

30

networks. Some African rulers took their vacations, had their suits made, and sent
their children for schooling in Europe.
Behind rhetoric about self-determination, the US and European powers have used
aid to compete with one another through their colonial and neo-colonial systems. 7
Trade and investment wars have gone on in the name of a super-project of social
engineering called development.8
The Players
The aid system has played with a fixed cast, but has also seen givers and receivers
come and go. Major trends and episodes may be summarized as follows.
AT THE PROVIDER END The USA has held commanding positions, first as the major
bilateral donor, but also the driving force behind the IFIs. Japans aid effort has
grown dramatically: in the 1990s it became the biggest spender in absolute terms.
Figure 2.1 shows the relative importance of main aid providers from 1960 to 2000.
For the Soviet Union and its Eastern European allies the role of aid donor ended
around 1990, whereupon, broken up and broken down, they became net aid
recipients. The period 1973-92 saw a number of oil-producing countries (chiefly
Saudi Arabia and the Gulf States) appear for a while as heavyweight donors.
Peaking at $9.6 billion in 1980, their grants and loans went chiefly to Asian and
African countries with large Islamic populations. Much of the money went into
projects in transport and energy; theirs was an aid programme for Islam and for the
oil industry.
Foreign aid comprises many kinds of flows. This books chief focus is on foreign aid
as used by officials (most of the time) in the strict sense of flows from official
sources under soft or concessional terms, chiefly for purposes of economic
development and welfare. Resources for political or military purposes are thus, in
principle, excluded. When directed towards low-income countries of Asia, Africa and
Latin America it is termed official development assistance (ODA); when directed
towards Eastern Europe, the ex-Soviet Union or other countries in transition it
carries the less condescending label official aid (OA). In this book, OA is included in
ODA unless otherwise noted.
Since the early 1980s bilateral or country-to-country aid has accounted for about
two-thirds of total ODA. About one-third of net ODA has flowed from multilateral
bodies: the IFIs, European Union channels and the United Nations agencies.
Multilateral aid has helped shield donors from the political risks of acting alone
where recipient sovereignty is breached, namely in attaching macro-economic and
political conditionality to aid. It has also helped in special cases such as South Africa
and Namibia, where donors together helped pull the plug on apartheid.
AT THE RECEIVING END Recipient countries form a mixed group. Former colonial or
current neo-colonial relationships strongly determine who gets what from whom.
This appears in informal sphere of influence: the USA in the Middle East and Latin
America, Australia in Papua New Guinea and Fiji. Appendix A provides a snapshot of
top recipients of 14 major donors at the end of the 1990s. Geography, colonial
history and culture are decisive for France, Britain and Portugal, countries whose aid
goes chiefly to their ex-colonies. Historical ties show up in Germanys aid to Turkey.

30

For over a decade the same populous countries have been among the top four
recipients of total bilateral ODA: Indonesia, China, India and Egypt.
The poorest countries have never been the highest priority; they account for less
than one-third of total ODA. More important have been those in the other lowincome category such as Indonesia, China, Cte dIvoire, India and Pakistan, and
lower-middle-income category, such as Egypt, Jordan, Guatemala, Bolivia and the
ex-Yugoslavian states. Table 2.1 presents net ODA disbursements in the 1990s
across six categories.
Poverty may be a main justification for aid, but it has seldom been the main
criterion for allocating it. If aid were distributed according to a simple head count of
poor people, then China, India and other South and East Asian countries would have
received most of it. But in the 1990s they received only about one-third ODA. Other
factors, such as size of a countrys population, count. For a given poverty rate,
smaller countries tend to receive more aid. Imperial scrambles for territories and
preferences for island and enclave nations have biased aids distribution.
As shown in Figures 2.2 and 2.3, both bilateral and multilateral ODA have been
directed towards poor countries, but not the poorest.
Whos Really Aiding Whom?
Aids public image is one of Western beneficence and non-Western beggary. Apart
from a parade of stories told to make benefactors feel good about their aid, there is
rarely a hint that the North gets something in return. On the contrary, the usual
insinuation is of unproductive and ungrateful welfare queens living high on Northern
generosity. That is an illusion. Foreign aid is a sideshow. Real benefits, and real
costs, appear in quite different and larger flows and blockages.
Between richer and poor countries, gains and losses can be estimated in various
ways. Official flows in funds, goods and people can be compiled with some accuracy.
But the global growth of unregistered transactions in illicit goods, tax evasion,
remittances blow large holes in the date. Lack of information is in part a result of
deliberate deregulation of capital, and the rewarding of old practices of bank
secrecy, tax paradises and fictitious bookkeeping.
Table 2.2 shows only recorded transactions. In the case of worker remittances,
actual values are far larger. In the case of tiny Somaliland, for example, they total
about half a billion dollars annually.12 Personal transfers surpass all official and nongovernmental aid. In 1998, officially recorded remittances from the Netherlands to
42 low-income countries (exclusive of Eastern Europe) totaled about US$ one billion,
a sum equivalent to 115 per cent of official Dutch aid to those countries. 13 Most
value, however, is redistributed upwards and outwards, from poorer to richer. These
flows take the following forms.
BRAIN DRAIN Richer places gain from professionals migrating from the South, many
of them trained at university level through aid-funded bursary programmes. The UN
estimates that African professionals departing for work abroad numbered about
27,000 in the 15 years up to 1975, 60,000 from 1985 to 1990, and 200,000 in the
period 1990-99.14 Today an estimated one in three African university graduates
works outside Africa. 15 Asia has suffered a haemorrhaging of talent, particularly to

30

the USA, where stay rates for advanced students in engineering disciplines and the
sciences can be higher than 75 per cent for students from particular countries. 16
CAPITAL FLIGHT Northern financial circuits gain from Southern capital, whether
looted or legitimately saved. To escape regulation and taxation, well-connected
firms and persons use many scams including mis-invoicing of imports and exports
and suitcases of cash to stash wealth abroad. Tax havens help account for the
difference between the $85 billion poor countries should receive in taxes from
foreign corporations and the $50 billion they actually receive. 17
[B]y the end of 1990 the cumulative total of flight capital from developing
countries was approximately $700 billion, equivalent to more than half the size
of the external debt of developing countries. In effect, roughly half of the
foreign borrowing by developing countries was transformed into an outward
movement of private capital by citizens of the indebted countries. 18
Figure 2.4 indicates the importance of capital flight in some selected African
countries. Researchers have speculated that the impact of a return of such
(relatively) huge investment flows would clearly be massive. 19
NORTHERN TRADE BARRIERS Northern business interests gain from excluding
imports from the South. Each year developing countries lose about $700 billion as a
result of trade barriers in rich countries: for every $1 provided by the rich world in
aid and debt relief, poor countries lost $14 because of trade barriers. 20
LOSSES DUE TO NORTHERN DUMPING Northern interests gain from crushing
Southern competition. Crop and livestock agriculture have been especially hard hit.
In some African countries where it costs $74 to produce 100 kilos of maize, the
local market price feel to $21 due to subsidized Northern exports. 21 In 1986, Haiti
was largely self-sufficient in rice, a staple food for its people. Forced by donors and
lenders to drop trade restrictions, the country was flooded with rice from the USA,
where farmers are subsidized. By 1996, Haiti was importing 196,000 tons of foreign
rice at the cost of $100 million a year. Haitian rice production became negligible.
Once the dependence on foreign rice was complete, import prices began to rise,
leaving Haitis population, particularly the urban poor, completely at the whim of
rising world grain prices.22
REPAYMENT OF DEBT Debt repayment from poor to rich far exceeds aid. In 2000,
lower-income countries paid to their creditors, net of what they received in new
long-term loans, $101.6 billion more than three times what they received in aid
grants in that year. In 1999 the imbalance had been even greater: lower-income
countries had paid to creditors almost five times more than what they received in
aid grants.23
From 1992 to 2000, debt repayments as a share of poor country earnings from their
exports and services changed as follows. Repayment of loan principal rose from 14
to 19 per cent; repayment of interest on loans rose from 8 to 10 per cent. All
together in 1999, debt repayments (interest + principal) consumed 28 per cent of
the earnings of lower-income countries.24
UNFAVORABLE TRENDS IN TERMS OF TRADE Trade losses swamp aid flows. The
purchasing power of most Southern exports has fallen steadily throughout the era of

30

foreign aid. Right through the 1980s, commodity prices fell on average by 5 per
cent annually in real terms. By 19990 they were 45 per cent below their 1980 level
Between 1980 and 1991, the developing countries suffered an estimated
cumulative loss in total export earnings in real terms of US$290 billion, an annual
average loss of US$25 billion.25 For the nonoil African countries, excluding South
Africa, the cumulated terms of trade loss [from 1970 to 1997] represent almost
minus 120% of GDP, a massive and persistent drain on purchasing power. 26 The
usually optimistic World Bank estimates that the purchasing power of most
commodity exports in 2010 will be lower than it was in 1997. 27 These dismal trends
stand in contrast to the unremitting pressure aid providers have put on low-incomes
countries to export their way out of poverty.

Aid is an ambiguous, two-faced thing. There is commonly a lot less to it than meets
the eye. Under its many padded layers, the business of giving camouflages its much
larger and inseparable twin, taking. Neither bilateral nor multilateral aid is targeted
in proportion to the poverty at the receiving end. The terms of loans from the
helpers can be as hard as, if not harder than, the terms, set by merchant bankers.
Finally, aid flows are simply dwarfed by the flows from poor to rich.
None of the foregoing should be read as new or astonishing. Most of these
processes are not the result of intentional scheming or wickedness, but merely the
unreflecting pursuit of the rules of the game. Most depend on collusion within the
cosmopolitan global North, such as between bankers and other business people in
both richer and poorer countries. A story of uniquely predatory Northern actors
victimizing uniquely defenceless Southern actors is a myth. Predation is worldwide,
though some countries are better-positioned that [sic] other to practice it.

Sogge, David (2002), THREE: The Aid Regime and Power Agendas, in
Sogge, David, Give and Take: Whats the Matter with Foreign Aid?, pp. 4064, London & New York: Zed Books.
It has been called a sector, an enterprise and an industry. As a hierarchy of bodies
whose practices converge around a set of rules, the aid system may also be called a
regime. It is a system of power doing its work in a wider realm of international
politics. During the Cold War, the Soviet Union and its allies formed their own
modest aid regime. That collapsed around 1990, whereupon most of its members
found themselves at the receiving end of todays only major regime, that of the
OECD club of rich countries.
This chapter looks at what drives the regime, what institutions occupy its
commanding heights, what checks and balances constrain its members powers,
and what rules are supposed to guide it. The chapter sets the stage for the following
two chapters about aid chains at upper and lower levels.
Is the aid regime one coherent thing? Some specialists have voiced doubt on the
point, arguing that Western aid was at best an arbitrary set of practices run by each

30

country according to its own rules and purposes. France, for example, has
frequently gone its own way. Japan makes business the centerpiece of its aid.
More frequently at the non-conforming fringe have been a few smaller, tradedependent countries with robust traditions of domestic social welfare: Norway,
Sweden, Denmark, Canada and the Netherlands. As middle-power internationalists,
from the mid-1970s to the late 1980s this so called Like-Minded Group tried to
harmonize their aid and related policies along social-democratic lines. Much earlier
than others, they focused on poverty and on political and civil rights. Since 1975, all
except Canada have met the UN spending norm of 0.7 per cent of GNP. This
suggests that a Nordic-Dutch sub regime of aid exists, or did exist.
Todays aid regime discourages non-conformity. Indeed, it looks, talks and walks like
a state-run monopoly. It is a prime candidate for break-up and for the cure it blithely
prescribes others: competition. Why such structural adjustment is unlikely may be
apparent in the following pages.
Why Provide Foreign Aid?
Rarely has one compelling drive been pre-eminent, although victory in the Cold War
was clearly the dominant purpose in the aid regimes first four decades. Assigning a
single motivation to the aid regime would be absurd. Aids motives are always
mixed. Hence the risks of incoherence the frustration of some aims by other aims
are always high.
The mix changes over time, and varies between donors. Small trading nations will
pursue a mix of aims different from those of a continental super-power. The useful
question, then, is: what motives predominate? Aid specialists have probed the
matter and commonly locate motives in three clusters.
Strategic Socio-Political Motives

Short-term Abroad, to reward and keep a client on side politically during

negotiations, wars or other crises; to defuse public protest and insurrection;
to provide a base for intelligence-gathering; to influence decision-making in
international fora. At home, to reward or retain loyalty of ethnic/political
constituencies, to be seen to be doing something during a crisis.

Longer-term Abroad, to gain regular access to and loyalty of leadership at the

receiving end; to win or deepen acceptance of a doctrine or model of
development; to reinforce a countrys place in a larger economic, political and
military system; to stabilize economic or demographic trends in a country or
region in order to stem unwanted effects such as terrorism and migration; in
international institutions, to set and steer economic and political agendas. At
home, to consolidate political and support of voter and contributor
constituencies, particularly the private sector, but also those with ethnic ties
to aid recipients.

Mercantile Motives
Short-term Abroad, to seize market opportunities. At home, to promote
interests of a sector of business and related employment; to improve the

30

lender/donors balance of payments; to assure the solvency of creditor banks,

public or private.

Longer-term Abroad, to win, expand, protect trade and investment

opportunities, including strategic access to raw materials and cheap labor; to
shape and stabilize North-South economic roles and hierarchies; in
international institutions, to win and stabilize adherence to economic rules. At
home, to consolidate and protect economic sectors.

Humanitarian and Ethical Motives

Short-term To show concern and compassion for victims of war, upheaval and
natural catastrophes;

Longer-term Abroad, to demonstrate concern about poverty, human rights

abuse including the human rights of women; to compensate for damages. At
home, to show solidarity with a particular country or group, to claim the high
moral ground.

Discussions of what motives actually drive aid frequently get clouded by talk about
what should drive it. Debates about it can evoke public displays of doubt or pride
about national character and power. Are we a generous people? Are we pulling our
weight in the world? A study of how Dutch, Belgian and British politicians talk about
their nations foreign aid roles in the period 1975-90 reveals much about national
self-regard. Dutch rhetoric shows a self-image of The Activist: aid should be used
to advance social justice, development and stability. Belgian politicians, by contrast,
talked about their countrys interests in terms of The Merchant: aid should benefit
the domestic and international market. In British parliamentary debates, the
dominant role conception was that of a Power Broker: aid should support friendly
governments and advance British power and influence. 2
Greater solidarity at home can mean greater beneficence abroad. Strong political
commitments to domestic welfare, as in Nordic countries, are associated with strong
aid performance, measured both by quantity (aid spending as a proportion of
national income) and by quality (proportion of aid aimed at poverty reduction).
Weak commitments to domestic welfare, as in the USA, coincide with weak aid
quantity and quality.3
Some have argued that the Western foreign aid regime arises from ethical and
humanitarian motives.4 Certainly moral concerns influence conventional talk about
aid, especially talk for the public at large. The World Banks corporate motto since
the late 1990s has been: Our dream is a world free of poverty. But does donor
practice match this talk? A team of researchers probed the determinants of aidgiving behavior, comparing US, French, Japanese and Swedish bilateral aid flows to
Africa in the 1980s. They looked at how these donor distributed their aid according
to recipient countries strategic importance, economic potential for the donor, and
humanitarian need. The results pour cold water on the notion that humanitarianism
drives foreign aid. Ideology and the pursuit of commercial advantage are the main
determinants.
Official aid is seldom a tool of altruism, even in Sweden, whose aid was long
assumed to be driven by humanitarian concerns. Data suggest that Sweden acts

30

rather more as a Merchant than an Activist, even in the 1980s, when it made
important contributions to political change in southern Africa. 5 Since then, Swedish
commerce and investment, including corruption-tainted sales of weapons to South
Africa, have been consistent with those findings. Other researchers have reached
similar conclusions: the direction of foreign aid is dictated by political and strategic
considerations, much more than by the economic needs and policy performance of
the recipients. Colonial past and political alliances are the major determinants of
foreign aid.6
As noted elsewhere in this book, national aid agencies have largely fallen into step
behind the IMF and World Bank. Yet here and there motives are getting re-mixed.
Beginning in 1997 a streak of idealism was detectable in British aid policy. Like other
donors, the UK sees aid as a means to hitch low-income wagons to turbo-charged
global markets. But it also accepts that aid should help civil society activists to
mount pressure on decision-makers to protect citizens rights even where those
rights are frustrated by market forces. US policy, on the other hand, shows a
different trend. It has downgraded foreign aid to Africa and the Caribbean, regions
targeted in its Trade and Development Act of 2000, whose theme is business, as
usual. Low-income countries, as far as the USA is concerned, have to export their
way out of poverty.
Motives behind aid never come in fixed and stable proportions. One observer
therefore concludes: Perhaps the safest generalization to make is that foreign aid,
when used alone or in combination with other policy instruments, has a unique
ability to allow the donor to demonstrate compassion while simultaneously pursuing
a variety of objectives.7
TWO NEGLECTED MOTIVES Aid usually revolve around self-interest, but two types of
motivation are often overlooked: obligations to compensate for suffering and
damage, and imperatives to respond to common problems of a region or the globe.
Compensation From the late 1940s to 1981, Japan made grants totaling $1.9 billion
to 13 Asian countries; commercial gain was part of its motives, but the formal
purpose was to compensate those countries for losses in the Second World War and
during Japans prior colonial exploitation. 8 Through treaties and commissions, the
USA instigated and enforced Japanese reparations. In so doing it applied a double
standard, since elsewhere Western powers have always insisted aid must not and
cannot be seen as a form of compensation or reparation for damages inflicted by
colonialism.9 In the 1970s, for example, Southern advocates of a New International
Economic Order found no Western sympathy for their proposal to create judicial
means to take ex-colonizers to court for development damage. Today, counties
hurt because of policies imposed by the World Bank and IMF have no means of legal
redress.
Common interest Deadly microbes, criminal mafia, radioactivity and greenhouse
gases easily spill across borders. Migrants in search of a better life are now entering
richer areas at faster rates. Global risks are increasing and vocal publics are
demanding protection and guarantees of compensation. Such trends are
concentrating the minds of politicians and policy-makers. Up until recently,
complacent in their fortress nations, they paid little attention to approaches built
around global and mutual interests. Today, among some policy elites and activist

30

groups, and understanding is slowly crystallizing that lands both rich and poor face
a common fate, whether they exist together in a region such as Mediterranean
basin, or together in a single Planet Earth. Where common interest is a point of
departure, joint and reciprocal initiatives can be a fairly short step. Hence, recent
talk about global public goods10 and warnings, in the wake of the suicide attacks in
September 2001, that prosperous countries should prepare for significant transfers
from rich to poor. That, however, would mean largely junking todays arrangements
and moving towards redistribution something wholly different from todays aid
system. []
This chapter has cast a cursory look at the commanding heights of the
the motivations, institutions and rules which drive it, and some of the
balances that should make it publicly accountable but usually fail to
regime operates and reproduces itself in extended hierarchies or aid
motif of the following two chapters.

aid system,
checks and
do so. The
chains, the

Sogge, David (2002), SEVEN: When Money Talks, What Does It Tell Us?,
in Sogge, David, Give and Take: Whats the Matter with Foreign Aid?, pp.
140-165, London & New York: Zed Books.
When wealthy foreign donors come calling, recipients are not supposed to squirm in
their chairs and put off accepting any money. Yet in the USA, officials of major
universities have shown just that kind of uneasiness towards some big donors from
abroad. Governments, business foundations and wealthy individuals from Taiwan,
Korea, Singapore, Mexico, Turkey donors not known as resolute defends of
academic freedom are offering millions to promote research and teaching about
their respective lands. Academics may welcome the money, but they face serious
misgivings about the benefactors and their motives. One seasons US professor of
East Asian studies said bluntly: They are out to get over their point of view. They
are paying to win support for their government. 2
Americans object because they fear the agendas driving those monies will close off
genuine inquiry. They can mount opposition, however, with few risks to themselves
or others; indeed, they may gain status by standing up for scholarly autonomy.
When institutions prostitute themselves think of many universities getting
handsome payments for research results favoring the products of pharmaceutical
firms there is no reason for serious alarm. Alongside such big and dangerous
domestic pay-offs, those foreign millions look like minor threats to intellectual
integrity.
How analogous, but how different are the vulnerabilities in countries of the South
and East. There, policy agendas of big donors and lenders, once plucked of their
rhetorical feathers, are also unmistakable. But to challenge them is to run serious
risks. Too much is at stake. Virtually every aid offer is one that cannot be refused,
especially if it comes from Washington, DC. After decades of aid given only on
condition that aid providers ideas are accepted, refusal is no longer an option
except perhaps from a few dissenters, who can be easily quashed. Where ideas are
run towards goals under aid sponsorship, the playing fields are anything but level.

30

Ideology has long been at the heart for foreign aid. Producing and transmitting
policies and discourse, and filtering out and delegitimizing others, are essential
vocations of aids most powerful players. It is not by caprice that the World Bank is
positioning itself as the worlds mightiest think-tank. As the leading producer of
doctrine and knowledge about how the planet should develop, it aims to achieve the
supreme instrument of power power to define the alternatives. 3
Those at the top of the aid system faithfully transmit the dominant ideas of business
and political elites, but they also routinely research and develop their own. They
often roam about plundering ideas of rivals and critics. In the 1990s, aid-speak at
the top became saturated with terms such as sustainability, civil society and
empowerment. These ideas sprang from the emancipator camp of social
movements, but they found themselves cast in supporting role in market
fundamentalist scripts.
This chapter suggests that the aid systems most important instruments and
outcomes are in the realm of ideas. In the hands of sophisticated users, aid-driven
ideas have leveraged change far out of proportion to the monies applied. The World
Bank, the endowed foundations, think-tanks and policy activist NGOs all know this.
Surprisingly, only a few private aid agencies have begun to go beyond the charity
micro-project to engage in battles of ideas. []
Conclusion
By concerning and shrewdly backing the production, transmission and legitimation
of knowledge and ideas, an elite corps of agencies some endowed foundations,
the World Bank, and a few UN and bilateral bodies have made a little money go a
long way. For decades, those investments have shaped paradigms, the public
policies nested in them, and the debates about those policies. And that was the
intention. As one of the economists present at the 1944 Bretton Woods meeting
said, One of the most important functions of a development assistance institution is
to influence the politics and strategies of aid recipient countries. 43 This is
deliberate, but it is not high conspiracy. There is no control room steering the flow of
ideas from a secret location. Yet what a Harvard professor wrote about his own
branch of area studies suggests the limits to freedom in the marketplace of idea:
Hence, as always, the main drive comes from Washington itself and from the
shift in the way which policymakers view Americas role in international affairs.
As always, major shifts of this type work their way through the system with
remarkable speed, soon causing the heads of federal agencies, private grantmaking foundations and university presidents to all speak with one voice. 44

Sorenson, David S. (1979), Food for Peace or Defense and Profit? The
Role of P.L. 480, 1963-73, in Social Science Quarterly, Vol. 60, No. 1, pp.
62-71.
In summary, only partial confirmation of the national security model resulted from
the two tests employed here. On the one hand, the expected relationship between
arms transfers and P.L. 480 aid did not materialize. Yet border distinctions did

30

correlate with food assistance, thereby lending at least some credibility to the
containment hypothesis. However tenuous this argument, it is sounder than the
need explanation, which collapsed with the discovery that nutrition level
correlated positively with food aid. Clearly the location of a country is more critical
than its level of nutrition in determining food assistance policy. Finally, though there
were real shifts in P.L. 480 policy that indicated a market development strategy ,
there is insufficient evidence to suggest shifts in P.L. 480 allocations are used to
open the door for more profitable returns on American food shipments abroad. 6
Students of American foreign aid policy will not be startled by these findings. But
they have provided partial confirm as well as refutation of several lingering
justifications of food aid policy through the use of a multi-model approach. 7
However, no hypothesis generated here receives strong confirmation. This in itself is
interesting, given the implication that whatever the policy intentions have been, P.L.
480 outcomes have not succeeded all that well in meeting them.
It must also be realized that recent changes in Food for Peace policy alter these
findings and the above conclusions were this study to be conducted five or 10 years
from now. The 1975 congressional requirement that 70% of P.L. 480 shipments must
go to most seriously affected (by food shortage) nations seems to indicate a trend
in the direction of the humanitarian explanation. Finally President Carters recent
decision to grant a small amount of P.L. 490 to communist Laos, where serious food
deficits exist, may portend a real shift in emphasis from the period of time focused
upon by this research.

Stokke, Olav, (ed.) (1989), Western Middle Powers and Global Poverty: The
Determinants of the Aid Policies of Canada, Denmark, the Netherlands,
Norway and Sweden, Uppsala, Sweden: The Scandinavian Institute of
African Studies.

Stokke, Olav (1989), The Determinants of Aid Policies: General

Introduction, 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. 9-32, Uppsala, Sweden: The
Scandinavian Institute of African Studies.
Foreign aid is an integral part of the foreign policy of a nation. Aid for development
may be conceived of as a foreign policy objective in its own right or as an
instrument to achieve other objectives. As is the case with most foreign policy
objectives, the roots are to be found in domestic politics. Aid policy is part of a
cluster of domestic policies which emerge from the same or related traditions.
Likewise in the foreign policies which emerge from the same or related traditions.
Likewise in the foreign policy setting, aid policy is merged into foreign policy
traditions and objectives. Aid policy, therefore, is molded in a setting in which
traditions, norms and interests of both the domestic and external environment
influence the outcome. Such determinants vary from one system to another. []

30

The broader North-South perspectives

This study, which is limited to the aid policies of these five nations, is part of a
project that focuses on their North-South relations. 2 The project aims at identifying
the main features of these relations and the main determinants of the various
dimensions of their North-South policies. A core question in this regard is the
following: to what extent can these policies be explained with reference to the
ideologies and basic values predominant in the countries in question?
The project started out with the assumption that the predominant political
philosophy and values of the countries would have a strong bearing on their NorthSouth policies. Basic philosophy and values do not normally change easily. Still,
even these adapt to important changes in the external and domestic environment.
Since the early 1970s, three changes in particular are assumed to have the
potential to influence their political philosophy and basic values with a bearing on
their North-South policies: the economic recession in the Western world, which
started in the early 1970s; the ideological change as far as political and economic
doctrines were concerned, which took place at government level in some major
Western powers (United States, United Kingdom) during the late 1970s and early
1980s; and the crises which, during the late 1970s and early 1980s, hit most
developing countries more forcefully than ever before involving their external and
internal economy, their ecology and in many cases the very survival of people in
exposed regions.
Humanitarian internationalism
The framework selected as a point of departure for our analysis is that of
humanitarian internationalism.3 The core of humane internationalism is an
acceptance of the principle that citizens of the industrial nations have moral
obligations towards peoples and events beyond their borders; it implies a sensitivity
to cosmopolitan values, such as the obligation to refrain from the use of force in the
pursuit of national interests and the respect for human rights.
In the context of the theme of this volume, which focuses on development
assistance, this implies a responsiveness to the needs of the Third World as regards
social and economic development. The moral thrust of this responsiveness is
combined with, and considered to be instrumental for, the promotion of the more
long-term, overall interests and values of the rich countries. The responsiveness of
Third World development needs represents an extension of internationally
predominant socio-political values at home, as reflected in the five countries
national social welfare policy, broadly defined, although the commitment to Third
World needs is less extensive than to their own citizens. We do not suggest,
however, that the forces underpinning humane internationalism are the
predominant determinants of the foreign policies of these countries, as more
traditional determinants economic, political and strategic concerns frequently
have the upper hand.
Humane internationalism thus defined implies (i) the acceptance of an obligation to
alleviate global poverty and to promote social and economic development in the
Third World; (ii) a conviction that a more equitable world would be in the best longterm interests of the Western, industrial nations; and (iii) the assumption that

30

meeting these international responsibilities is compatible with the maintenance of a

socially responsible national economic and social welfare policy.
Humane internationalism, accordingly, is associated with a set of objectives, viz. to
promote economic and social growth and economic, social and political human
rights in the Third World and to alleviate human suffering. It is based on
humanitarian values and ethics, including respect for the dignity of man, and is
motivated, in the first place, by compassion the moral obligation to alleviate
humane [sic] suffering and meet humane needs across national, political and
cultural border. However, self-interest is part of the motivation, too; this includes
broader national interests related to objectives of mutual benefit across borders,
and narrower interests related to, inter alia, employment or an expansion of trade
and investment opportunities.
Humane internationalism stands in strong contrast to realist internationalism, which
his based on the world view of anarchic international relations, in which states
pursue, and should pursue, only their own national interests.
In the 1960s, humane internationalism was reflected in the Pearson Report, 4 which
expressed the view that expanded trade, investments and aid would set off selfgenerating, social and economic development in the Third World before the turn of
the century and that international agreements and institutions would be conducive
to the creating of peace, equity and stability.
By the mid-1970s, however, the contour of a different, less optimistic world had
emerged, in which the gap between rich and poor countries had grown wider and
the prospects for the future much bleaker. Even so, the main thrust of the NIEO
programme formulated in the mid-1970s and supported, with a few reservations,
by the Scandinavian governments and the Dutch government, though to a varying
degree struck an optimistic chord, namely that the industrially developed
countries should adapt themselves to the developmental needs of the Third World
through structural adjustments. However, very little came out of the NIEO efforts.
Since then, the development paradigms of the Western, industrialized countries and
their attitudes to cooperation with the Third World have changed dramatically. In the
1980s, the industrial world, including to a large extent even the five countries
included in this study, have insisted that the poor countries should adapt their
policies to the needs of the rich world.
In response to these developments a reflection of the increasing predominance of
realist internationalism three clusters of related ideas and attitudes, which had all
along been part of humane internationalism, came more distinctly to the fore:
reform internationalism, liberal internationalism and radical internationalism.
Both reform internationalism and liberal internationalism tend to be system
oriented, concentrating on what the governments and international agencies should
achieve in the South. Each acknowledges that rich countries have an obligation to
alleviate poverty in the Third World, considers that fair North-South relations are in
the best, long-term interest of the North and shares the conviction that the primary
obligation governments is to their own nationals.
Reform internationalism is associated with a set of objectives much in line with
mainstream humane internationalism, viz. improved equity and social and economic

30

justice, both within and between nations, and the promotion of human rights. Its
basis and motivation, too, are in line with mainstream humane internationalism,
though with an explicit international ethic that goes further: the existing global
distribution of resources and incomes is considered morally indefensible and the
international economic system is considered unfair to the poor. Hence, like humane
internationalism, it supports transfers of resources to promote development in the
Third World. But it goes further by asking for reforms both reforms within Third
World countries for the benefit of poor social groups, and reform of the international
political and economic system for the benefit of the South. Like humane
internationalism, it is not exclusively altruistic, in so far as fair North-South relations
are considered to be in the best interests of the rich countries.
In contrast to liberal internationalism, reform internationalism does not consider the
market to be the most efficient instrument to determine production priorities or to
settle income distribution. Hence, although basically belonging to a liberal tradition,
it favors state and inter-state intervention in order to pursue the objectives
identified. It is gradualist in its approach. It works through the existing aid channels
the multilateral and bilateral aid agencies which are considered to be useful
instruments for the correction of global inequalities. However, it also strives for the
improvement of these agencies so that they can do a better job in pursuing the
objectives defined. It is in favor of channeling aid through NGOs, too.
Who, then, are the main champions of reform internationalism? They may be
differently situated in our five countries, but are generally associated with Social
Democrats and to a large extent also with the Scandinavian Christian Democrats
and Liberals.
Liberal internationalism combines the core component of humane internationalism
with a strong commitment to an open, multilateral trading system. It shares with
realist internationalism the conviction that states should pursue immediate and
long-term economic and political self-interest. However, unlike realist
internationalism, it acknowledges a responsibility for development in the South. Its
objectives include economic growth in the South. This is to be achieved by pursuing
genuine common interests between rich and poor countries. Liberal internationalism
is motivated by a humanitarian tradition in combination with an enlightened selfinterest emerging from the increased North-South interdependence and the new
opportunities opened up by the integration of the Third World into the Western
market economy.
Liberal internationalism is basically against state and inter-state intervention,
although it favors general rules that can create equal opportunities and reduce
discriminatory practices and protectionism. Its attitude towards major channels for
aid the bilateral and international aid agencies depends on their degree
interference and discrimination. Thus, it is skeptical towards economic growth, by
means of mobilizing, in particular, the private sector to increase production and
trade. It is also skeptical towards those agencies which pursue extensive
procurement tying, and favors, in particular, the international development finance
agencies and also the multilateral aid agencies within the UN system which practice
open bidding. Liberal internationalism favors the mobilization of the private sector
in development efforts, including the mobilization of industrial and business
enterprises of the North, and the use of ODA for this purpose.

30

Who, then, are the main champions of liberal internationalism? They, too, may be
differently distributed in the five countries, depending upon the economic structure
of each country, but everywhere competitive transnational corporations would
figure prominently.
The core of radical internationalism is, in contrast, an acceptance of the obligation
to show solidarity with the poor and oppressed in other countries, even at the
sacrifice of narrower interests in ones own country. It is associated with a set of
objectives, viz. the attainment of full economic, social and political equity, and
increasingly coupled with ecological concerns, too. Ideologically, it confronts the
exploitive and oppressive economic and political structures at work within and
between states. Radical internationalism, is rooted in ideologies professing equity of
man and solidarity within and across national boundaries. It insists that the dire
need which prevails in the Third World should be given predominance over narrow
self-interests at home, given the differences in terms of economic and social levels,
provided that aid is directed to meet these needs by creating or supporting
structures for self-reliant, sustainable economic and social growth. It considers it to
be of crucial importance that the recipient of aid pursues a policy to this end, be it a
government or a social movement (NGO). It is skeptical to civilian and military
bourgeois elites in control of the majority of Third World countries and reluctant
about, if not against, the provision of state-to-state aid to countries ruled by such
elites.
Radical internationalism strongly favors state and inter-state intervention if such
interventions are oriented towards the objectives outlined above. It would be just as
strongly against interventions by exploiting or repressive structures, whether a
Third World government or an international organization, and the Bretton Woods
institutions are included in this category. However, radical internationalism also
includes some non-authoritarian, anarchist elements that would be against any
strong, intervening sate. It prefers to channel aid via non-governmental solidarity
movements. It looks upon the major established aid channels, the bilateral and
multilateral aid agencies, with basic skepticism, but tends to differentiate between
the according to their performance vis--vis the objectives outlined above and the
policy of recipients chosen. In the case of multilateral aid, it is against providing aid
through international development finance agencies, particularly the Bretton Woods
institutions, because of their development philosophy and the orientation of their
aid. They are not considered instruments for securing genuine advantages for the
Third World, but rather as instruments in the service of donor interests, in particular
those of the United States. It is more favor of the global aid agencies (the United
Nations system) because Third World governments are ensured a greater influence
here (although many Third World governments are pursuing policies deemed
contrary to the objectives set out above).
The above represents the main features of the analytical concept. Who are the
champions of radical internationalism in the domestic setting of the five countries?
A few examples may serve as descriptive illustrations. Some solidarity movements
have this orientation. These are, generally speaking, politically to the Left, but in
some of the countries they even include organizations belonging to the political
centre (especially youth branches) and some Christian NGOs. Other protagonists
include movements for an alternative future, environmental activists and political

30

parties to the Left of the Social Democrats, and, for some aspects, even left-wing
Social Democrats.
To what extent can the aid policies of the five countries chosen for this study be
explained with reference to humane internationalism and its offshoots as sketched
above? A brief presentation of some major features of their aid policy may serve as
a basis on which this core question may be further explored and refined.
Major features of aid policies
Several, though not all, dimensions of the aid policies of the five countries are
similar. And in most aspects, their policies differ from the mainstream patter of
Western countries. This may be illustrated by their performance in five major policy
dimensions: the volume of ODA, the magnitude of the multilateral aid component,
the choice of main recipients for bilateral aid, the financial conditions of aid and the
degree of tying of aid.
1. The volume performances are shown in Table 1. The patterns during the
1960s reflect the low level of their previous relations with Third World counties,
except in the case of the Netherlands which was a colonial power. For the rest, the
aid activity evolved to a large extent as a result of their active participation in, and
strong commitment to, the United Nations (UN). Here, development assistance
emerged as an issue during the late 1940s. Third World development increasingly
attracted attention as a key question, as the membership structure of the UN
drastically changed during the 1950s and early 1960s. By 1970, the four noncolonial countries had caught up with the average aid assistance (as a percentage
of GNP) of the member countries of the Development Assistance Committee (DAC)
of the Organization for Economic Cooperation and Development (OECD)), which by
then had declined from 0.5 per cent in the period 1960-65 to 0.34 per cent. At that
point in time, the Netherlands was clearly ahead (0.62 per cent).
By 1975, all five countries had passed the 0.5 per cent of GNP mark, with Sweden
and the Netherlands ahead (0.78 and 0.74 per cent) and Norway in a middle
position. During the following years, the performances stagnated; in the period
1979-83, it even declined below 0.5 per cent of GNP. Danish ODA climbed to the 0.7
per cent level in 1978 and further to 0.89 per cent of GNP in 1986. Dutch aid
increased to reach 0.8 per cent in 1976, 0.94 per cent in 1979 and 1.07 per cent in
1981, but declined somewhat during the subsequent years to reach 1.01 per cent in
1986. Norwegian ODA increased to 0.84 per cent in 1977, 0.95 per cent in 1979 and
1.1 per cent in 1983, declined somewhat the following two years and reached the
peak level of 1.2 per cent of GNP in 1986. And the Swedish ODA increased to 0.95
per cent in 1977 and after a decline during the subsequent years to 1.02 per
cent in 1982. Then it declined to 0.8 per cent in 1984, before it increased again
somewhat, to 0.85 per cent of GNP in 1986.
During this period, the DAC average which included the aid given by the five
stagnated, varying around 0.35 per cent of GNP. The performances of the four
front-runners were, in relative terms, two to three times that of the DAC average,
and Canadas performance was also clearly above this average.
Another indication of the relative importance of the development assistance is given
in Table 2, which shows ODA appropriations as a percentage of the central

30

government budget expenditures. For all the five counties, the level is high,
compared with that of the United States. On this account too, the trends in the five
countries differ. Canada shows a slightly declining trend, while ODA takes up an
increasing share of the budgets of the four others up to 1980, when it stagnates or
slightly declines.
2. All five countries are channeling much development assistance through the
multilateral aid agencies. Different measures of their multilateral commitments are
given in Tables 3-4. Their multilateral aid as a percentage of total ODA is given in
Table 3, where aid channeled through the European Community (EC) is included for
the EC members (Denmark and the Netherlands). The multilateral share is high for
all five countries, though both the level and the trends differ. After 1975, Denmark
and Norway maintained the largest multilateral component, on average 46 per cent
in the case of Denmark and 44 per cent in the case of Norway. The Canadian
average was around 40 per cent, the Swedish 33 per cent and the Dutch 29 per
cent, while the DAC average was 31 per cent.
This picture is supplemented by the data on multilateral contributions in terms of
USD (current prices) and as a share of GNP; the latter indicate the burden-sharing.
As shown, the five countries contribute more to the multilateral aid agencies as a
percentage of their GNP than the DAC average. Norway, which comes out at the
top, has since 1976 contributed almost four times as much as the DAC average.
Compared with the performance of the United States, their performances are even
more distinct both with regard to the level and the trends.
Another aspect is presented in Table 4, which shows how their multilateral aid is
distributed between the international aid agencies. All five countries give strong
support to the UN system according to this indicator, in particular the Scandinavian.
However, the share is declining. Still, by 1985 the UN agencies received about half
or more than half of the multilateral aid of the three Scandinavian countries,
around 40 per cent of the Canadian and more than 30 per cent of the Dutch. The
share of the multilateral finance institutions the World Bank (mainly the
International Development Association (IDA)) and the regional development banks
has been increasing for all five countries, in particular the Netherlands. However,
the levels differ, with Canada at the top, followed, in 1985 by the Netherlands and
Sweden. Denmark and the Netherlands channeled fairly large sums through the
European Community. Even on this account, the profiles of the five countries differ
from the DAC average, in which the UN agencies receive a smaller share and the
financial aid agencies a larger.
3. A large share of the bilateral aid of the five countries is concentrated on a
few main recipients, as show in Table 5, which includes countries that received more
than 2 per cent of total ODA in 1970-71, 1982-83 or 1985-86. To a large extent, they
have also chosen the same recipients all have included India, Bangladesh,
Tanzania and Kenya among their main recipients; at an early stage, four have also
included Pakistan. The regional concentration of bilateral aid to the Indian subcontinent and eastern and southern Africa is also striking. According to this
indicator, the trend is towards decreased geographical concentration in the cases of
Denmark and Sweden, while Norway has maintained the concentration at the same
level. Another trend is the shift from Asian to eastern and southern Africa. The

30

stability in aid relations is manifest for all five counties, although the degrees of
stability differ.
4. The generosity with which aid is given is reflected in the financial terms of
the ODA. Three dimensions of this aspect are shown in Tables 6-8. The proportion
provided as grants is the most clear-cut indicator (Table 6). The patterns of the five
countries differ, with Norway and Sweden providing aid on the most favorable
terms: since 1975, almost all of their ODA has been given as grants. Canada,
Denmark and the Netherlands started out at lower grant-loan rations, and these
were improved by 1985 to around 95 per cent in the case of Canada, 90 per cent for
the Netherlands and 80 per cent for Denmark. The performances of the five
countries were clearly ahead of the DAC average (81 per cent in 1985). A similar
picture emerges from Table 7 on the basis of the calculated grant element of aid,
although difference between Norway/Sweden and the other three become less,
according to this indicator. The grant element of aid to the least developed
countries (LLDCs) has been fairly high for all five countries (Table 8).
5. A series of mechanisms have been established with the main purpose of
ensuring a high return flow of aid; some of these formal, others informal. One of
these mechanisms is the tying of aid. On this account (Table 9), performances differ
among the five. Canada consistently ties a large proportion of its total aid. The
Canadian figures suggest that tied aid as a proportion of the countrys total aid has
declined sharply during the last three years. Denmark has been tying its bilateral
development credits (about half of the bilateral ODA), but the proportion of tied aid
declined after 1975 to 24 per cent in 1986. Dutch tying of aid started at a higher
level but later on showed a strongly declining trend, according to DAC data (below
10 per cent after 1985). However, this trend is contested in the study on Dutch aid
policy which follows. Norwegian and Swedish ODA has been tied at a relatively low
and stable level (largely below 20 per cent). Also on this account, the five countries
differ from the DAC average, which varied between 45 and 32 per cent: the three
Scandinavian countries and the Netherlands with a lower level of aid-tying, Canada
with a much higher level.
This brief survey reveals several common features but also some differences in the
aid policies of the five countries. This makes it interesting to explore to what extent
the same or similar determinants have been forming the policies. The fact that the
aid policies of all five countries and in particular those of the Netherlands and the
Scandinavian countries differ from the mainstream OECD policies on most
dimensions of aid policy makes such a comparison all the more interesting. []

Stokke, Olav (1989), The Determinants of Norwegian 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. 159-230, Uppsala, Sweden: The Scandinavian
Institute of African Studies.
Most of the conclusions arrived at here have been set out in the previous section.
Here, the relative impact of the determinants on the different aspects of aid policy
will be assessed. In some areas, the different determinants move the policy along

30

more or less the same path, which makes any assessment of their relative impact
difficult. In others, however, they conflict, facilitating such assessments.
The main conflict dimension is between altruism, in the first place associated with
socio-political norms, and self-interest, in the first place associated with the
systemic and business interest in export promotion, both belonging to the domestic
environment. This conflict is manifest for most dimensions of the aid policy, in
particular as concerns the magnitude of the multilateral aid component, the
principle of geographical concentration of bilateral aid and the selection of priority
countries, the principle of untied aid and, in general, the commercialization of aid.
1. Most aspects of Norwegian aid policy are attuned to the dominant sociopolitical norms of the domestic environment. This applies to the reasons for
providing development assistance and to the development aims established. It also
applies to the two main strategies, in particular, to the welfare strategy, but also to
the industrialization and trade strategy, in so far as they relate to development
objectives in the Third World and efforts to bridge the gap between poor and rich
countries by reforms of the international economic system, a new division of labor
and improved trade relations. The established guidelines are also in tune with these
norms.
The dominant socio-political norms, therefore, constitute the main determinants of
Norwegian aid policy. They have in substantial part been strong enough and shared
sufficiently widely across the political spectrum to be able to deflect attempts by
Norwegian systemic and economic interests to bend the aid programme
significantly to their advantage. This applies, in particular, to the heyday of altruism,
in the years between 1970 and 1976. During this period, two major White Papers
were presented by the government (Labor) and adopted by Parliament. However,
the increased commercialization of ODA during the second half of the 1970s and the
early 1980s in particular, the way in which the principle of untied aid has been
defined and implemented, and the use of ODA in the promotion of Norwegian
exports justify a modification of this general conclusion.
2. The overarching systemic interest in the maintenance of peace and economic
stability and in an international regime to enhance these values has been decisive
for some dimensions of the aid policy. This transpires from the motives given for aid.
Some aspects of aid policy are directed to this objective, in particular the large
component of multilateral aid. Peace and economic stability belong to a cluster of
international common goods that also includes poverty alleviation and economic
and social growth in the Third World. Although there could be conflict, in the
distribution of ODA, between development objectives and peace objectives, this
rarely happens. The social bearers of the dominant socio-political norms are in favor
of both peace and development. A large, multilateral aid component conflicts, on
the other hand, with the systemic and business interest in export promotion. On this
dimension of the aid policy, the systemic interest in the maintenance of peace and
economic stability has been the decisive one.
3. Some elements of aid policy are direct to the systemic and business interest
in export promotion. This applies to the motives given for aid, though not
prominently, and to the long-term aid objective, though this is formulated in general
terms, approaching the mutual interest in, inter alia, expanded trade. The

30

industrialization and trade strategy is also geared to this interest, and, by definition,
the commercialization of aid policies. After 1976, aid policy has increasingly been
oriented towards this interest, in particular the introduction of a commodity aid
component, the interpretation and implementation of the principle of untied aid, the
freezing of the multilateral component at 0.5 per cent of GDP, instead of the 50 per
cent of ODA contained in the 1984 White Paper along with the interpretation of this
guideline provided by Parliament in 1987, and the many mechanisms established
with the explicit purpose of promoting Norwegian exports financed through the ODA
budget.
Export promotion by means of ODA conflicts (as perceived) with several of the
dominant socio-political norms and the social bearers of these norms have been
ardent opponents of the commercialization of aid. Since 1976, however, the
proponents of export promotion have increasingly kept the initiative, although the
gains have not been too impressive in quantitative terms, and Parliament, again in
1987, has put up a forceful resistance.
Other aspects of aid policy are, on the other hand, dysfunctional to this interest.
This applies, in the first place, to the large, multilateral, ODA component and to
several of the other established guidelines: the principle of geographical
concentration, the criteria for selection of priority countries and the selection that
has been made (poor countries), the poverty orientation reflected in the welfare
strategy and the target groups (the poor, women), untied aid, aid as grants, and
recipient-oriented aid. As noted, some of these guidelines were adapted to the
interest of export promotion after 1976, and several of the exemptions from the
principle of geographical concentration were accommodations of this interest. Even
so, the guidelines have constituted barriers to the use of ODA for the promotion of
Norwegian systemic and business interests in export promotion and have for this
very reason been under attack from the social bearers of these interests.
On questions that really mattered, however, involving the principle of untied aid,
the export-guarantee system and mixed credits, substantial concessions were made
after 1975, against the protests of the social bearers of the dominant socio-political
norms. However, even in these areas, the gains were circumscribed. In areas where
the interest was affected in a more general way, viz. the multilateral component or
aid as gifts, the impact was less.
4. The prevailing economic situation in Norway was suggested as a major,
potential determinant, involving several dimensions of the aid policy. The main
changes in the domestic and external economic situation after 1975 were the
following:
(a) A rate of inflation during the early 1970s, continuing at a relatively high level
even later, with a bearing on the level of Norwegian costs. The North Sea oil
discoveries creating opportunities for industries, job opportunities at a far higher
salary level than in other branches of industry, and the prospect of large state
revenues were a major cause of this development, affecting adversely the
competitiveness of Norwegian mainland industries and exporters, including
industries that faced competition from Third World producers on the domestic and
international markets (textiles, shipbuilding).

30

(b) An acute, structural crisis in the shipbuilding industry that was perceived as a
temporary crisis and dealt with accordingly. Norwegian shipbuilding enterprises
constituted the core industry in many minor towns. The crisis had, therefore, the
potentiality of creating unemployment in many districts, as a close-down would also
affect the employment provided by supportive enterprises. It became a matter of
priority for the government to rescue the shipbuilding industry by an active search
for new contracts and various forms of subsidies. The new oil riches of the North
Sea became instrumental, both in strengthening the financial basis, thus allowing
for public subsidies, and in easing the efforts to convince prospective oilfield
operators to place order with Norwegian firms. The ODA budget was also used as an
instrument in this policy.
(c) During 1975-77, Norway experienced high balance-of-payments deficits.
Gradually, however, the new incomes stemming from oil revenues and oil-related
activities improved the public income and economic growth (GNP) and affected the
balance-of-payments situation positively. During the early 1980s, foreign debts were
reduced.
The adverse trends in the Norwegian economy were reinforced by the international
recession during this period. They were all working in the same general direction,
along with the systemic interest in export promotion and a high employment rate
and business and labor interests to the same end. It was also expected that they
would adversely affect the aid volume and terms of aid.
The actual effects were, however, less than expected. The strained economic
situation affected the volume of aid, but only temporarily and rather mildly. On this
dimension, it was balanced by the socio-political norms which were reinforced by
the deteriorating situation emerging in the Third World. Although strained, the main
characteristic of the Norwegian economy during these years was that of an
economy in sustained growth Norway improved its relative position among the
richest industrial countries. This also explains why the strained economic situation
did not affect the financial conditions of aid. It was, however, most decisive for the
increased commercialization of aid during the second part of the 1970s and early
1980s, reinforcing the systemic and business interest to this end, involving
increased emphasis on the return flow of aid, including the redefinition of the
principle of untied aid and mechanisms to promote Norwegian exports. Its effects on
most other aspects of aid policy, were small, even marginal.
5. Although Norwegian aid policy is in many respects different from the
mainstream aid policy of the Western powers, several aspects also reflect values
(norms, standards and interests) being pursued in the external environment. The
Norwegian aid policy has been well attuned to the policies of other Nordic countries,
in particular, to Swedish aid policy. The similarities are to be found especially in the
large volume of ODA on favorable financial terms, the poverty orientation, involving
poor recipient countries, poor target groups and recipient governments that are
expected to be geared towards social justice, the selection of priority countries, the
principle of untied aid and the large multilateral aid component, although the
pattern varies. The detailed, formal policies established in the 1972 and 1975 White
Papers have similarities with other Nordic countries policy statements. Several of
the changes since 1975, including the commercialization drive, the weakening of
the principle of untied aid and the conditionality reflected in the rephrasing of the

30

principle of recipient country orientation in the 1984 White Paper, came in the wake
of changes in the same direction in Swedish aid policy, though with a time lag. The
frequent appearance of Social Democratic governments on both sides of a common
border may be part of the explanation. It is, however, difficult to assess whether
Nordic co-operation or, rather, close proximity, involving communication, cooperation and competition has had a decisive impact on the various aspects of aid
policy or has only reinforced a policy which has emerged from genuinely domestic,
political processes. The values operating in the systems are basically similar.
6. The norms established by the OECD (DAC) have also influenced some aspects
of aid policy, although the impact has probably not been strong, as Norway has
been far ahead of the targets and standards set (less aid tying, more aid on better
financial terms, especially to the LLDCs, increased aid through multilateral agencies,
etc.). The standards set by most DAC members, in their aid performance, may even
have influenced Norwegian aid policy in a negative direction, from the point of view
of these norms, although such effects are not easily traced.
The main partner in the regional security policy co-operation, the United States, has
had some influence, though a rather marginal one, in the area in which its influence
could be expected to be the strongest: the choice of partners for bilateral cooperation. The influence of minor allies in NATO has been even less, as is indicated
by the support given to the liberation movement of Portugals African colonies when
the wars of liberation took place.
7. The multilateral institutions the World Bank and the United Nations system
have influenced several aspects of Norwegian aid policy, particularly during the
initial stage. This applies, in the first place, to aid philosophy, strategies and targets,
although after 1975 Norway was ahead of the volume targets established by the
UN. Some of the guidelines in particular, aid as grants and the principle of untied
aid have been influenced by the multilateral aid agencies. Their main role,
however, has been to reinforce the effects produced by the dominant socio-political
norms of the domestic environment. The World Bank, in particular, has underpinned
the philosophical basis of the industrialization and trade strategy.
8. Multilateral aid agencies and priority countries have in their capacity as aid
channels had a substantial impact on Norwegian aid, though not necessarily on
aid policy. Although several dimensions of the aid policy are attuned to the interests
of the priority countries governments (viz. a large volume of ODA on grant terms,
country planning with long-term commitments, and the principle of recipientoriented aid), it does not necessarily follow that these governments are the main
determinants. Still, in spite of the asymmetrical power structure of aid relations,
they have also influenced, indirectly as much as directly, some aspects of aid policy.
These tentative conclusions are based on the correspondence between actual policy
manifestations and the assumed outcome if the potential determinants were to be
decisive. Although process analysis may add to or even modify the conclusions, the
approach used has made it possible to identify the basic determinants of the aid
policy.
Attention has not been directly focused on the actors who would be important in
any process analysis with a similar purpose. These have been included in broad,

30

aggregate units. This applies in particular to political parties, although their

positions in relation to the main issues have been indicated. Variations in the aid
policy over time, to some extent, coincided with changes in government along a
Right-Left dimension, although these variations have been small and the Right-Left
division somewhat blurred. One reason for this is the strong aid commitment of the
parties belonging to the centre, in particular the Christian Peoples Party (CPP) and
the Liberals, which, together with the Socialist Left Party (SLP), have been the most
ardent supporters of altruistic aid and increased aid.
The predominant consensus between the political parties (excepting the PP) has
occasionally been broken by the parties to the Left and to the Right. The main
conflicts have involved ODA volume, the selection of bilateral aid recipients, and,
increasingly, the commercialization of aid, in particular the mechanisms established
with the primary purpose of promoting Norwegian exports.
Whereas the main political parties, and especially Labor, have actively sought a
broad consensus on aid issues, the minor parties to the Right and Left have not
accepted such self-imposed restraints. The selection of recipient countries for
bilateral aid is a case in point. Here, the SLP has argued for more aid to countries
with a Socialist orientation, the inclusion among priority countries of additional
countries with this orientation (Angola, Cuba, Nicaragua, Vietnam), the exclusion of
countries with market-oriented, conservative regimes (Kenya, Pakistan, Sri Lanka)
and more support to the liberation movements of southern Africa. As noted, the
party has not been alone the left wing of the Labor Party (and on some issues, the
whole party), the Liberals and the CPP have adopted similar positions on several of
these issues. Even on the more fundamental issue of whether to provide aid at all,
there is a cleavage between the parties, as the tiny Progress Party has advocated
the abolition of all public aid, in particular multilateral aid and any aid that does not
engage private Norwegian enterprises and business.
The main division within the broad consensus among the main political parties
has been between the Right (Conservatives) and the Centre-Left (Centre Party, CPP,
Labor, Liberals, SLP). However, the participation of smaller parties in coalition
governments in which the Conservatives have been the main partner has modified
the positions of the parties belong to the Centre on many issues, thus blurring this
division. This applies in particular to the CPP during the 1980s, when the party in a
government position (in charge of the Ministry of Development Co-operation) gave
legitimacy to several mechanisms identified with the commercialization of
Norwegian aid and accepted ODA budgets far below its commitments and even
below what Parliament might have accepted on the basis of the electoral platforms
of the parties. On balance, the party managed to commit the Conservatives to a
poverty-oriented aid policy and volume targets above 1.15 per cent of GDP. The
Conservatives have been dependent on the parties in the Centre to form a
government a fact that has influenced the aid policy positions adopted by the
party and blurred the conflict along the Left-Right axis.
The conflict between altruism and self-interest, manifest above all in the
commercialization-of-aid issue, involves the political parties along a RightCentreLeft axis, though this split is also found within Labor. During the late 1970s and
early 1980s, however, the conflict appeared first of all as one between the national
political institutions: the governments (Ministry of Foreign Affairs) and Parliament. 61

30

The export-promotion drive was carried out by the government administration (in
particular by the Ministry of Trade and Shipping and the Ministry of Industry), in
liaison with private sector, economic interest groups. In 1980, in a report to
Parliament (Report No. 35), the government (Labor) made an effort to transform the
practice of aid established during the second half of the seventies the increased
commercialization, in which aid was geared towards broader economic co-operation
into policy norms. In 1981, Parliament rejected reorientation and insisted that the
old guidelines be maintained with an emphasis on the poverty orientation of aid
geared to social justice and the channeling of aid to poor countries. Although the
principle of untied aid was modified, the redefinition was made with the intention of
containing the way in which it had been implemented. In Parliament, all the parties
represented on the Foreign Affairs Committee backed this position, including the
governing Labor Party.
Several factors contributed to these political pirouettes, in particular the feeling that
practice had become too far removed from established principles. Manifestations of
double standards are probably more conspicuous in the cluster of policy areas to
which aid policy belongs (together with social security, employment, etc.) than in
other areas of domestic or foreign policy. The government issue also influenced the
positions of the political parties. The general election of 1981 was close, and
political parties were in the process of formulating their manifestos a fact that
facilitated a pre-occupation with norms and values. The government (Labor) was a
minority government and had parties both to the Left and in the centre which were
opposed to the increased commercialization that had taken place. The main
opposition parties had agreed to form a non-Socialist government if the elections
allowed. In this setting, the Conservative could not afford an open clash with the
CPP on an issue which that party sensitive to strong signals from the Council of
Foreign Relations of the Church of Norway had at heart. For this reason, the CPP
played a decisive role in the outcome.
The crucial role of the parliamentary situation, and in particular the consequences
involved in partnership in a coalition government, is also illustrated in some specific
issues during the period up to mid-1983 with minority governments (Labor and
Conservative). When in 1980 the government (Labor) decided to apply for
membership of the Inter-American Development Bank (IDB) financed by ODA,
Parliament turned the proposal down. When the government (Conservative) in 1982
proposed that NOK 145 million should be allocated in the aid budget for 1983 to
cover losses under the special export-guarantee system, contrary to the yearly limit
previously agreed on (NOK 20 million), Parliament unanimously turned the proposal
down.
Under the new majority regime from mid-1983 to late 1985, matter changed. With
the CPP included in a majority coalition government, these issues were decided in
line with the position of the Conservatives. The various mechanisms for the
promotion of Norwegian exports were reinforced in the Governments White Paper
(1984) and new mechanisms were added, including mixed credits, an arrangement
which was rushed through Parliament ahead of the White Paper and obtained the
votes of the three coalition parties and (somewhat hesitantly) Labors as well. The
White Paper also included the proposal to use ODA extensively to cover losses on
export guarantees in the future too (NOK 200 million a year) and membership of the
IDB. The redefinition of the principle of untied aid concluded this course of events.

30

Clearly, the government structure was instrumental in bringing about the quite
fundamental changes that took place on these issues as it had been a few years
earlier in defense of the then established policy.
These changes in favor of self-centered Norwegian economic interests are
important but do not provide the full picture. The CPP did not abandon all the
altruistic principles with which it had been previously identified. The poverty
orientation came out stronger than ever in the White Paper a fact that implies setback for a policy directed towards satisfying self-centered Norwegian economic
interests. Another important aspect in this programme of continued growth
safeguarding long-term, development assistance and restricting the utilization of
ODA to mechanisms geared to stimulating broader economic co-operation. Such
utilization of ODA was restricted to the allocations above the 1.1. per cent of GNP
which was to be used for humanitarian aid and long-term development assistance.
The financial framework of the new mechanisms introduced was rather rigid with
the exception of the funds to cover losses on old export guarantees, which had to
be covered by the state anyway. Here, safeguards were introduced against future
losses.
However, once new mechanism are introduced, they may well open up future
avenues for economic interest groups that are well placed and experienced in
manipulating the system. The full implications of the new mechanisms modest as
they are today in financial terms will only be appreciated in years to come.
The most striking feature of Norwegian aid policy is its continuity and the high
degree of consensus-seeking among the main political parties. On some issues in
particular, issues which have a bearing on self-centered, Norwegian interests there
has been a continuous conflict along the axis between altruism and self-interest.
Although a shift of emphasis took place during the second half of the 1970s and
early 1980s involving, above all, increased commercialization in most aspects,
altruism has maintained the upper hand, though with modifications and variations
as regards its strength over time.

Stokke, Olav (1989), The Determinants of Aid Policies: Some Propositions

Emerging from a Comparative Analysis, 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. 275-316,
Uppsala, Sweden: The Scandinavian Institute of African Studies.
General Conclusions and Their Implications for the Future
The aid policies of the five countries are expressions of humane internationalism.
This is the main conclusion, although the policy varies somewhat from country to
country and from one policy dimension to another within the same country.
A General Move Towards Liberal Internationalism Since the Mid-1970s
There is a general trend in all five countries towards liberal internationalism. This
orientation started during the second half of the 1970s.

30

The Canadian aid policy has basically reflected humane internationalism. The
features of liberal internationalism have been strongly pronounced throughout and
have been growing during the 1980s, with, increasingly, some traces of
international realism, too. Predominantly humanitarian motives have been
combined with a desire to promote Canadian economic interests and influences
abroad. Although opinion surveys have shown that most Canadians were not willing
to sacrifice development effectiveness on the altar of commercial benefits, many
authors have considered the commercial interests of Canadian business of major
influence in questions of foreign aid policy. However, if self-interest had been the
prime determinant, Canadian aid policy would have had very different features. Aid
is supported, in the first place, because it is considered an international public
good.67
The balance between self-interest and altruism tips more to the latter in the Danish
case than in the Canadian. Business interests were at an early stage granted their
share of the aid cake (one quarter) in the form of tied financial assistance. This
balance has been maintained since the late 1960s although increasingly allowing
for the use of part of the credits for local purchases. As indicated by the recently
proposed action plan for DANIDA, however, the efforts to adapt bilateral aid to
Danish business interests are continued. Danish aid policy basically reflects humane
internationalism. It contains features of reform internationalism. Features of liberal
internationalism have always been present, with traces of realist internationalism.
The Dutch aid policy is basically a reflection of humane internationalism. However,
features of realist internationalism are also discernible. ODA has been used as a
means to maintain good relations with former colonies and dependencies once they
became independent, a patter which fits into the realist tradition. This feature was a
dominant one during the early years of Dutch aid. It has remained throughout, but
decreased in importance during the 1970s and 1980s. During the mid-1970s, Dutch
aid policy under Social Democratic leadership had features of reform
internationalism, especially if assessed on the basis of declared policy. It was
adapted to demands from Third World governments for reforms in the existing
international economic and political system. During these years, Dutch aid policy
transcended the NIEO demands by focusing on redistribution aspects of the
recipients domestic policies too, with the aim of stimulating reforms oriented
towards social and economic growth. During the late 1970s and the 1980s, these
policy features were gradually weakened (by successive Centre-Right governments)
and increasingly replaced by a trend towards liberal internationalism.
Norwegian aid policy also reflects humane internationalism, with the inclusion, since
the early 1970s, of elements of reform internationalism, particularly if assessed on
the basis of declared policy. During the mid-1970s, the Norwegian government
together with the Dutch was most active, within the group of Western
industrialized countries, in pressing for reforms in the international economic
system in favor of the Third World. This drive was pursued into the 1980s, when the
North-South dialogue hardly appeared on the international agenda. As in the Dutch
case, aid policy was also oriented towards reforms at the national level, in the way
the poverty orientation was defined. From the early 1970s, a few fragments of
radical internationalism have also been manifested, particularly in the support for
southern African liberation movements. Since 1976, some dimensions of the aid
policy, in particular the commercialization drive, have increasingly reflected liberal

30

internationalism. The protectionist aspects of this drive, in particular

introduction of tied aid, represents small traces of realist internationalism.

the

The Swedish aid pattern has been very similar to the Norwegian, although with
some differences in emphasis. Basically, the policy reflects humane
internationalism. Several elements have, from the very start, reflected reform
internationalism, especially in terms of motives for providing aid. Elements of
radical internationalism can also be identified, more strongly articulated than in the
Norwegian case and especially related to the support for African liberation
movements and the selection of recipients for bilateral aid. From the mid-1970s, the
policy has increasingly reflected liberal internationalism, too, with small traces of
realist internationalism.
The Major Determinants
The aid policies of the five countries reflect, for most dimensions, the dominant
socio-political values of the domestic environments. These are, according to the
point departure of this study, the main determinants of most dimensions of aid
policy. However, systemic and private sector interests have also influenced these
countries aid policies, as have their systemic interests related to the international
common good, particularly the quest for international peace and stability. Some
influence has also been exerted by international organizations and even by the
recipients.
The relative influence of these determinants varies from country to country and
also, within each of the five countries, from one dimension of the aid policy to
another, as noted above. In some of the five countries, such variations have also
been dependent on the political color of the government of the day and, in general,
on the prevailing parliamentary situation.
The dominant socio-political values referred to have had the strongest impact on
the aid policy of the Scandinavian countries and the Netherlands. Different values
have exerted the strongest influence on the various dimensions of aid policy. The
values connected with the welfare state, in particular social justice, have been most
strongly expressed in the Norwegian and Swedish aid policies and, during the mid1970s, in Dutch aid policy too, as assessed from the declared policies. The prime
expression of this is the poverty orientation of the stated aid policy, involving poor
countries as the main recipients, the poor as the major target group and the
expectation of a policy of equity and social justice on the part of the recipient
governments. Human rights concerns, including the concern for democracy, have
had a more or less strong impact on the stated policy of the five countries, but have
also occasionally exerted a decisive influence on aid relations.
The private sector and systemic interest in export promotion has had the strongest
impact on the Canadian aid policy. It has also influenced the aid policy of the other
four countries, but to a lesser degree. Its strongest impact has been on the
dimensions of aid policy where business interests had the most direct stake. Even
here, their influence has been circumscribed as, in the Danish case, where
procurement tying was restricted to bilateral financial assistance and, in the
Norwegian case, where the financial frames for the various mechanism designed to
ensure an increased return flow were quite limited.68 However, the influence of the

30

combined systemic and business interest in export promotion increased during the
late 1970s and 1980s.
A common feature of the five countries is the strong impact of their (systemic)
interest, as small and middle powers, in peace and international stability and an
international system to pursue and maintain these objectives. This is expressed, in
the first place, through their large aid contributions through the multilateral aid
agencies. The five countries differ somewhat on this account, too. Systemic
interests related to foreign policy concerns have also occasionally influenced some
aspects of aid policy, in particular the selection of recipients. The more particular
interests of the administrative structures have also had their impact, both on the
main policies, such as the large multilateral aid components, and on the structure of
aid, including its forms and guidelines for co-operation.
It is difficult to assess the influence which the international organizations have
exerted on the national policies outlined below. At an early stage, international
norms certainly had some impact, in particular those established for the volume of
aid. Since the early 1970s the four European countries have pursued aid policies
ahead of these norms. In the case of Canada, international norms have exerted
some influence both with regard to the poverty orientation and the volume of aid.
Major changes in the international environment have affect aid policies. The
international recession, contrary to our expectations, had only a marginal impact on
the ODA volume performance although some temporary setbacks were caused.
Again contrary to expectations, its impact on the financial terms of aid was even
less. In fact, these terms improved after 1975. However, the strained economic
situation, resulting in high unemployment rates in some of the five countries,
facilitated the increased commercialization of aid which took place in all five
countries during these years.
The ideological reorientation towards Liberalist orthodoxy, which occurred during
the late 1970s and early 1980s in some of the major governments of the Western
world, worked in the same general direction. It influenced several dimensions of aid
policy, and spurred on the drive towards commercialization of aid which had gained
momentum at an earlier stage. It also had an impact on the trend, in the late 1980s,
towards increased privatization of aid including the enhanced role of NGOs as aid
and development agents, although these were motivated by other concerns as well.
The changed conditions in the Third World the desperate economic crises
involving soaring debt burdens, balance-of-payments deficits and low productivity
as well as famine caused by politics and natural disasters affected, in particular,
the volume, the financial terms and the forms of the five countries aid. The
humanitarian response to the deteriorating economic situation of so many
developing counties probably offset the negative effects on the volume and
financial terms of aid, caused by the strained economic situation of the donors
during the recession. It led, too, to forms of aid, such as balance-of-payments
support, which were adapted to the foreign currency needs of the recipients.
However, these forms of aid were also easily adapted to the commercialization
drive.
Consensus Seeking in the Domestic Setting

30

There exists a strikingly high degree of national consensus between the major
political parties of the five countries on most aid issues. This is not because aid
policy is considered of minor importance in the national political arena, as is the
case in several other OECD countries. 69 Aid policy has attracted considerable
attention.70 This does not necessarily imply that an aid issue has much likelihood of
toppling a government. However, it is indicative of the importance of this policy
area that, in the Scandinavian setting, one major political party (the Liberals of
Sweden) made a strong pro-aid stance one of its top issues to profile the party in
consecutive general election campaigns.
Although the high degree of consensus is the predominant feature, we have also
identified, at the level of national politics, several disagreements between the main
political parties, save for Canada, where conflicts between the two major parties on
aid issues have been fairly rare. Although positions have been shifting from one
policy dimension to another, the picture that emerges contains an element of RightLeft conflict, although this pattern is blurred in the Scandinavian countries by the
strong pro-aid positions of the Liberals and the Christian Democrats. These parties,
which hold a central position on a Left-Right axis, have, together with the parties to
the Left (Left Socialists/Peoples Socialists, Communists), outflanked the Social
Democrats in the core issues, such as the volume of aid (they favour an increase)
and the question of commercialization (by and large, they take a more purist view).
However, participation in coalition governments and policy adaptations in order to
make such alliances credible have blurred this pattern at times, in particular when
parties belonging to the political centre have found themselves in a government
coalition with the Conservatives. Participation in such government coalitions or
even the intention of forming such an alliance has also affected the policy
positions of the Conservatives and contributed to the national consensus on aid
issues. Liberalist political parties aiming at reduced public spending and less
intervention by the state (in Denmark and Norway) have attacked the very idea of
development assistance.
The major political parties have actively sought consensus on aid issues. The main
motive has been to protect aid and to promote it as a national concern of major
importance. One strategy to this end has been to create domestic alliances by
combining interests. This has been the case in Denmark, where a balance was
struck between the different forces from the very start. The ODA programme was
equally divided between grants and development credits, in order to accommodate
different interests: the multilateral component constituted the tribute of a small
state to an international system and was a way of reaching a large number of
recipients; the tied bilateral credits represented a recognition of Danish business
interests and an attempt to enlist its support; and the grants were a tribute to the
specific Danish aid objectives in order to accommodate the altruistic friends of aid.
The selection of main recipients for bilateral grant aid represents a balancing of
Right-Left interests: the four priority countries pursue different development
policies.71
In the Norwegian case, a similar balancing has occurred in the selection of priority
countries: Left recipients are balanced by Right, that is Socialist Tanzania is
balanced by market-economy Kenya, as is Mozambique by Sri Lanka. At the regional
level, India was balanced by Pakistan, and later on Bangladesh by Pakistan where
foreign policy (diplomatic) considerations also had some impact. However, the

30

consensus between the political parties has been broken in other cases, such as the
aid programme to Nicaragua, where East-West considerations have had some
impact, thus reinforcing the conflict between Right and Left. The 1984 White Paper
of the non-Socialist coalition government illustrates another type of trade-off
between Conservatives, who obtained the inclusion of mechanisms supportive of
export promotion, and the Christian Democrats, who obtained the inclusion of a
poverty orientation and the maintenance of a high ODA volume. The main political
parties, especially the Social Democrats, have actively sought consensus on aid
issues. As a result, issues are seldom pressed through Parliament by a majority
against strong objections from a major opposition party: compromises are the most
common outcome. The minor parties to the Right (Liberalists) and the Left have not
always taken part in this consensus seeking, especially the Liberalists.

Svendsen, Knud Erik (1989), Danish Aid: Old Bottles, 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. 91-116, Uppsala, Sweden: The Scandinavian Institute of African
Studies.
It is now time to attempt to draw a general conclusion on the strength of the various
determinants tested in recent years with respect to the most debated aid issues in
Denmark.
First, a short list of the issues and the corresponding tests:
1. Aid Objectives: The poverty orientation has been confirmed but not legislated
on. A large majority is in favor of keeping the compromise formulation in the
Act.
2. Aid Volume: After one cut in the volume and further attempts to cut it,
followed by a few years of zero growth, a political decision has been taken to
reach a figure of 1 per cent of GNP by 1992, but on the basis of a slight
majority.
3. Multilateral/bilateral aid: The 50-50 division has been confirmed, despite
efforts to reduce the share of multilateral aid.
4. Allocations to international organizations: A freeze on contributions to UNDP
has been lifted, but efforts to prevent the EEC share from growing were not
successful.
5. Choice of recipient countries: No change in the list of four, but political
agreement on more aid for southern Africa and the Sahel. Nicaragua is a
special case.
6. Tied aid: The number of eligible countries has been expanded by raising the
limit expressed in terms of average income; loans to LLDCs have been
changed to grants, and it was emphasized that the use of this aid is governed
by the general aid objectives.

30

7. Evaluation activities: Some modest expansion, but far from spectacular

progress.
8. Support for private capital transfers: The development objectives of statesupported joint venture have been stressed, and the reservation of aid funds
for matching (flexible mixed credits) was prevented.
The general impression is one of little change, especially when compared with what
one might have expected or feared under the recent political and economic
circumstances of Denmark. This testifies to the resilience of the aid programme
mentioned earlier. The basic features of Danish aid have been left unchanged,
despite the many diverse efforts to challenge some of them. On some scores, the
commercial interests have had some success (the list of countries eligible for tied
aid), but, on others, they have had to note defeats (state support for private capital
transfers).
At the same time, it is obvious that the balance of forces behind the aid programme
is a very fine one. This, combined with the fact that aid has become a permanent
part of Danish political life, makes it necessary to speculate on possible changes in
the aid profile, if there are changes in parliamentary power.
It should be added that in no other policy area have there been such efforts to test
public support through opinion polls on a regular basis as for the aid programme.
The polls were begun in 1960 and at that time they showed that 40-45 per cent
were in favor. Since then, there has been a significant increase in this indicator,
peaking at 71 per cent in 1984 in the midst of a massive Hunger in Africa fund
campaign. In 1985, the polls showed that approximately two-thirds of the
population (68 per cent) were backing a 1 per cent target for Danish development
assistance. This basic fact of steady and large support imposes, of course, certain
constraints on the controversies in the political system.
Future Changes in Aid?
It has been the central argument that the aid profile reflects the distribution of
political power, which has not given either the Conservative/Liberal bloc or the
Social Democrats (and the parties to their left) a stable majority in Parliament. This
has led to basic compromises in the aid programme, which, together with the
existence of special groups of aid supporters in almost all parties, have protected
the aid programme from the influence of the economic crisis.
If the Conservative/Liberal bloc should gain a majority of their own, without needing
the support for the RV, it is not very likely that there would be major changes in the
aid profile. This bloc would probably care more for the business interests (expand
the list of countries eligible for tied aid, introduce matching funds, etc.), but the
existence of aid-positive forces in the bloc, including a small Christian Party, would
exclude a major degradation of aid. A shift in the country priorities for Danish aid is
highly unlikely, that is the low-income countries will continue to receive top priority.
The situation would be different if the Social Democrats gained a majority, together
with the parties to their left. Such a new coalition would have to reach an
agreement on a long list of issues, based on a number of compromises not tried
before. It is reasonable to expect that the aid programme would be a part of such a

30

new deal, given the interest of the left-wing parties in aid, and that it would be
easier for the Social Democrats to yield in this area than in other fields of policy.
If this reasoning is correct, one would expect the objectives of aid to be made more
precise, possibly through a change in the legislation. Furthermore, a more
transparent implementation of the aid programme in accordance with the poverty
orientation should also be expected, meaning greater emphasis on the monitoring
and evaluation of aid activities. Such greater evaluation efforts would also be
directed towards the multilateral aid, especially the funds channeled through the
EEC. With regard to the choice of countries, one would expect a closer scrutiny of
development policies and their implementation in the major recipient countries and
special arrangements for aid to Nicaragua. The latter initiative might in fact be the
major symbol of a new direction in the aid effort. Otherwise, one would expect a
reduction in the present large spread of Danish aid, that is a higher degree of
concentration. Finally, an agreement on the gradual reduction of the share of
bilateral tied aid might also be expected. This might, however, run into some
opposition from a few trade unions.
This cautious assessment of the changes in the aid programme to be expected from
a move to the left by the Danish political forces does not point to any large-scale,
radical reform. Such changes would have an important impact on Danish aid
principles and practice, and they would meet resistance from the
Conservative/Liberal bloc, but they still could not in my view be called radical. This
is not so surprising, given the present nature of the Danish aid programme and the
absence of an implementable alternative to this programme.
The major alternative in the aid debate in Denmark in recent years has been the
programme for a New International Economic Order (NIED). The problem with this
approach, however, is that it does not produce an alternative aid programme. It
rather tends to reduce the importance of aid as such, making other North-South
relations more important than aid. As experience has show that very little has come
out of these efforts to change the economic world order, and as it has been
necessary to make a more realistic assessment of the balance of economic power in
the world, the intellectual and popular appeal of the whole concept of a new order
has been drastically reduced.
It may be said that the various documents describing the demands for a new
economic world order also included some broad proposals for changes in foreign aid
and that these issues were taken up later, for example, by the Brandt Commission.
In this sense, the concept of a new world order does not exclude concessional
transfers of resources to the Third World. The old slogan of trade, not aid does not
apply to this approach, which is rather trade and aid.
These broad ideas for fundamental changes in the procedures (and volume) of aid
transfers, that is automaticity, general financing, no conditions attached to the use
of funds, etc., have never caught on in the Danish aid debate. Only one small leftwing party has argued for the sovereign use of Danish aid funds by the recipient
countries (which should therefore include only countries with an acceptable
development policy).

30

The general trend in the aid debate in Denmark has meant a stronger interest in the
use of aid funds, to the poor groups received the benefits of this aid. This has again
meant more thorough planning of the use of aid funds in cooperation with the
authorities of the recipient countries, but still in conformity with Danish aid
objectives. This has promoted a broader understanding of the aid relationship as
being an agreement between two sovereign states, and Denmark has over the
years become clearer in its dialogues with recipients about its aid objectives, as
defined politically in Denmark.
This has meant stronger signals to the recipient countries about the Danish interest
in assisting the poor population groups most recently, a demonstrated concern
from the Danish side for aid dimensions like the situation of women and the natural
environment in the Third World.
This concerned participation, as it has been called in the international aid jargon,
has been extended from questions of specific aid uses (project identification, etc.) to
general policy issues, produced by the economic hardships in the form of fiscal
crises and payments deficits in some recipient countries.
Thus, in many ways, the general aid ideology in Denmark has moved away from the
aid ideas in the programme for a new economic world order, with the possible
exception of the greater use of multi-year frameworks for untied transfers to the
major recipient countries (the rolling five-year plans mentioned above).
Political changes in Denmark might as argued above induce adjustments in the
Danish aid profile, and no great political shift would be required to push aid in
another direction (only 5-6 per cent of the votes).
But compared with the basic aid features of most other OECD countries, the
changes will not be very significant. It is a fairly safe prediction that Danish aid will
continue at a relatively high level, that the public will be concerned with its effects
on poverty, that aid will be given primarily to low-income countries, with an
emphasis on eastern and southern Africa, and that the international organizations
will continue to receive a large share of Danish aid.

Svensson, Jakob (1999), Aid, Growth and Democracy, in Economics and

Politics, Vol. 11, No. 3, pp. 275-97.
Does aid work? Using the growth impact of aid as a yardstick, our results suggest it
does, but only in certain environments. In particular we have found that the longrun growth impact of aid is conditional on the degree of political and civil liberties.
Aid has a positive impact on growth in countries with an institutionalized check on
government power; that is, in more democratic countries. The data suggest,
however, if this is not the case, aid will be used to satisfy the governments own
non-productive demands. These results suggest that promoting democracy in the
developing world may not only have a value in itself, it may also increase the longrun growth impact of foreign assistance. We also found that there are large
differences across donors with respect to the allocation of foreign aid. While a few
donors, conditional on other motives, have reward recipients with better than

30

average records of civil and political liberties with more aid since the 1970s, this
correlation is much weaker in the 1990s. This result points to the importance of
creating incentives within the donor organizations to channel aid towards
environments where it can be productive (see Svensson, 1997). A contribution of
this paper is that we have taken a step towards identifying such an environment.

Svensson, Jakob (2000a), Foreign Aid and Rent-Seeking, in Journal of

International Economics, Vol. 51, pp. 437-461.
Discussion
We have shown that foreign aid and windfalls are associated with higher corruption
in countries more likely to suffer from powerful competing social groups. We believe
this result is supportive of the theory. The model we have laid out is built around a
standard rent-seeking specification. Admittedly, this is a black box approach to
policy formation. It should be viewed as a reduced form of a more structural model
in which organized social groups can capture a large share of government income,
either by means of direct appropriation, or by manipulating the political system to
implement favorable transfers, regulations and other redistributive policies.
In the empirical section we use corruption as a proxy of rent-seeking. We believe
that corruption is likely to be highly correlated with other forms of discretionary
redistribution, and therefore able to capture more than the empirical relationship
between aid, corruption and the political equilibrium. This assertion also finds
support in the data the empirical results are robust to other proxies of wasteful
rent-seeking.
The key insights we want to capture in the model are that economically irrational
responses to windfalls that has been noted in the literature may be politically
rational, and that foreign aid may affect the outcome (and the political equilibrium)
through a less tangible mechanism.
These results rely on four general assumptions. First, economic policy is determined
jointly by a number of powerful social groups. In the long run, the groups are better
off if they cooperate than if the act noncooperatively. There is a large literature both
in economics (see, e.g., Easterly and Levine, 1997; Rodrik, 1998) and in political
science that links interest / social groups with redistributive policies in developing
countries. Problems of coordination and cooperation are at the heart of this
literature. Thus, we believe that our reduced form model captures an important
aspect of reality.
Second, we assume that the deviating group can capture the entire government
budget. An objection to this is that a slight increase in rent-seeking by one group
when all others refrain yields a very large payoff. While technically correct, this
critique takes the models structure too much at face value. Rent-seeking is a
composite variable of both direct cost of redistribution (e.g., bribes), and indirect
costs of political competition (e.g., resources employed to seize or attempt to seize
power). In these dimensions, deviating from a cooperative code of conduct is likely
to yield high short-run payoffs.

30

Third, the larger the government budget, the larger the incentives to deviate. An
objection to this assumption is that it implies that the richer the economy, the more
rent-seeking, and the type of discretionary redistribution analyzed in the model is
not associated with policies in many rich developed countries. In response, it is
important to make clear that the focus in the paper is on the relationship between
rent-seeking, windfalls and foreign aid, and we have purposely assumed away other
incentives to engage in rent-seeking. 15 An intuitive way to think about the setup is
that government income takes two forms, a constant flow and a stochastic flow.
y(t) is the stochastic part, and there are pre-existing institutional arrangements
determining the distribution of the constant flow. The constant part could vary
between countries, implying that rich countries are not necessarily more prone to
rent-seeking. The focus of this paper is the conflict arising when a country receives
income above the level that its pre-existing institutional arrangements can handle,
i.e. windfalls, and how expectations of foreign aid influence this response.
Finally, we assume that the donor (partly) cares about the recipients welfare. There
is plenty of empirical support for this assertion.
Concluding Remarks
The present model has abstracted from a number of issues influencing public policy
in developing countries. The analysis may therefore be biased and it would be
inappropriate to draw any definite conclusions. Nevertheless, some important
insights emerge from the analysis. First, we have shown that the provision of public
goods does not need to increase with government income, thus providing a politicaleconomy rationale for why large windfall gains in revenue, or large inflows of
foreign aid, do not necessarily result in general welfare gains. Second, we have
shown that expectations of aid in the future may suffice to increase rent dissipation
and reduce the expected level of public goods provision.
From a policy perspective, there are four main implications of these findings. First,
the model points to the importance of studying the interaction between the political
process shaping public policy and foreign aid. Second, concessional assistance may
influence policy in the recipient country even without any resources actually being
disbursed, implying that evaluations of project and sector assistance may
overestimate the total impact of foreign aid. Third, the analysis stresses the
important issue of commitment in foreign aid policy. If the donor community can
enter into a binding policy commitment, aid may mitigate the incentives for social
groups to engage in rent-seeking activities. However, such a regime shift would
involve an aid policy that in the short run provides more assistance to countries in
less need, and less assistance to those in most need. Enforcing such a regime shift
may be difficult (Svensson, 1997). Finally, the fact that democracies seem to be less
subjective to the perverse effect of aid on corruption suggests that political
liberalization should have an important priority in the donors policy agenda.
We provide some empirical evidence supporting the mechanism we propose.
Foreign aid and windfalls are associated with increased corruption in countries more
likely to suffer from competing social groups. We find a weakly robust negative
relationship between aid and corruption in countries where these conditions are less
likely, while there is no evidence that the donors systematically allocate aid to

30

countries with less corruption. These results are robust to a number of statistical
problems.

Svensson, Jakob (2000b), When is Foreign Aid Policy Credible? Aid

Dependence and Conditionality, in Journal of Development Economics,
Vol. 61, pp. 61-84.
The present model has abstracted from a number of issues influencing the game
between the donor and the recipient. The analysis may therefore be biased and it
would be inappropriate to draw definite conclusions, let alone to make final policy
recommendations. Nevertheless, some important insights emerge from the analysis.
First, it is shown that one reason for the poor aggregate record of foreign aid may be
a moral hazard problem that adversely affects the aid recipients incentives to
undertake structural reforms. In principle, conditionality could partly solve the
problem, but this requires a strong commitment ability by the altruistic donor.
Contrary to conventional wisdom in the aid literature, we show that without such a
commitment technology, delegation of part of the aid budget to an international
agency with less aversion to poverty as well as tied project aid may improve welfare
for all parties.

Svensson, Jakob (2003), Why Conditional Aid Does Not Work and What
Can Be Done About It? in Journal of Development Economics, Vol. 70, pp.
381-202.
Recent empirical evidence suggests that aid has a positive impact on growth under
certain conditions, but that foreign aid has not been systematically channeled to
countries where those conditions prevail. We argue that this finding is partly driven
by a common feature in the donor agencies incentive system: the low opportunity
costs of committed funds. As a result, there is a strong bias towards always
disbursing aid to the ex ante designated recipient, irrespective of that recipients
performance and (irrespective of) the conditions in other potential aid recipient
countries. This assertion finds strong support in the data.
In this paper, we have analyzed a simple reform that may improve the outcome
from the donors perspective. Instead of committing a fixed amount of aid to each
recipient ex ante, and making aid conditional on reform or outcome, the donor
would commit the aggregate amount to be given to a group of countries, but where
the actual amount disbursed to each individual country would depend on relative
performance. Explicitly linking the allocation and disbursement decisions has two
important advantages as compared to the present practices. First, by creating a
conflict of interest between the beneficiaries of foreign assistance, the opportunity
cost of aid is internalized, thereby giving the donor (or country department)
stronger incentives ex post to reward good policies. Second, competition among
recipients allows the donor to make inferences about common shocks, which
otherwise conceal the recipients choice of action. This enables the donor to give aid
more efficiently. A recent World Bank report (Collier and Dollar, 1998) estimates that
if aid is redirected towards poor countries with good policies, more than 80 million

30

people could be lifted out of poverty for the same aggregate level of foreign aid.
Consequently, there are potentially large gains of reforming current aid practices,
and this paper has studied one such reform.
We believe that the argument for reforming program funding also applies to project
aid. Thus, under certain conditions, it might be optimal to pool the budget for
different (but similar) projects instead of having separate budgets for each
individual project.
Four objections against linking the allocation and disbursement decisions are worth
stressing. First, it could be argued that competition between recipients introduces
uncertainty about financial flows, which renders planning more difficult and makes
fiscal spending too volatile. This may be true if making comparisons with how the
aid system presently seems to work; i.e., commitments are always disbursed.
However, this is not true if we compare it with the conditionality outcome as it is
supposed to work. In fact, if the shocks facing the recipients are (highly) correlated,
the uncertainties will be reduced by having the recipients compete in an aid
tournament.
Second, it could be argued that the degree of reform implementation depends on
domestic political economy forces, rather than on conditional aid. In fact, recent
evidence suggests this to be the case (Burnside and Dollar, 2000; Dollar and
Svensson, 1998). However, these studies analyze the impact of conditional aid (as
it seems to work), not as it was meant to work. Therefore, as stressed in the paper,
we should not expect any significant correlation between aid flows and policy
reform. More important, the model primarily concerns the incentive structure within
the donor organization. Even if the degree of policy reform is solely determined by
domestic political economy forces; i.e., is independent of foreign assistance, linking
the allocation and disbursement decisions will still be useful since this provides
incentives for the donor to allocate/disburse aid to where it can be effective.
Third, the time-inconsistency problem analyzed above could be dampened in a
dynamic setting. If the donorrecipient game is repeated an indefinite number of
times, this might provide incentives for the manager not to pay out all funds if he
observes a negative signal, in order to build a reputation and give the proper
incentives for countries to undertake reform. But, typically managers in aid agencies
regularly switch positions (to other country desks). Thus, building a reputation
would require strong internal control and coordination over time in the donor
agency, a presumption the data does not support. In fact, the disbursement pattern
does not change over time.
Finally, collusion among recipients undermines the equilibria described in Section 4.
An important assumption is thus that the recipients act non-cooperatively. We
believe this to be an accurate starting point for analyzing problems in the current
aid system. Collusion may be a more important issue when it comes to linking
projects within a country, however. This is an important topic for future research.
A question partly left unanswered is, why is it that if the linking of the
allocation/disbursement decisions improves outcome, the donor community does
not explicitly link these decisions? One answer is of course that the potential cost of
tournament type aid schemes is perceived as being very high (for example the cost

30

related to the political risk of creating competition between countries). However, the
extent of competition between countries, and thus the potential cost, can be
controlled by varying the share of aid disbursed through a tournament-type aid
scheme. This also seems like a less important concern for project aid. A more
plausible explanation is related to the change in the existing power structure within
the donor agency/donor community implied by such a regime shift. In essence, the
reform would reduce the discretionary power of many managers mainly in charge of
the disbursement decisions. Moreover, by making the opportunity cost explicit in
the decision process, the management would be required to make tougher
choices. Recipient-specific interest groups (e.g., domestic firms, NGOs), and
potentially the recipient government, may also oppose an institutional change that
would imply aid flows conditional on performance, rather than ex post unconditional
disbursements.

Taffet, Jeffrey (2007), Foreign Aid as Foreign Policy: The Alliance for
Progress in Latin America, New York and London: Routledge Taylor &
Francis Group.
Conclusion: Aid to Latin America in Context (pp. 195-197)
At the start of the Kennedy administration, the Alliance for Progress was the great
hope of U.S. policymakers as the means to counter the rise of Communism in Latin
America. Rather than use force or coercion to influence political change, the
program would encourage leaders to pursue reform. Aid from the United States
would be a way to help Latin American leaders help themselves create lasting
economic growth and stability, and in doing so develop new, more cooperative and
positive inter-American relationships. As Richard Nixon had found in 1958, and as
Castros success illustrated, many in the region resented U.S. power and arrogance,
but Kennedy hoped to change all this and usher in a new age of collaboration and
mutual respect.
The Alliance for Progress did not achieve these goals. In an effort to establish the
program, the United States instructed Latin Americans on how to pursue reform. As
the case studies demonstrate, they were rewarded when they cooperated and
punished when they did not. The program therefore did not represent a partnership,
but reinforced Latin American ideas about the overbearing United States. In
developing the program, policymakers in the United States did not imagine,
comprehensively or rationally, exactly how it would work; the mechanisms they
developed were unwieldy, impractical, inefficient, and ignored. While there was an
initial desire to allow Latin Americans an important role in determining how money
was spent, blunt political considerations made that impossible. This meant that the
Alliance for Progress devolved into a U.S. foreign aid program that retained little of
its dramatic revolutionary content. It became simply a way to help friends, hurt
enemies, and promote a set of theories about how to best create economic stability.
It was not an alliance, and it was not even always about economic progress.
Initially, Kennedy stressed that the Alliance for Progress would reject the notion of
imperial hubris the idea that the United States, as the strong and wealthy power,
and with great ability to influence change, knew what was best for Latin America.

30

Kennedy wanted Latin Americans to believe that the United States wanted to help
because it was the right thing to do and that he cared about their problems. In
terms of rhetoric, Kennedy was successful. Latin Americans saw him as a great
leader, dedicated to progressive change. The reality is that, however unfortunately,
his policies and those of his successors did not live up to the initial ideals. Faced
with political and economic instability and the threat of anti-American politicians
taking power, U.S. policymakers felt they had little choice but to use the tools
available, including the Alliance for Progress, to create conditions favorable to their
own interests. To expect them to have acted otherwise ignores the overwhelming
and larger context of the Cold War, which informed their understandings of the
world and the reality of their power relative to Latin Americans.
The application of foreign programs as a way to manipulate foreign nations was at
one level necessary and obvious, but on a second level clearly counter to the best
traditions of American democracy. In a remarkable address at the University of
Denver in August 1966, Johnson explained that the overriding rule for U.S. foreign
policy was that it must always be an extension of domestic policy. He argued,
our safest guide to what we do abroad is always to take a good look at what we are
doing at home. One application of this rule in Johnsons mind was that in the
United States we do not like being told what to do. We like even less being told what
to think. Thus, in international relations, The United States has no mandate to
interfere wherever government falls short of our specifications. Unfortunately,
these dictums did not guide policy. Rather, U.S. policy was the exact opposite of
what Johnson professed.1
Had the policy actually worked effectively it would be possible to make an argument
that interference was a good idea, but U.S. political successes were few. In Brazil,
U.S. foreign aid programs had minimal effect on the political orientation of the
Goulart government, and were unable to influence the military government in
important ways. In Chile, the massive aid in the pre-1964 era had little impact on
Freis victory, and thereafter served mostly as an irritant that drove Chilean leaders
toward anti-American positions. Most dramatically, nine and one-half years after
Kennedy announced his ten-year commitment to Latin America, Salvador Allende
won his countrys presidential election. In the Dominican Republic the ledger may
be significantly more positive. It is unlikely that U.S. aid programs had much impact
on political changes during the first half of the decade, but they did create stability
in the postintervention era. Finally, in Colombia, aid may have had a marginal effect
in strengthening the governments of the National Front; it allowed them to avoid
tough decisions, and to spend, essentially, beyond their means.
Understanding the political logic of the Alliance for Progress helps in developing a
perspective about U.S.-Latin American relations during the 1960s. Throughout the
decade, U.S. policymakers continually looked to the program as a catchall solution
to the problems they faced. This should not suggest that the Alliance for Progress
was central to every piece of the relationships, only that it was a way of
manipulating them to U.S. advantage. With the notable exception of policy toward
Cuba, decisions about economic aid programs were part of every U.S. action in the
region. The U.S. government was willing to use the CIA to engage in covert actions,
to use Marine to invade the Dominican Republic, to encourage military leaders to
overthrow civilians, and to use its considerable power to help U.S. businesses. But in

30

each one of these cases there was a connection to economic aid in an attempt to
create stability, reward friends, or keep threats from emerging.
In broader terms, the Alliance for Progress also helps clarify how policy toward Latin
America in the 1960s was consistent with earlier and later periods in inter-American
relations. There is little debate in the scholarly community that the major theme in
the history of U.S.-Latin American relations is the U.S. desire and ability to dominate
the region.2 This interest came from aspiration about increasing U.S. power,
economic and otherwise, and it was usually justified by assumptions about Latin
American cultural inferiority. The Alliance for Progress demonstrates that U.S. policy
in the 1960s was, though different rhetorically from other eras, essentially similar in
application. Kennedy talked about the Alliance for Progress as a partnership of
equals and suggested that his goals were more moral and cooperative than his
predecessors. The reality was more complicated. Though U.S. policymakers did
hope to implement Kennedys vision, the discrepancy in economic power, U.S.
global interests, and assumptions about U.S. superiority meant that U.S. policy was
not a repudiation of the past, but a continuation of it.

Tarp, Finn (ed.) (2000), Foreign Aid and Development: Lessons Learnt and
Directions for the Future, London and New York: Routledge.

The White House (2010), National Security Strategy, available online:

http://www.whitehouse.gov/sites/default/files/rss_viewer/national_security
_strategy.pdf.
Its easy to forget that, when this war began, we were united, bound together
by the fresh memory of a horrific attack and by the determination to defend
our homeland and the values we hold dear. I refuse to accept the notion that
we cannot summon that unity again. I believe with every fiber of my being that
we, as Americans, can still come together behind a common purpose, for our
values are not simply words written into parchment. They are a creed that calls
us together and that has carried us through the darkest of storms as one
nation, as one people.
President Barack Obama, West Point, New York, December 2, 2009

This strategy calls for a comprehensive range of national actions, and a broad
conception of what constitutes our national security. Above all, it is about renewing
our leadership by calling upon what is best about Americaour innovation and
capacity; our openness and moral imagination.
Success will require approaches that can be sustained and achieve results. One of
the reasons that this nation succeeded in the second half of the 20th century was
its capacity to pursue policies and build institutions that endured across multiple
Administrations, while also preserving the flexibility to endure setbacks and to make
necessary adjustments. In some instances, the United States has been able to carry

30

forward this example in the years since the Cold War. But there are also many open
questions, unfinished reforms, and deep divisionsat home and abroadthat
constrain our ability to advance our interests and renew our leadership.
To effectively craft and implement a sustainable, results-oriented national security
strategy, there must be effective cooperation between the branches of government.
This Administration believes that we are strong when we act in line with our laws, as
the Constitution itself demands. This Administration is also committed to active
consultation with Congress, and welcomes robust and effective oversight of its
national security policies. We welcome Congress as a full partner in forging durable
solutions to tough challenges, looking beyond the headlines to take a long view of
Americas interests. And we encourage Congress to pursue oversight in line with the
reforms that have been enacted through legislation, particularly in the years since
9/11.
The executive branch must do its part by developing integrated plans and
approaches that leverage the capabilities across its departments and agencies to
deal with the issues we confront. Collaboration across the governmentand with
our partners at the state, local, and tribal levels of government, in industry, and
abroadmust guide our actions.
This kind of effective cooperation will depend upon broad and bipartisan
cooperation. Throughout the Cold War, even as there were intense disagreements
about certain courses of action, there remained a belief that Americas political
leaders shared common goals, even if they differed about how to reach them. In
todays political environment, due to the actions of both parties that sense of
common purpose is at times lacking in our national security dialogue. This division
places the United States at a strategic disadvantage. It sets back our ability to deal
with difficult challenges and injects a sense of anxiety and polarization into our
politics that can affect our policies and our posture around the world. It must be
replaced by a renewed sense of civility and a commitment to embrace our common
purpose as Americans.
Americans are by nature a confident and optimistic people. We would not have
achieved our position of leadership in the world without the extraordinary strength
of our founding documents and the capability and courage of generations of
Americans who gave life to those valuesthrough their service, through their
sacrifices, through their aspirations, and through their pursuit of a more perfect
union. We see those same qualities today, particularly in our young men and
women in uniform who have served tour after tour of duty to defend our nation in
harms way, and their civilian counterparts.
This responsibility cannot be theirs alone. And there is no question that we, as a
nation, can meet our responsibility as Americans once more. Even in a world of
enormous challenges, no threat is bigger than the American peoples capacity to
meet it, and no opportunity exceeds our reach. We continue to draw strength from
those founding documents that established the creed that binds us together. We,
too, can demonstrate the capability and courage to pursue a more perfect union
andin doing sorenew American leadership in the world.

30

Thrien, Jean-Philippe and Nol, Alain (2000), Political Parties and

Foreign Aid, in American Political Science Review, Vol. 94, No. 1, pp. 151162.
The findings presented in this article help clarify how foreign aid is shaped by
domestic politics. Our model confirms the primacy of welfare state socialist
attributes and government social spending in the explanation of development
assistance policies. At the same time, it shows, contrary to previous quantitative
studies of the topic, that political parties do matter, not directly and in the short run,
but indirectly and over the years. Our findings lend support to the intuition of
qualitative studies that have long emphasized the role of partisan cleavages in the
formulation of foreign aid policies. For scholars interested in parties, the model also
can be useful, since it offers a new assessment of partisan effects. It confirms the
empirical relevance of cumulative scores of partisanship and shows how socialdemocratic power operates through other political determinants.
Most international relations scholars agree that the question is no longer to
determine whether domestic explanations should be integrated with international
ones, but to establish exactly how this can be done (Moravscik 1993, 8). In our
opinion, it is imperative to look closely at domestic conflicts and to do so with the
help of the comparative politics literature. This study suggests that political parties,
welfare institutions, and social spending play a significant role in the aid policy
process, probably because parties and the welfare state render some ideas more
politically influential than others (Yee 1996, 93). As is explained in the theoretical
model section, when parties hold power for a long period, they put forward specific
conceptions of social justice that become established as central to a countrys
political debates. Foreign aid, in particular, appears strongly influenced by the
capacity of a society to accept and institutionalize nonmarket principles of income
redistribution (Nol and Thrien 1995, 549).
The exact processes through which this influence becomes effective and evolves
can only be assessed with case studies. Our findings are consistent with a host of
such studies, as well as with Lumsdaine's (1993, 179) observation: The parties that
supported aid were those concerned with issues of equality and alleviation of
poverty, not those concerned with the free market or with military and strategic
issues. The influence of these concerns is felt mainly in the long run, as parties
establish their primacy in society and as their ideas become institutionalized. The
partisan history of Scandinavia and Britain, for instance, has shaped these
countries public debates: Liberalism and social democracy have been hegemonic
ideological forces in the arena of political reasoning for close to a century. They
have structured the political dialogue around questions of liberty and equality,
individual property rights and the central governments power to intervene in the
marketplace, social class and citizenship (Kitschelt 1994, 265). We agree that such
public debates matter, and we argue that they matter not only for domestic politics
but also for foreign policy.

Thrien, Jean-Philippe (2002), Debating Foreign Aid: Right Versus Left,

in Third World Quarterly, Vol. 23, No. 3, pp. 449-66.

30

The aid regime is a complex international institution which, over the years, has
experienced a number of transformations. Most of these changes, however, can be
made sense of only if they are relocated within the ideological environment that
spawned them. That insight has made it possible here to examine foreign aid in an
innovative manner, whereby its evolution has been shown to be characterized by an
ongoing conflict between the Right and the Left. Considering that the notions of
Right and Left refer to a continuum rather than discrete realities and that, in
addition, their meanings have varied through space and time, one could no doubt
object to our interpretation on grounds of reductionism. This is a common liability of
arguments developed in terms of ideal types. Ultimately, however, using the RightLeft distinction as a conceptual road map to understand development assistance
offers many more advantages than drawbacks. Indeed, the Right-Left division has
made possible an analysis of aid that is at once systematic, solidly rooted in political
reality, and less mechanical than the realist, liberal, and neo-Marxist interpretations
that have traditionally dominated the field of international relations.
Looking beyond this specific study of foreign aid, it is important, by way of
conclusion, to emphasise that few international phenomena be they economic,
social, environmental or security issues are exempt from the Right-Left opposition.
Yet, despite its manifest descriptive capabilities, the Right-Left distinction has until
now received very little attention from students of international relations. It is hoped
that this omission may one day be corrected. Among the likely benefits that
introducing the terms Right and Left would bring to international relations theory,
three are worth underscoring. First, these terms could help improve the dialogue
between the fields of comparative politics and international relations. Second, they
would provide a conceptual bridge linking the positive and normative dimensions of
the analysis of international processes. Above all, however, they would open the
way to making the language of the experts less cryptic for the ordinary citizen.

Thorbecke, Erick (2000), The Evolution of the Development Doctrine and

the Role of Foreign Aid, 1950-2000, in Tarp, Finn (ed.), Foreign Aid and
Development: Lessons Learnt and Directions for the Future, pp. 17-47,
London and New York: Routledge.
The retrospective appraisal undertaken in this chapter revealed the close
interdependence throughout the last five decades of the twentieth century among
(i) development objectives, (ii) the conceptual framework and models, (iii) data
systems and information, (iv) strategies and (v) the role of development aid. In each
period, the nature and scope of the prevailing development strategy and the role of
aid were largely predetermined by the state of the art, the available data systems
and the prevailing conditions at the time. Thus, for example, a very limited
analytical framework such as the totally aggregate (one-sector) model of the 1950s
and the predominance of a data system relying almost exclusively on national
income accounts, predetermined that the corresponding development strategy
would be couched within a uni-sectoral setting. In contrast, the multi-sectoral
framework of the 1990s, based on a much clearer understanding of the elements
and mechanisms (some endogenous) influencing the development process and the
availability of an extremely disaggregated set of socio-economic data, allowed the
design of a stabilization-cum-growth-cum-poverty alleviation strategy.

30

The conception of the role of aid evolved in parallel with the evolution of the
development doctrine. In the 1950s, the role of aid was seen mainly as a source of
capital to trigger economic growth through higher investment. Faith in the capacity
of recipient governments to plan successfully and use aid efficiently was strong. In
the 1960s, the role of foreign assistance, in the light of the two-gap models, was
considered important in removing either a savings deficiency through an increased
flow of foreign savings or a deficit in the current account of the balance-of-payments
by providing the necessary foreign exchange. The 1970s witnessed a major change
in the role of aid, i.e. that the primary objective of foreign assistance should be to
raise the standard of living of the poor largely through increased employment. The
focus on poverty alleviation required new types of investment and new forms of
intervention.
With the advent of the debt crisis and the debt overhang, in the 1980s the role and
conception of aid changed in a major way. The primary purpose of aid became
twofold; as a stop gap measure to salvage the shaky international financial system
and to encourage the implementation of appropriate adjustment policies in third
world countries through conditionality attached to programme lending. In that
decade, characterized by pro-market and anti-government rhetoric, there was a
strong and lingering case of aid fatigue influenced by the rising fear that foreign
assistance was generating aid dependency relationships in poor countries. The issue
of the effectiveness of aid conditionality was also critically debated. The socioeconomic havoc created by the Asian financial crisis engendered a fundamental reexamination of the role of aid and the uncritical acceptance of Bretton Woods rules
of the game and the Washington Consensus. The World Bank, in particular, took
the leadership in advocating poverty alleviation and improvement in human welfare
as the overarching objective of development and of foreign assistance.

Tingley, Dustin (2010), Donors and Domestic Politics: Political Influences

on Foreign Aid Effort, in The Quarterly Review of Economics and Finance,
Vol. 50, pp. 40-49.
A common and very robust result in the public opinion literature is that individuals
who are more conservative are also less likely to support foreign aid. The literature
on legislative voting on foreign aid in the US finds a similar pattern. However, the
evidence based on cross-country analyses has been more mixed. This paper
presents the first analysis that systematically explores the domestic political
determinants of aid behavior over time and within countries. I have argued that
political and economic variables play an important role in capturing trends in foreign
aid. Notably, as governments become more conservative, the share of GDP
committed to foreign aid effort declines.
Interestingly, economic ideology appears to matter more for aid to poorer
developing countries and multilateral institutions than aid to wealthier developing
countries. This is broadly consistent with Fleck and Kilby (2006) who find that more
conservative US governments to give more aid to trading partners, while more
liberal US governments give more aid to countries needy countries. This also
suggests that aid to richer countries could possibly be more about trade or
geopolitics. These results have important implications for how we understand the

30

economic impact of foreign aid. First, changes in domestic political ideology through
regularly occurring elections could introduce changes in aid levels, which in turn
create volatility in aid. The magnitude of this volatility and its effect is of course an
open empirical question. But volatility in aid is an increasingly cited cause of aid
ineffectiveness (Arellano et al., 2009; Bulir & Hamann, 2003; Bulir & Lane, 2002;
Eifert & Gelb, 2005; Lensink & Morrissey, 2000). However, this literature generally
has been silent on the causes of volatility. Insofar as the policy prescriptions from
this literature generally seek to limit volatility, a more thorough understanding of
the sources of volatilityfor example, donor politics as outlined in this paper
seems worthwhile.
Another contribution is that the analyses show that changes in donor level political
variables lead to changes in aid effort that differ across particular types of aid.
Hence, governments may have different strategic and economic interests
depending on their ideological orientations. Constancy in the international political
environment could mask important domestic sources of change in economic and
strategic interests. This could have important implications for identification
strategies used in the aid effectiveness literature. The results of this paper echo a
conclusion laid out by Fleck and Kilby (2006, p. 220) (o)ur 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 (see also Fleck
& Kilby 2008; Kilby & Dreher 2009). As a result of changes in aid motivation, the
strength of instruments may change over time, as could the satisfaction of the
exclusion restriction. Treating country interests as though they are fixed and
independent of domestic politics leads to faulty assumptions in attempts to solve
endogeneity problems in the analysis of the relationship between aid and growth.
While domestic ideological factors appear to influence aid effort, undoubtedly other
ideological and structural factors can influence commitment decisions. For example,
the literature argues that there may be some externalization of moral beliefs
(Lumsdaine, 1993). While my analysis controlled for domestic welfare state policies,
changes in the debate about the morality of aid might influence aid effort. For
example, consider the recent warming to foreign aid from conservative Republicans
in the United States. Pundits and scholars attribute this fact to changes in moral
agendas of Evangelical Christian groups that have come to see foreign aid to poor
countries as an important function of government (Busby, 2007). Geo-political and
security concerns could overwhelm otherwise salient ideological positions, as could
international influence following broader consensus across donors (Lumsdaine,
1993, p. 140). It will be an interesting empirical question over the next decades to
see if other changes at the international level have an effect on the type of political
coalitions in donor countries that support foreign aid.

Toye, John (1991), The Aid and Trade Provision of the British Overseas Aid
Programme, in Bose, Anurdha and Burnell, Peter (eds.) (1991), Britains

30

Overseas Aid Since 1979: Between Idealism and Self-Interest, pp. 97-124,
Manchester: Manchester University Press.
The ATP scheme has had a major impact on lowering the quality of UK aid. Ideally
the real-terms reductions in the aid budget in the decade after 1979 could have
been offset to some extent by raising the quality of individual aid projects. Less
transfer of purchasing power to developing countries, but wiser spending, should
mean that the developmental impact overall would not fall proportionately. This is
not an ignoble prospectus. But the retention and expansion of the ATP scheme has
meant that the leaner and fitter aid budget remains a prospectus rather than an
achieved fact.
ATP not only has an undesirable bias against aid for the poorest and aid that is
environmentally-friendly, its sketchier appraisals make it generally more accidentprone it its efforts to promote development. The critics of ATP have made these
points before. Additionally, however, it must be understood that the commercial
advantages which the UK is said to gain from the scheme are much more dubious
than is generally realized. The maximization of the value of exports if necessary
using government subsidies is not a self-evidently desirable national economic
objective. The ATP scheme trades off developmental benefits for a policy objective
which lacks a defensible economic rationale.
What is not in doubt is that ATP has created a vested interest of a classic kind. It has
brought together a small number of large capital goods firms with a common
interest in maintaining and expanding the scheme. The scheme itself, by adding to
their profits, provides them with the wherewithal to finance the costs of their own
political lobbying. Successive governments have allowed themselves to be captured
by this vested interest. Even the Thatcher government, dedicated to fiscal
discipline, continence and free trade, never had the courage to strike down this
wretched abuse of taxpayers money. Were the Tory pessimists, who mused on the
vanity of human wishes, right after all?

Travis, Rick and Zahariadis, Nikolaos (2002), A Multiple Streams Model of

U.S. Foreign Aid Policy, in Policy Studies Journal, Vol. 30, No. 4, pp. 495514.
Using and anchor-and-adjust conceptualization, we offered a multiple streams
model to account for interactions between domestic and external factors in
explaining U.S. foreign aid allocations. Our findings have implications for the study
of public policy, the future of the foreign aid program, and theoretical attempts to
develop more generalizable explanations of policy that encompass foreign and
domestic issues.
We have carried the multiple streams approach forward in three ways. First, this is
the first attempt to examine quantitatively hypotheses derived from the multiple
streams approach. We have shown that the hypotheses can be tested empirically
and that the results are largely consistent with the theoretical expectations. The
effects are in many instances significant only when some factors (problems or
politics) interact with other in the presence of open policy windows. We conclude

30

that Kingdons work is a good way to organize diverse types of information and to
illustrate the interactive nature of the policy process. Second, we have extended
Kingdons model to incremental decision making. Our empirical work reinforces the
overwhelming importance of budgetary momentum in foreign aid allocations.
Finally, we have extended the multiple streams model that was initially used to
explain agenda setting in domestic politics to the area of decision making. More
important, we have used the same model to explore questions of foreign policy. By
demonstrating that this can be done with little analytical loss, we aim to encourage
further research in this direction. Contrary to conventional wisdom, which currently
views foreign policy as a distinct area, with its own models largely divorced from
domestic policy, we maintain that the two are different sides of the same coin. The
difference between them are more imagined than real. Surely, foreign policy
involves fewer constituencies and a more closed circle of political elites. But as our
study shows, such characteristics are not detrimental to theoretical developments
that view both policies as conceptually similar enterprises. The study aims to
encourage more theoretical cross-fertilization between foreign and domestic policy
models.
Further, our study yields important insights as to the future of the foreign aid
programme. For example, we uncovered an aid-trade substitutability effect that was
in existence even before the end of the Cold War. This implies that the desire of
post-Cold War administrations, such as Clintons, to use increased trade ties as a
mechanism for reducing economic aid already had a history. The substitutability
relationship also suggests that as free trade on a global scale grows, aid is likely to
diminish in amount and importance. Greater commercial ties and not ideological
struggles may spell the end of the program. Additionally, we offer nuance to
particular arguments on whether domestic politics makes a difference on foreign
aid. We have found that it is not Democratic control of the presidency that counts
but rather Democratic control of the Senate that exercises a systematic negative
bias on aid allocations of security funds. There is no such effect over the allocation
of economic assistance. The finding that domestic politics, as represented by
Senate control, has an effect varying across programs suggests that there is much
to be learned about how specific societal pressures affect foreign policy.
Finally, our work has sought to integrate multiple areas of research by analyzing
them in reference to one model. The use of a single model has done more than offer
a more parsimonious way of analyzing public policy. As globalization takes hold, old
divisions between domestic and external affairs become more blurred. For political
science, this has meant renewed attention to breaking down disciplinary barriers
particularly between international relations and comparative politics (Caporaso,
1997). Despite some promise, however, not much has been accomplished beyond
the recognition that it should be done. Work on two-level games has provided one
interesting, but limited, way to model interactions between external and domestic
effects on policy (Putnam, 1988; Evans, Jacobson, & Putnam, 1993). Two-level game
models show how domestic coalitions, resources, and institutions shape the winning
set of solutions and interact with the external environment as a way of crafting
strategies to achieve success in foreign policy. The major point is that games in one
level (international) cannot serve as inputs for games in the other (domestic).
Policies are made by playing on two levels simultaneously. Our multiple streams
model used a different point of departure. We have sought to overcome the single
actor assumption of two-level games, which we find unrealistic, while still striving to

30

model the interactions between external problems and domestic politics on the
formulation of public policy. In light of attempts at theoretical integration, we
conclude that the use of multiple streams models to study both domestic and
foreign policies is a good place to start.

Tuman, John and Ayoub, Ayoub (2004), The Determinants of Japanese

Official Development Assistance in Africa: A Pooled Time Series Analysis,
in International Interactions, Vol. 30, No. 1, pp. 43-57.
In this paper, we have attempted to clarify the determinants of Japanese ODA to
Africa. The findings suggest that humanitarian considerations, as measured by real
GNP per capita, human rights, democracy, and food insecurity have figured
prominently in Japanese aid decisions. The model also points to the importance of
trade and Japanese ODA in Africa, although oil-exporting countries did not receive
more Japanese ODA, on average, during the study period. Aid is given to promote
certain U.S. security interests, including rewarding countries that house U.S. military
personnel and in recipients that shared a border with a communist regime. Other
U.S. economic interests were found to have little explanatory value, however.
The results of this study indicate that the humanitarian interests supported by
Japanese ODA may vary somewhat cross-regionally. Although human rights and
regime type have been shown to be relatively unimportant determinants of
Japanese ODA in Latin America and Asia (Inukai, 1993; Tuman, Emmert, and
Sterken, 2001), we find that human rights and democracy have had an effect on aid
disbursements in Africa. For other humanitarian interests, however, there does
appear to be consistency across different regions. This study, like previous analyses
of Africa (Schraeder, Hook, and Taylor, 1998), 26 shows that Japanese ODA
concentrates in countries with lower per capita income. A number of other studies
have found the same relationship between Japanese aid and national income in Asia
and Latin America (Chan, 1992; Inukai, 1993; Cingranelli and Gomez, 1996; Katada,
1997). The negative association between recipient income and ODA throughout the
world suggests that Japanese aid policymakers share a global concern for poverty
reduction.
Similarly, the national economic interests associated with Japanese ODA are not
consistent across different regions of the developing world. As noted, Japanese ODA
in Asia and Africa is often linked to the promotion of trade with recipients (Rix, 1996;
Stein, 1998; Schraeder, Hook, and Taylor, 1998). Nevertheless, trade and direct
investment have been shown to have little influence on Japanese aid in Latin
America (Tuman, Emmert, and Sterken, 2001). The reasons for this regional contrast
are not entirely clear. Possibly, Japanese ODA in Africa and Asia responds to a much
broader range of national interests than in Latin America because the former
regions offer advantages to Japanese corporations. For example, while U.S.
companies account for the majority of trade and direct investment in Latin America,
they have little presence in Africa. As a result, Japanese companies involved in
Africa are in a strong position relative to potential competitors, and ODA might be
used to maintain that advantage. Likewise, the association between ODA and trade
in Asia might reflect Asias close proximity to Japan, its efficient and low-cost
workforce, and its natural resource base.

30

An additional implication concerns the motives of different OECD aid donors in

Africa. As two of the largest and most politically powerful donors on the continent,
the U.S. and Japan pursue remarkably similar goals. While seeking to use aid to
improve trade with Africa, the U.S. has also linked aid to containing communism,
safeguarding its security interests, reducing poverty, and promoting marketoriented reform (Schraeder, Hook, and Taylor, 1998; Stein, 1998). Likewise,
Japanese aid in Africa has also been used to promote Japanese national economic
interests, U.S. strategic interests, and idealism. The only divergence between the
U.S. and Japan in Africa, as noted, has been over support of structural adjustment.
Given recent U.S. efforts to stabilize to international system, the cooperation of
Japan and the U.S. in the area of foreign assistance is potentially significant. Since
initiating the war on terrorism, for example, the U.S. has expected Japan and others
to provide more assistance to countries that support U.S. strategic and security
interests (Ministry of Foreign Affairs, 2002). The findings of this study suggest that
Japan has already promoted U.S. strategic interests in Africa for many years now.
Quite possibly, then, the collaboration between the U.S. and Japan in the area of
African aid can be used to build cooperation in other areas, including in West Asia
and the Middle East.27

USAID (2002), Foreign Aid in the National Interest: Promoting Freedoms,

Security and Opportunity, Washington, DC: USAID.
The world has changed dramatically over the past two decades. Of the worlds 200
countries in 2001, 124 were democraciesthe highest number ever. Nearly 6.0
billion people live in market economies, up from 1.5 billion in 1980. Globalization
has integrated the worlds markets for goods, services, finance, and ideas.
Population growth rates are down, and in most parts of the world health and
education have surpassed where the U.S. stood 50 years ago. And remarkable
advances in biotechnology are bringing the promise of new cures for the sick and
new seeds for the hungry.
But these bright prospects also have dark sides. Many new democracies are fragile,
others fake. Many market advances are reversing in stupendous losses of
confidenceas with Enron and Argentina. Several billion people remain mired in
povertyand stranded across a gaping digital divide, blind to what could be free for
all. Weapons of mass destruction using modern technology could unleash
irreversible disasters on people and the planet. And for many people, especially
Americans, the terrorist attacks of September 11, 2001, breached the sense of
security offered by geography.
In September 2002 President Bush introduced his National Security Strategy. For the
first time development has been elevated as the third pillar of U.S. national security,
along with defense and diplomacy. Under the leadership of Secretary of State
Powell, the U.S. development community is redefining its own strategic priorities to
meet this challenge.
These changes have altered the landscape for global development. Within this new
landscape U.S. foreign assistance must move in new directions. To inform the

30

debate on future assistance, the U.S. Agency for International Development (USAID)
commissioned this analysis of the main trendsand the related challengesnow
unfolding. This follows in the tradition established more than a decade ago by then
USAID Administrator Alan Woods, whose similar report on development trends
changed USAID and the debate on foreign assistance.
The main message of this report: foreign assistance will be a key instrument of
foreign policy in the coming decades. The report does not address all the issues of
development assistance. Instead, it focuses on six:
Promoting democratic governance.
Driving economic growth.
Improving peoples health.
Mitigating conflict.
Providing humanitarian aid.
Accounting for private foreign aid.

Of these six issues, four articulate key development concepts driving the Presidents
proposed Millennium Challenge Account, a major new initiative announced by
President Bush in March 2002, just the third major foreign aid policy statement since
the second world war. The Millennium Challenge Account is based on the proposition
that countries ruling justly, investing in their people, and encouraging economic
freedom will receive more U.S. aid.
Around the world one of the most pressing needs is to advance democratic
governanceno small task. At a superficial level the state of global democracy
appears highly encouraging. Over the past quarter-century democracy has become
the worlds most common regime. But swirling beneath this expansion is growing
disenchantment with political leaders seen by their people as corrupt, self-serving,
and unable or unwilling to address economic and social problems. In many
developing and postcommunist countries, people are losing confidence not just in
elected officials but also in democratic institutions. So, promoting democratic
governance must become a higher priority in U.S. foreign aid. Democracy and good
governance are required to spur development and reduce poverty in poorly
performing countries. It is also vital to U.S. security.
Also essential is boosting economic growth in developing countries. The United
States can get global agriculture moving by restoring the budgets of global
agricultural research centers, training scientists in basic biology and applied
agriculture, and pressing to reduce the damage from industrial countries
agriculture policies. The United States can also promote trade and investment in
developing countries by better coordinating its policies and programs. And it can
help countries develop their microeconomic agendas, improving the climate for
business.

30

Fundamental to this growth is improving peoples health and education. Because of

changing demographics, most developing countries will have larger workforces over
the next two decades. As a result more resources will be available to invest in
economic endeavors. But for that to happen, workers must be productiveand to
be productive, they must be healthy. Diseases that cause illness and premature
death must be identified, prevented, and managedincluding future health
problems, which will be more diverse. If foreign assistance continues to rely on longstanding definitions of public health priorities, it may be unable to address this
diversity. Responding to changing health challenges will require different budget
allocations and more flexible programs.
Global markets are also changing as developing countries shift from low-cost labor
to higher-end manufacturing. That change requires new types of workers, able to
learn new skills and use new technologies. A primary school education is no longer
enough for workers to take part in the global economy. Moreover, higher degrees
academic and technicalare needed to adapt global technology to local settings
and to keep up with new advances. So education systems in developing countries
must broaden their sightsand U.S. foreign assistance must offer more support for
secondary education for the global marketplace.
Given the devastation caused by conflict, the United States needs to do much more
to mitigate itand when that is not possible, to help manage it. Conflict is the
product of deep grievances, political and economic competition, irresponsible
political leaders, and weak and unaccountable institutions. It does not occur simply
because people are unhappy or greedy, or because a country has the resources to
sustain violence. Nor does it happen where all state and social institutions are weak.
It happens when causes at multiple levels come together and reinforce each other.
Preventing conflict requires long-term interventions that make states and societies
better able to manage tensions. Whatever the causes, a crucial part of the solution
is encouraging innovative institutions that can deal with problemslocal, regional,
and national. The most important principle when designing country programs is to
apply a conflict lens to each major area of foreign assistancefrom agriculture to
economic growth to democracy and governance and to have each area work in
concert.
In the aftermaths of conflict and natural disaster, the United States must continue to
provide humanitarian assistancebut much more effectively.
The need for
humanitarian assistance shows no signs of abating, and new dimensions of
disasters will create new demands. Trends indicate a larger, more complex role for
humanitarian assistance in the coming decades. The United States, the only
national power with truly global reach, has a critical role in addressing current and
future trends in disaster assistance. It must project a clear consistent message
about addressing humanitarian needs in conflict settings and reducing
vulnerabilities that transform natural and technological events into disasters.
U.S. assistance can do much to shape the 21 st century. And as the Millennium
Challenge Account ramps up, U.S. official aid is set to rise from $10 billion a year
today to $15 billion in 2006 and thereafter. U.S. assistance is generally measured
solely as the official development assistance that the government provides through
USAID, the Peace Corps, multilateral institutions, and programs sponsored by the

30

State Department and Department of Defense. But many nongovernment sources

also provide foreign aid: foundations, corporations, private and voluntary
organizations, colleges and universities, religious organizations, and individuals.
All these sourcesproviding nearly $60 billion a year, or six times the official
assistancemust be taken into account to plan aid more effectively. With private
assistance predominating, U.S. official assistance will have to develop stronger
partnerships with the full array of private sources.
The dominant themes, then, are for foreign assistance to focus on political
leadership, on policy, on people, and on partnership. Unless a countrys leaders
make smart choices for national priorities and show their political will to work with
outside donors, developmentand development assistancecannot succeed.
Unless sensible policies are put in place, with the rule of law to promote good
governance and individual freedom, development cannot be sustained, particularly
for agriculture, the engine of growth for most poor countries. Unless countries
invest in health and education, people cannot take on the demands of todays
competitive workplace, and development cannot even start. And unless the official
development community works better with partners, both traditional and new,
many development opportunities will be wasted. Too much is at stake in all this. We
have to ensure that these themes suffuse the future of foreign assistanceall in the
national interest.
- Andrew S. Natsios, Administrator, USAID

Voeten, Erik (2000), Clashes in the

Organization, Vol. 54, No. 2, pp. 185-215.

Assembly,

in

International

In this study I demonstrated that the underlying structure of conflict in the post
Cold War UNGA is one-dimensional. The position of countries along this single
dimension is stable across time, issue area, and importance of issues. If global
politics has become multidimensional and alliances have become ad hoc and issue
based, this does not show up in the voting behavior of countries in the UNGA. This
finding rejects the dealignment hypothesis.
The analyses also revealed a surprising degree of stability in the voting patterns of
states. Much of the Cold War East-West conflict has carried over into the postCold
War period. The evidence contradicts the structuralist hypothesis that North-South
conflict has superseded East-West conflict. The results suggest that there is some
truth to the stability hypothesis that argues that besides the countries belonging to
the former Soviet bloc that are now aligning with the West, the behavioral voting
alignments have changed little since the end of the Cold War. Moreover there is
some indication that European countries have moved away somewhat from the
United States, another prediction of the stability hypothesis.
However, the stability hypothesis does not tell the whole story. Some things have
changed since the end of the Cold War. First, I found considerable evidence of an
emerging counterhegemonic voting bloc. Whereas the United States and its
Western allies occupy one pole of the main dimension of conflict, the other pole is

30

occupied by a group of rising powers (China and India) and some other countries
(for example, Iraq, Iran, Libya, and North Korea) that challenge the neoliberal world
order and have been involved in clashes with the West, particularly the United
States. The emergence of this bloc indicates that the positions of countries along
the first dimension are at least partly explained by their degree of opposition to U.S.
hegemony, as stated by the counterhegemonic hypothesis.
Second, the results indicate that the regime type of countries affects their voting
behavior. This effect occurs independently from the effect of the level of economic
development on state behavior. Moreover, states that have become more
democratic since 1989 have started to vote more with the West, even when I
exclude Eastern European countries from the analysis. However, the effect of
democracy on state behavior is not the same across issue areas. The evidence
supports the Kantian hypothesis that democracies tend to vote with each other on
issues concerning principles of political and economic liberalism. It is somewhat
inconclusive about whether regime type has any general influence on the voting
behavior of countries.
Third, the study clearly rejects the general claim that postCold War global conflict
is dominated by clashes of civilizations. However, I do find some evidence of
divisions between non-Western civilizations. Islamic countries separate from
African and Latin American countries on the less-important and less-stable second
dimension of conflict. Moreover, I find that in comparison to the Cold War period
Islamic countries have moved away from the West.
Identifying the position of countries in global conflict by their relative position on a
Westernnonwestern dimension is undoubtedly a simplification of global politics,
but it is a simplification that explains voting behavior in the postCold War UNGA
extremely well. The stability of the positions of countries along this dimension over
time, issue area, and issue importance is truly remarkable. A one-dimensional
explanation of global politics may not be as simple-minded as perhaps it first
appears. It incorporates the emergence of a counterhegemonic bloc and the
importance of levels of democracy and economic development as determinants of
state behavior. Moreover it captures some regional distinctions that are considered
important in world politics. Further research should investigate whether the relative
positions of countries on this Westernnon-Western continuum might accurately
predict clashes and cooperation outside the UNGA.

Voeten, Erik (2004), Resisting the Lonely Superpower: Responses of

States in the United Nations to U.S. Dominance, in The Journal of Politics,
Vol. 66, No. 3, pp. 729-754.
The preference gap between the United States and the rest of the world widened
considerably and at a constant rate between 1991 and 2001. The increase in the
gap is not a phenomenon limited to states from particular parts of the world, and
there is not much evidence that some states have chosen to bandwagon with the
United States. It appears that U.S. hegemony has elicited almost universal
resistance. One might interpret these results as evidence that the widening
preference gap is purely a structural phenomenon and thus largely unaffected by

30

apparent temporal variations in U.S. foreign policy. We should, however, consider

some caveats before settling on such a conclusion too confidently. For example, I
have only investigated the responses of states, not individual citizens. It may be
that the more important consequence of unilateralist policies is that it turns world
public opinion against the United States. This may have a lagged effect on the
behavior of states through increasing domestic pressures. It may also increase
support for nongovernmental activities targeted at the United States. Finally, the
shift towards more unilateralist policies in the mid-1990s appears to have had a
substantial impact on the agenda. States increasingly introduce resolutions to
denounce unilateralist U.S. policies and drop resolutions supportive of U.S.
purposes. This suggests a modification to the liberal-institutionalist perspective.
States may punish uncooperative behavior by introducing multilateral initiatives
that complicate Washingtons calculations, even though they do not adjust their
perceived interests to policy fluctuations. The rationale is that U.S. policies are
subject to change as new Administrations (or Congresses) are elected. Governments
that realize this have little reason to adjust their policy preferences in response to
policy fluctuations. By affecting the multilateral agenda they seek to affect policies
more directly.
Although the finding that states have negatively adjusted their preferences to U.S.
dominance is robust and applies to the vast majority of states, there is considerable
country-specific variation in the extent of the changes. The results support the
hypothesis that changes in the degree to which a state respects civil and political
liberties domestically explains shifts in foreign policy preferences. Thus, a purely
structural account of post-Cold War politics is inadequate. Just because this finding
is consistent with the liberal paradigm and the previous finding better fits a realist
framework does not imply that the two are logically inconsistent. States may well be
influenced in forming perceptions of their national interests both by structural
pressures and liberal concerns, which is exactly what the analysis suggests. On
balance, the common shift away from the United States appears to be the most
powerful force, which is mitigated only slightly by variation in domestic orientations.
Future research with longer time series as well as alternative data sources should
evaluate whether this main finding holds up. Finally, there remains considerable
variation that is left unexplained by the model, implying that other variables may
also help explain preference change. For example, future studies could test whether
replacement of leaders with specific ideological or religious beliefs leads to changes
in foreign policy preferences. It would also be useful to explore the use of
alternative data. For example, the current data does not allow us to track
movements in U.S. preferences as the U.S. votes consistently on the issues under
investigation.
Besides its substantive implications, the analysis also demonstrates the merit of the
multilevel IRT model. The integration of a measurement model with a structural
model demonstrably leads to different inferences than when different indicators of a
latent construct are combined using an arbitrary aggregation mechanism that
ignores measurement error and characteristics of the items (resolutions) under
consideration. The application of the IRT model to roll-call data is attractive because
of its identity with the main behavioral model of legislative behavior: the spatial
model. However, the IRT model can be used as a more general measurement model
for latent constructs (e.g., Jackman and Treier 2002). Given the prevalent use of
fallible manifest indicators to measure latent constructs such as democracy and

30

ideology, the multilevel IRT model holds great promise for applications in political
science.

Vreeland, James R. (2004), The International and Domestic Politics of IMF

Programs, paper prepared for the Reinventing Bretton Woods Committee
and World Economic Forum conference on The Funds Role in Emerging
Markets: Reassessing the Adequacy of its Resources and Lending
Facilities, Amsterdam, November 18-19, 2004.
The Influence of the United States
Protestors against the IMF are often surprised to learn that the United States only
controls about 17 percent of the votes at the IMF. This gives the US veto power over
certain important decisions that require an 85 percent majority, but it is a far cry
from majority control of the Fund. The IMF, however, does not operate according to
strict voting rules. Votes are rarely taken. Rather, the Managing Director, who
usually chairs the Executive Board meetings, takes action according to the sense of
the meeting. This may open the door for a member of the Executive Board who
represents small countries to influence the meeting with a carefully turned phrase,
but it also means that opposition to the US by smaller countries cannot be
expressed through block voting but must be voiced individually. Moreover, the
Managing Director has been reported to rarely act against the will of the US,
perhaps as is fitting, since the US has veto power over his appointment
(Lichtensztejn and Baer 1987, cited in Thacker 1999).
Scholars have therefore proposed that the US has the power to use the IMF for
political objectives. There are many anecdotes, but when dealing with only one
observation at a time, it is difficult to sort out economic explanations from political
explanations. Strom Thacker (1999) undertook the first systematic study of a large
body of evidence on the question of US influence at the IMF. To test whether the US
uses the IMF as a tool of foreign policy, he considered voting patterns at the United
Nations as a determinant of IMF programs. Thacker found that countries that voted
along similar lines as the US were more likely to receive an IMF program than
countries that did not. More specifically, countries that changed their voting
patterns so that they became more similar to the US preferences were more likely
to get an IMF conditioned loan, and countries that changed their voting against the
US were less likely to get a loan.
At first blush, it may seem strange to consider voting at the United Nations as
meaningful many votes are symbolic and most are not of great importance to the
US. But Thacker was careful to include in his study only those votes that the US
State Department had identified as key votes. These were votes that the US state
department had announced that it did care about.
By using statistical analysis of the experience of 87 countries (for a total of over 700
yearly observations), Thacker was able to control for other factors that determine
IMF participation. He did find evidence that economic factors play an important role.
But moving closer to the US in terms of voting on key issues at the United Nations
plays a significant role as well. His variable is a straightforward measure: the

30

change from one year to the next in the correlation between a developing countrys
the UN voting record and the US voting record on votes identified by the US State
Department as key where the US exerted explicit pressure on how to vote. The
variable predicts IMF participation well, even after one controls for economic
variables predicting participation. (I will employ this variable below in Section 5.)
Thacker concludes that the US uses IMF loans to reward countries that move
towards it and punish those that move away.
Since Thackers systematic study of US political influence over the IMF, others have
explored other ways of measuring and testing US influence. For example, Randall
Stone (2002) has looked at the connection between US foreign aid and IMF
punishment for non-compliance with the conditions attached to IMF loans. Stone
considers the amount of foreign aid that a country receives from the US to be a
proxy for how important the country is to the US. If the US can use the IMF to
pursue its political objectives, countries that receive favorable amounts of US
foreign aid are also likely to receive favorable treatment by the IMF.
Stone has undertaken two studies considering the effect of US foreign aid on IMF
program punishment intervals one on the Post-Communist countries of Eastern
Europe (2002) and one on Africa (forthcoming). Both studies confirm his hypothesis:
the more US foreign aid a country receives, the shorter the duration of punishment
for IMF programs that fall into non-compliance. In addition to the statistical studies,
which include data from many countries from Eastern Europe and Africa, Stone also
presents detailed case studies. For example, he shows that Russia, a country that
was considered to be of great strategic importance to the US after the fall of
Communism, received much lighter punishments for non-compliance than Poland,
which was considered to be of less importance to the US. Stone concludes,
Although the United States holds a minority of votes, it does indeed call the shots
at the IMF, as critics allege (2002: 62).
Note that, in addition to the political motivations, the US may also influence the IMF
to protect financial interests. Consider the findings of two unpublished studies by
Thomas Oatley and Jason Yackee (2000) and Lawrence Broz and Michael Hawes
(2004). Oatley and Yackee show that the amount of US bank exposure in a
developing country is a determinant of the size of the IMF loans the country
received. Broz and Hawes find that the total amount of US lending as a proportion of
a developing countrys GDP is a significant predictor of both the IMF agreement and
the size of the IMF loan. They take this as evidence of the influence of US banks
operating through US political channels. This point of view is different from the
arguments of Thacker and Stone. Rather than argue that the US uses the IMF to
reward friends, Broz and Hawes, as well as Oatley and Yackee, argue that the US
uses the IMF to protect US financial interests. This is a crucial difference with
respect to conditionality because, when financial interests motivate the US, there
may be an incentive to see policy conditions enforced.
Conclusion
The impact of politics on IMF arrangements has important implications about IMF
conditionality. In an IMF agreement with a country favored by the US, conditionality
may have no bite. Yet, in countries not particularly favored by the US conditionality
may help to push through important policies of economic reform. Stone (2002)

30

found in Eastern Europe that countries participating in IMF programs that were not
favored by the US thus, where the threat of punishment for noncompliance was
credible succeeded in curtailing inflation. IMF conditionality may be used in these
situations, however, to push through unpopular policy changes that favor one
constituency over another. Stiglitz contends:
There isa process of self-selection of reforms: the ruling elite has taken
advantage of the reform process and the asymmetries of information both
between themselves and the citizenry and between the international aid
community and themselves to push those reforms that would benefit them.
Partial compliance allows countries to avoid IMF punishment and to push through
policies to protect elite interests while shifting the burden of austerity to labor and
the poor. Systematic studies indicate that IMF programs typically exacerbate income
inequality (Pastor 1987, Garuda 2000, Vreeland 2002, 2003). Pastor (1987) found
that the single most consistent effect the IMF seems to have is the redistribution of
income away from workers (1987a: 89). His finding has been confirmed in more
recent studies with broader data and updated methods. Indeed, of all the areas
where the IMF may have an impact, income distribution appears to be the one area
where there is the most consensus in the literature on the effect of IMF programs.
Thus, we may imagine 4 sets of countries: (1) There are countries favored by the US
for political reasons conditionality has no bite. (2) There are countries not favored
by the US whose governments agree with the policies prescribed by the IMF and
face no opposition conditionality is not needed. (3) There are countries not favored
by the US whose governments use the IMF agreement to favor domestic elite
interests conditionality is abused. (4) There are countries not favored by the US
whose governments agree with conditions but face opposition conditionality helps
push through Pareto improving reforms.
Whether or not IMF conditionality is a good thing depends on how common situation
(4) is. Dollar and Svensson (2000) have argued that the IMF should specifically
target such situations. This might be a wise move, but it may be politically
unfeasible both at the international and domestic levels. At the international level,
how can the IMF resist the pressure to help US allies? At the domestic level, how can
the IMF know the true intentions of governments? Yet, unless IMF conditionality is
used for situation (4), conditions are useless at best and harmful at worst.
How common is it that IMF programs help to push through policies that are
unpopular in the short-run but have positive effects in the long-run? Judging by the
dearth of evidence of program success, this is probably not so common. So, perhaps
the IMF should scale back its operations, lending only during times of severe crisis
and providing policy advice without imposing conditions per se.
Yet, recall the argument of Gould. She finds that private financial institutions provide
supplemental financing to countries in crisis only provided that bank-friendly
conditions are included in IMF arrangements. Using the IMF to enforce developing
countries commitments of to repay loans may be Pareto enhancing. Without the
IMF, private financial institutions may be unwilling to loan to countries in crisis. With
the IMF, however, crisis countries who receive the loans and private financial
institutions who receive a credible commitment of repayment are both better off.

30

This suggests a scaling back of conditions to the level of debt repayment. This is
something with which the IMF has been quite successful. IMF loans, for example, are
almost always repaid. Governments would still have to make tough decisions about
how to cut back domestic consumption to repay loans, but they would do so on their
own terms.
Scaling back conditionality would have little impact where the IMF lends under
political pressures from the US because conditions have never been strictly
enforced in these situations. It would have a great impact on other countries,
particularly where governments have sought out IMF conditions to push through
unpopular policies. This would be a loss in the handful of cases where wellintentioned governments need IMF leverage to make policy changes that will help
the country in the long-run. But it would prevent other governments from misusing
IMF conditionality to push through policies that shift the burden of austerity on labor
and the poor in the name of the IMF.

Wade, Robert Hunter (2002), US Hegemony and the World Bank: The
Fight Over People and Ideas, in Review of International Political
Economy, Vol. 9, No. 2, pp. 215-243.
Conclusions
I began with the tension between the hegemonic states substantive need for
foreign policy levers, including multilateral organizations, on the one hand, and its
need to be seen to be acting with procedural appropriateness in multilateral
governance structures, on the other. Without the appearance of procedural
appropriateness hegemony would give way to domination, and by and large
hegemony is more efficient for the hegemon. But respect for procedures may mean
putting up with messages coming out of multilateral organizations that are not
consistent with the hegemons foreign policy objectives. Acting to make the
messages consistent with the hegemons foreign policy objectives may entail
procedurally inappropriate behaviour. This is the hegemons dilemma in multilateral
organizations.
The Banks autonomy and dependence
In the cases considered here the US Treasury intervened in order to prevent the
Bank or two highly visible people of the Bank from saying things that ran against
its own message about how other countries should develop. The Treasury was
clearly unhappy with Stiglitzs statements (as was the IMF). But it was not able to
fire him directly. It waited till it could use its (procedurally appropriate) veto over
Wolfensohns second term as the means of getting rid of him, by making
Wolfensohn (who had the authority to renew or not renew Stiglitz as chief
economist) agree to non-renewal as a covert condition of his own reappointment;
and later, provoked by Stiglitzs New Republic broadside, it ensured that Wolfensohn
fired him as his special advisor and removed him completely from the Bank. The
Treasury was also clearly unhappy with the January 2000 draft of the WDR.
Treasurys pressure on the draft and the presidents and managing directors

30

apparent acceptance of the Treasury critique was construed by Kanbur to be

sufficiently potent and inappropriate as to prompt him to resign.
On the other hand these cases show a more complicated situation than the US pulls
the lever and the Bank responds, as though the Bank were an arm of the US
government.
First, the US intervention was kept covert, and only known for sure to the parties
directly involved. By the standards of other US interventions in the Bank, these
cases were subtle and mild. Some of the Executive Directors (the representatives of
the member states on the board of directors) grumbled at the American role, but in
a spirit of the Americans up to their usual tricks. Some of the staff especially the
staff of the WDR thought the American intervention offensive and their senior
management weak, but then they did not really count. The most damage came
from the press reports, which played up the US role as inappropriate hence the
siege-like atmosphere in the meeting between External Affairs and the WDR team
as they considered how to explain Kanburs resignation in terms that did not involve
US pressure. By and large, though, US intervention worked well from the US
standpoint: it secured the objectives (Stiglitz fired, the WDR rebalanced) with a
sufficient gloss of procedurally appropriate behaviour over the covertly
inappropriate behavior that the procedural pillar of US hegemony was minimally
compromised.
Second, the cases also show the limits of US influence. The US had a lot to do with
the fact that Stiglitz had no chance of being renewed as chief economist, but
Stiglitzs chances were in any case low because of the disgruntlement of top
managers and many of his own staff, not all of it informed by ideology. Wolfensohn
then appointed him as a special advisor and gave him a key role in finding a
successor, which Treasury cannot have welcomed. Only after Stiglitz made a
flagrant attack on the IMF and the Treasury did both Treasury and IMF demand that
Wolfensohn fire him as special advisor and Wolfensohn obliged, even though by
then safely reappointed for a second term.
Kanburs appointment also indicates Bank independence, for he was guaranteed to
steer the WDR on poverty in a direction that the Treasury did not like. Kanbur
resigned as director of the WDR rather than revise the draft in line with Treasury
demands, but the effect was to embarrass the senior management into committing
itself to keep the core Civil Society messages intact precisely so that the Bank
would not be seen to be the Treasurys lackey.
On the other hand, the final version did add other core messages from the Finance
agenda, as the Treasury wanted, in the name of the WDR needing to be consistent
with the Banks central message about how to get development.
The net result of the conflicting norms for (a) the Bank to speak with a single voice,
and (b) the WDR to be independent, was substantial inconsistency or lack of
integration in the final version. But the inconsistencies and dis-integrations would
be noticed only by those who read the report carefully. The Finance agenda
messages came particularly in the parts that would be noticed by readers in a hurry
in the standalone summary, in the first chapters, and at the beginning and end of
the other chapters.

30

The Banks independence is also seen in the fact that Jeffrey Sachs was indeed
invited to the Banks Annual Conference on Development Economics over Summers
objections (though the posters advertising his presence were taken down in
response to Summers fulminations). And it is seen, ironically, in the fact that
Summers and the Treasury wanted the WDR to support the ILOs labour standards
about unions and collective bargaining, but the Bank could not bring itself to do so.
In this respect the Bank appeared more neo-liberal than the Treasury. 40
The central tension in the making of WDR2000 to what extent was it the work of a
group of independent researchers, to what extent was it the voice piece of the Bank
has run through all the WDRs. The Bank has never confronted the tension by
making an explicit statement of what the World Development Report is. In practice,
the content of each report emerges as a contest between the authors, thinking of
themselves as independent researchers, and senior management and External
Affairs, thinking of it as independent so long as it says what they want it to say. The
point is unwittingly clear in the Banks press statement about Kanburs resignation:
The World Bank is committed to both open debate and an internal process that
maintains the integrity of the WDR, in which the final product reflects the best
evidence and judgement of the staff, as well as the wide range of external
commentary. The report will in the end be a product of the World Bank approved by
its President and by incoming Chief Economist Nicholas Stern.
Ideological convergence
We have seen that the US Treasury does not always get the Bank to do what it
wants. Also, the Bank may do and say what the Treasury wants for reasons beyond
the fact that Treasury wants it. Both organizations, after all, are committed to the
same broad neo-liberal ideology and to the same notion of what constitutes good
technical economics research.
The Development Economics complex at the Bank defends its researchers right to
reach their own results as a matter of principle. But you do not get to be a Bank
research economist without having demonstrated your commitment to the
presumptions of neo-liberalism and to the analytical techniques of AngloAmerican
economics. Once there, you know that if you come up with pro-free-market findings
you can send off your paper to The Economist or present it at an IMF seminar
straight away without anybody else checking the results; whereas if you come up
with contrary results you will be required by your managers to check them out with
a panel of colleagues who may be asked to undertake independent replication while
the paper is kept under internal wraps. The differential response sends a message
to the researchers who are looking for cues as to how to come along and get along
in the Bank.
Not long after the Kanbur case a reporter rang up the acting chief economist to ask
him to explain why the Development Economics complex had two staff papers on its
web site which seemed to contradict each other on the link between growth and
poverty reduction. Instead of saying, We are a research center and we encourage
people to pursue research findings where ever they lead to, the acting chief
economist said, worried, that he would look into it. He called a meeting of his
managers and advisors, and told them that the Bank must not be seen to be
speaking in different voices. Given the vulnerability of the Bank to public criticism,

30

he said, we must be very careful [about, for example, what goes up on our web
site]. Much the same mechanisms of self-censorship are at work in the Treasury. The
result is strong overlap of views without the Treasury exerting direct influence.
Moreover, the longer term game between Treasury and the Bank pushes in the
same direction. Having been bruised by bad publicity around the Stiglitz affair and
the Kanbur affair, the Banks senior managers are likely to be more cautious about
offending the US in future interactions, because they know how offending the
Treasury in one context spills over into costs to the Bank in other contexts. As they
become more cautious about giving offence, US hegemony is that much less
challenged.
The antibodies work over the long term through both mechanisms senior
managers concerns to limit upsets with the Treasury, and researchers awareness
that pro-free-market findings are better received. Those who dispute the economic
policies of the Finance agenda such as those who challenge the Banks advocacy
of funded pension schemes whereby individuals contribute to a pension fund which
invests in securities, and they receive a pension linked to the performance of the
stock market are kept on the margins; those who advocate policies that fit the
liberal free market ideology described earlier have a better chance of reaching the
commanding heights.41
The benefits of US Treasury influence on WDR 2000
The question of how the US Treasury influences the Bank should be kept separate
from the question of whether its influence is substantively desirable. In the
immediate context of the WDR 2000 it can be argued that the WDR was indeed
improved by Treasury influence to the extent that the WDR ended up giving more
emphasis to economic growth and less emphasis to parts of the Civil Society
agenda. Let me explain.
First, developing countries have been experiencing a severe but little noticed longterm growth slowdown. Ever since 1960 average incomes in developing countries
have grown more slowly than OECD incomes in most years, and world income
inequality has widened. Indeed, the median rate of growth in developing countries
average incomes between 1980 and 1998 was 0.0 percent.42 The growth crisis
should be right at the forefront of the development debate, as also the steps that
OECD countries should take to moderate it, including lifting US union-sponsored
protectionism. But the swelling phallanx of mostly western-based NGOs is not likely
to place it there, because it has given little analytical attention to economic growth
in developing country conditions. 43
Second, there is not much evidence that economic growth and productivity are
raised by changes in decision-making which give greater power to local groups. The
empowerment movement assumes too readily that benevolent paternalism is
always wicked and that giving power to the poor will result in cooperative thriving
rather than looting as shamelessly as the other lot.
Third, the ascendancy of governance, participation and environmental protection in
the development agenda has tended to eclipse the centrality of the question, How
to increase real economic rates of return in agriculture, industry and services, and
how to bring scientific research to bear on this task? One sees the eclipse in the

30

World Banks Comprehensive Development Framework, which shifts attention from

growth towards non-income aspects of poverty and legitimates the Banks retreat
from hard-nosed technical subjects like industrial policy and irrigation investment
towards soft-nosed education, health, participation, legal reform and cultural
properties.44
While the Treasury role in getting the WDR2000 to give more weight to economic
growth was surely useful, this is not to endorse the Finance agenda that the
Treasury sought to impose. My own preference, it will be clear, is for a realsector/industrial policy/social democratic agenda. Moreover, one should relish the
irony in the Treasurys upset at the January drafts embrace of the Civil Society
agenda. For it was the US Treasury, above all, that as the Cold War wound down and
the USs need to use the Bank for geopolitical objectives faded, most pressed the
Bank to open itself to NGO influence not because it particularly liked NGOs or their
governance and environmental arguments but because it needed to build up credit
with them and with the Congress in order to get their support or acquiescence on
the things that really did matter to the Treasury, including free capital mobility.
The benefits of multilateralism
The specific case of the WDR 2000 aside, the Bank would be a better development
agency if the US both the US state and US NGOs had less control over it, if
people from other states, with knowledge of other (social democratic,
developmental state) forms of capitalism had more influence over what the Bank
says and does, causing the Bank to affirm a wider range of institutional ecologies.
We know from Japan and continental Europe that efficiency, catch-up, innovation
and well-being can be promoted not only by the market principle of
exit/switching/liquidity but also, in some spheres, by the organizational principle of
voice/commitment/capacity-building. In a social democratic ideology, free markets
in labour are constrained by the need to protect organizational loyalties,
corporations are managed with responsibilities to employees and other stakeholders
as well as shareholders, they are not bought and sold on the stock market, and the
public sector expresses the principle of mutual responsibility through public
supervision of health care, education and collective social insurance. 45 Certainly
social democratic systems are on the defensive at the start of the present century.
They are under question from segments of national elites (this being the USs return
on generous scholarship funding for foreign students in American graduate schools),
and under pressure from capital flows out of Europe. The US Treasury declares that
capital will continue to flow out and the Euro will continue to fall unless and until
Europe shows more commitment to overhauling its restrictive labour market and
generous welfare systems which are seen as a barrier to growth, in effect setting
liberal free market conditionalities on US cooperation on behalf of the Euro. 46 But
political economies with social democratic characteristics clearly can be effective
vehicles of late development. And the world economy would be less fragile if it
contained a broader range of capitalist forms. 47
One test of the Banks independence from US views would be the appointment of a
chief economist and associated staff who champion these arguments. However, the
only major way to moderate US hegemony over the Bank is to shift its headquarters
or some important headquarters functions out of the US. Constitutionally the
European states have the votes to do this. A World Bank with important staff and

30

headquarters functions in, say, Berlin or Paris or Ankara (but not London) might be
suffused by the more diverse European views of political economy. 48 And the Bank
might be split into separate companies under a holding company, like a Japanese
kairetsu, each company de.ned by a results area, each drawing help from others
but operating largely independently, and placed in different centres around the
world.
Short of that, the Europeans and the Japanese could organize themselves to steer
the Bank a bit more. The Nordics have already been doing so on the social aspects
of development by putting up millions of dollars in trust funds for Bank work in this
area an area where the US Treasury is happy to let them take the lead and pay the
cost, because peripheral to the interests of the US state but central to the
objectives of many US NGOs whom the Treasury needs to keep happy. The question
is when the Europeans and Japanese will exercise more leadership on the economic
policy issues where the US Treasury really does want the Bank as its instrument,
such as opening developing country capital markets; and when the representatives
of developing countries on the board of the Bank will concert their actions for a
change.

Wall, Howard J. (1995), The Allocation of Official Development

Assistance, in Journal of Policy Modeling, Vol. 17, No. 3, 307314.
This paper is an examination of the criteria by which foreign aid, or official
development assistance (ODA), flows from donor countries to recipients. I develop a
theoretical model based on donor optimization and apply it to the total net ODA
allocations of three periods: 197980, 198485, and 198889. The estimation
indicates that per capita income and population are correlated with per capita ODA
receipts, while infant mortality and political/civil rights are not. Also, the negative
correlation between ODA and per capita income rose significantly through the
1980s. []
The theoretical model developed performs reasonably well for the three periods
examined. In the allocation of ODA, per capita income appears to be the important
indicator of intercountry well-being; in 1988-89 the elasticity of ODA per capita with
respect to per capita GNP was .92. There is also a strong population bias; in 198889, between two countries, a 10-percent difference in population meant that the
larger country received, on average, a 6.5-percent lower level of ODA per person.
Even though the explanatory variables are essentially the same as those considered
in previous studies, it is difficult to compare the results to those of previous studies
because the present specification differs substantially from their ad hoc models. On
the basis of statistical significance and on the percentage variation in ODA per
capita explained by the models, when compared to the present study, they provide
weak support for the hypothesis that recipients well-being is important in the aidallocation process. However, they do indicate some evidence that per capita income
is negatively related to ODA supply. Also, Dowling and Heimenz (1985) and Mosley
(1987) find evidence of a population bias whereas Maizels and Nissanke (1984) does
not. None of these studies found infant mortality (nor its close relative the Physical

30

Quality of Life Index) to be statistically significant, and none of them has examined
the role of human rights.

Wang, T. Y. (1999), U.S. Foreign Aid and U.N. Voting: An Analysis of

Important Issues, International Studies Quarterly, Vol. 43, No. 1, pp. 199
210.
Contrary to the argument that foreign aid is an ineffective policy instrument in the
pursuit of Americas global influence, the current findings suggest that the U.S.
government has successfully utilized foreign aid programs to induce foreign policy
compliance in the UN on issues that are vital to Americas national interests. Such
policy compliance did not come as a result of how much aid a developing country
has already acquired from the U.S. but of Washingtons manipulation of the level of
foreign aid as a reward for political deference or a punishment for political defiance.
Although the UN voting pattern was only one of many factors influencing U.S.
foreign aid appropriations, Washington has spent considerable time during the past
decade trying to establish a linkage between aid allocations and UN voting
coincidence rates. The linkage policy established during the Reagan administration,
in conjunction with subsequent manipulation of aid allocations, has sent a strong
signal to recipient countries: vote in the UN according to U.S. positions or run the
risk of losing aid. Indeed, the repeated cutbacks in foreign aid in recent years may
actually have made the marginal utility of each remaining dollar higher and thus
would have made compliance even more likely. The prospect of suffering economic
sanctions for political defiance on issues that are considered vital by the U.S.
government may help to explain the association between U.S. aid and coincidence
rates of important voting in the UN.
This analysis also demonstrates that it is unreasonable to focus on voting
coincidence rates of all UN votes when the effectiveness of U.S. foreign aid
programs is assessed. Most UN resolutions simply are not important enough for the
U.S. to apply its precious resources influencing the outcomes. As previous quotes
from Keohane (1966) suggest, the costs of repeatedly exercising pressure would be
too high for marginal gains and would invite resentment and antagonism over the
long run. Empirical evidence, as demonstrated by low voting coincidence rates on
all UN resolutions, seems to suggest that leaders of recipient countries also
understand this logic. They tend to be more likely to submit their political deference
to American positions when issues are important to the U.S. government because
they know that Big Brother is watching.
Finally, the sense that domestic programs should come first during the post-Cold
War era is certainly prevalent in American society in recent years. Such a pervasive
sense places considerable limitations on the employment of foreign aid programs as
a policy instrument. However, while the break-up of the Soviet Union has indeed
changed the international power structure, it has not made the U.S. a hegemon
which can use its military might indiscriminately to demand political deference from
all other nations. Thus Congress, the president, and the American people need to
recognize that economic statecraft (Baldwin, 1985) is even more important in the
current international system. By skillfully manipulating the level of foreign aid, the
U.S. can effectively pursue its global influence in the post-Cold War era.

30

Watanabe, Yuko (2006), What Determines Bilateral Aid Distribution?

Evidence from Major Donors, Undergraduate Honors Paper, Department of
Economics and International Studies Program, University of Oregon.
The determinants of bilateral aid distribution differ greatly across donors. However,
it is clear that a donor countrys own interests play at least some role. U.S. aid
seems to be dictated by their global strategic concerns, which are fairly irrelevant to
the recipient countrys need or their own commercial interests. Emphasis on the
improvement of education and health conditions advocated by U.S. foreign policy
and USAID was not statistically significant. Japanese aid is largely determined by
colonial ties and preference for Asia. Despite the persistent criticism of Japans
prioritizing its own economic interests in aid-giving, trade volume does not affect
the distribution pattern significantly in the regression model. U.K. aid is generally
explained by colonial ties and political concerns, which is fairly consistent with the
previous researches [sic] and common perceptions of the development
practitioners. Canadian aid distribution is unique in a way that it is primarily
allocated based on the humanitarian needs of recipient countries rather than
Canadas own interests. This may be partially due to its lack of strong historical or
regional ties with developing nations.
Although the improvement of transparency of the government and human
development are strongly encouraged by major international organizations like
World Bank, such variables do not seem to have statistically significant impact on
bilateral aid allocation. Variables that directly relate to poverty reduction, such as
literacy rate, infant mortality rate, and income inequality were not popular
determinants as well. Bilateral aid distribution in general is dictated by donor
interests far more than the need of recipient countries. In order to maximize aid
effectiveness and create a favorable environment for developing countries to
reduce poverty and work toward the Millennium Development Goals, bilateral aid
should be used as genuine tool for growth rather just than another foreign policy
tool for developed countries.

Wedel, Janine R. (2005), US Foreign Aid and Foreign Policy: Building

Strong Relationships by Doing It Right!, in International Studies
Perspectives, Vol. 6, pp. 35-50.
Foreign aid policies cannot be more successful than their implementation, which
inherently involves people and institutions. But people have their own interests and
cultural frameworks, and institutions are inevitably grounded in culture and politics.
Inattention to the agendas of individuals involved on both sides of foreign aid to
Central and Eastern Europe played a major role in its shortcomings. A recent court
decision holding two Harvard university scholars guilty of defrauding the U.S.
government while running a flagship project to reform the Russian economy
underscores the pitfalls in outsourcing traditional functions of government to small,
well-connected groups that are not fully accountable in serving the public interest.
Drawing on the authors experience studying informal systems and networks over
several decades, this article illuminates the importance of foreign policy and aid

30

relationships how they are set up, who wins and who loses, and how their lack of
accountability can contribute to the derailment of nation-building and constructive
relations among countries.

White, Howard and McGillivray, Mark (1992), Descriptive Measures of the

Allocation of Development Aid, Institute of Social Studies Working Paper
No. 125, The Hague: Institute of Social Studies.
What do the indicators tell us about patterns of aid allocation? Because the
indicators do not agree with one another, no unambiguous story emerges. However,
some statements about relative donor performance and changes over time may be
made.
Some donors are fairly consistently among the top performers notably the
Scandinavian countries, the Netherlands and the UK. Others, especially the US,
Austria and New Zealand, are consistently among the poorest performers. The UKs
African links (meaning that it gives aid to a number of relatively small countries)
means that it does particularly well on measures that are based on aid per capita
for example ranking in the regression coefficient of per capita aid on per capita
income.
Figure 7 shows how performance has changed over time, as measured by three of
the indicators: McGillivrays Performance Index, the correlation coefficient (using aid
per capita) and Suits Index. All three are indexed with 1980=100. For the first of
these a downward movement is a deterioration in performance, whilst the reverse is
the case for the latter two. Based on a log linear regression, there is no significant
trend (at the 10% level) in either the correlation coefficient and Suits Index. Using
the MPI there has been a statistically significant worsening of performance over the
period show. All three indicators agree that performance took a dive in the second
half of the seventies (thought [sic] the timings do not coincide) and recovered into
the 1980s. The poor performance in the latter part of the 1970s is surprising, since
this is a time when donors were beginning to be more vocal about directing aid
towards the poor. It is possible that we are observing the lags involved for this
policy to make itself felt though the impact does not appear terribly great. The
greater attention that donors have begun to pay Africa should improve performance
(especially by those measure based on income per capita). But against this are a
number of factors that will put a downward pressure on allocative performance.
These are the continued and rising use of mixed credits, the use of aid for debt
relief and aid for Eastern Europe and the Soviet Union. Mixed credits (i.e. an aid
package being tied to non-concessional finance, the whole lot of which is
procurement tied) were introduced during the 1970s and, despite efforts by DAC,
have increased in importance ever since. The nature of such aid (relatively
sophisticated capital equipment) means that it has a built-in bias towards middleincome countries. The debt burden is, in volume terms, concentrated in middle
income countries. This will create a tendency for aid as debt relief to have a bias
towards these countries. (This need not necessarily be so, if such aid is given
disproportionately to low income countries). Finally, growing assistance to Eastern
Europe and the Soviet Union will, despite the claims of some donors, almost

30

inevitably eat away at developing country receipts. The German government has
already explicitly stated that this is the case.
Not only has donor allocative performance not improved over the last two decades
(it may even have deteriorated) there are worrying signs that things may go from
bad to worse. Discussion of the appropriate measure of aid impact will help draw
attention to this issue. But we already have the evidence to made [sic] aid
allocation a matter of concern one that may possibly be taken up by pressure
groups active in development issues.

Windsor, Jennifer (2008), Mainstreaming Democracy and Governance in

Foreign Assistance, in Picard, Louis A., Groelsema, Robert and Buss,
Terry F. (eds.), Foreign Aid and Foreign Policy: Lessons for the Next Half
Century, pp. 414-424, New York: M. E. Sharpe, Inc.
Debates about the relationship between democracy and development have evolved
considerably since the 1950s. Although the East Asian model exemplified by China
still continues to hold allure for some, a consensus has increasingly emerged that
democratic regimes are likely to produce the governance outcomes that are
necessary for sustained, successful development.
The evolution of U.S. aid policy since 1990 has reflected that debate, and
successive administrations Democrat and Republican have taken steps to
integrate democracy into their development approaches. USAID has been at the
forefront of aid efforts, but under the George W. Bush administration, establishment
of the new Millennium Challenge Account was a significant policy development. The
issue is whether and how linkages between democracy and development will be
impacted by the fate of USAID, which in 2006 seemed increasingly in jeopardy.

Winpenny, James T. (1991), Efficiency and Effectiveness in the Overseas

Development Administration, in Bose, Anurdha and Burnell, Peter (eds.)
(1991), Britains Overseas Aid Since 1979: Between Idealism and SelfInterest, pp. 97-124, Manchester: Manchester University Press.
The concepts of efficiency and effective cannot be applied without any pretence at
science to the work of a government department with such a complicated mission
as the ODAs.
In judging its effectiveness one needs to be aware of the ambiguity of the ODAs
objectives. The problem cannot be reduced to the usual form of maximizing an
objective function subject to constraints, since there would be disagreement over
what the objectives and constraints were, and over the measures of attainment.
This chapter has argued that in the 1980s the purposes of aid became even more
complicated than before, while new constraints appeared on the ODAs operations.
Efficiency is an equally nebulous concept to apply to the ODAs operations. The
ODAs work is unlike that of any other UK government department, and it is

30

dissimilar in important respects from that of other overseas aid agencies. Although
the ODA, in consort with the rest of the international community, has sought to
apply performance criteria to its developing country clients, the application of
analogous criteria to its own operations is still an elusive goal. In either case,
judgment, informed by an awareness of the events outlined in this chapter, is
indispensable.

Wittkopf, Eugene R. (1973), Foreign Aid and United Nations Votes, in

American Political Science Review, Vol. 67, No. 3, pp. 868-888, American
Political Science Association.
A striking feature of the analysis is that the hypothesized association between aid
and votes was found to hold only for the United States, and only in that portion of
the analysis using deviations from idealized norms as the operational measures of
aid allocations and voting agreements. Although positive associations were
discerned for other donors as well, such as the Soviet bloc in 1964, for no aid donor
other than the U.S. was the association found to be consistently strong over time. In
some respects, then, the results support Keohanes observation that the use of
extra-parliamentary instruments of influence in the United Nations is confined
almost exclusively to the United States and the Soviet Union. 58 This appears to be
the case even though for other donor countries (notably Britain and France vis--vis
their former colonies) foreign aid is clearly part of a general dependency
relationship between developed and developing nations. Apparently, then, the
voting behavior of developing nations is largely irrelevant to the concerns of most
foreign aid donors.
Even in the relationship between aid allocations and voting behavior observed for
the United States, it is unclear which of the two variables should be considered a
cause and which a consequence. With the possible exception of the analyses of
Soviet bloc aid commitments, most of the results based on a lagged relationship
between the variables examined have failed to point toward significantly different
relationships between aid and votes within either of the two three-year periods
analyzed.
Certainly the association between aid and votes is sufficiently strong in the case of
the United States to warrant further research into the exact nature of the causal
nexus if, indeed, it exists at all. As suggested above, multivariate analysis would
be a logical next step. Alternatively, longitudinal rather than cross-national analysis
of some selected subset of developing nations might be pursued. Or one might
attempt to measure the perceptions that UN participants have of the use of aid as
influence. Whatever the particular strategy pursued, from the viewpoint of the
student of international organization the results for the United States do suggest
that continued examination of the extraorganizational links between UN members
may prove useful in describing and explaining the outcomes of the political
processes in the United Nations.
A word of caution is in order, however. Although the results do show a statistically
significant positive association, neither 10 per cent nor even 25 per cent covariation
is sufficiently large to lead one to believe that extraorganizational links alone will

30

suffice to explain organizational politics. Indeed, another researcher viewing these

results may find here a case for directing greater attention to intraorganizational
processes and influence patterns in an effort to explain political outcomes. 59 There is
merit in this position.
Similarly, the foreign policy analyst could interpret the results for the United States
as suggesting the need for continued examination of the impact of external
variables on foreign policy outputs, for both developed and developing nations.
When we move beyond the United States, however, the results also suggest that
external variables at least insofar as they are tapped in this study may well be
insufficient explanations of foreign policy behavior; that we may have to examine
role, governmental, and societal variables60 as well in order to explain foreign policy
outcomes.
Should there be a relationship between foreign aid and United Nations votes? A dual
interpretation of the findings can also be made by those interested in this normative
question. Those who prefer that appreciation for foreign aid be reflected in the
United Nations will find little solace in the generally moderate levels of association
between aid and votes. Conversely, those who subscribe to the opposite view may
well find discomfort in the fact that there is any association whatsoever between
the variables, particularly considering that the association appears to be confined
almost exclusively to the United States. Which perspective is adopted probably
depends on ones view of the role of foreign aid as an instrument of influence and
the role of the United Nations as an instrument of conflict management and
resolution. One perspective is represented by Kaplan's normative position that
the United States should not seek to starve a poor country into support for its
foreign policy. An incentive system cannot operate in the case of every vote in the
United Nations or every meeting of developing nations. 61 The other perspective is
represented by Westwood: It seems likely that one of the major questions for the
future is whether aid should not be included within the broad process of give and
take on concrete issues which produces cooperation among mature, independent,
and equal nations."62

Wood, Bernard (1982), Canada and Third World Development: Testing

Mutual Interests, in Cassen, Robert, Jolly, Richard, Sewell, John, and
Wood, Robert (eds.) Rich Country Interests and Third World Development,
pp. 94-127, London: Croom Helm.
More than most of the industrialized nations, Canada is visibly torn between its
interests in the global status quo and in a basic re-ordering of the international
economic system. Even the countrys international identity has sometimes seemed
to be at issue in the major North- South debates of recent years.
Because Canadas own economy remains heavily resource-based and is dominated
by foreign investment and imported technology to a greater degree than other
industrialized states, there are special temptations to assume an identity of interest
with some of the Third Worlds demands for a New International Economic Order. On
the other hand, the cultural and ideological permeation which has accompanied
Canadas economic linkages and defence alliances (particularly with the United

30

States), means that Canadian attitudes and perceived interests internationally are
often too-readily identified with those of the dominant Western industrial powers.
With these dual dangers of the over-simplification and misperception of Canadian
interests, remarkably little serious analysis has been carried out, even within limited
areas of North-South relations (such as international commodity trade, the
surveillance and direction of transnational business activity, or the relationship
between development aid and trade promotion). Even more apparent, and a
reflection of some of the gaps in domestic policies, is the absence of
comprehensive, integrative strategies of Canada-Third World relations. None the
less, the heightened debate on issues such as de-industrialization in Canada 1, the
need for national industrial strategies and Third World competition in both
manufactured goods and resource sectors, now provide an environment in which
more comprehensive perspectives may be able to take root.
However, under conditions of chronic economic slack and demoralization (combined
with unprecedented centrifugal pressures from the increasingly aggressive
provincial governments), Canadas mutual interests with developing countries are
defined and pursued in some extraordinary ways. In longer-term assessment of
Canadas international and global interests, it is especially important to take into
account the diverse, and sometimes surprisingly narrow, approaches to mutual
interests which may be taken by different Canadian spokesmen. In particular, it is
essential to view these mutual interests in a much wider context than that of the aid
relationship which, for Canada, is frequently still the most direct and visible link.
In late 1977 it was the Presidents committee of the Canadian International
Development Agency (CIDA) that listed the pursuit of mutual benefits as the first
strategic guideline CIDA officers. The President amplified in the following terms, on
this adaptation of the Canadian aid strategy:
The recent evolution of the Canadian economy as well as its short and medium
term prospects require that CIDA strive to ensure that its activities maintain or
generate employment and economic benefits in our own country. We must also
aim at strengthening mutually beneficial bilateral relationships between our
developing partners and Canada. This goal must be achieved while not
neglecting our essential mandate which is international development. 2
In cognisance of the intense pressures reflected in this kind of statement (and their
potential impact on Canadian perceptions of mutual interests with developing
countries), it is important to establish more clearly where Canadian interests lie.
By most of the usual indices, Canada must be considered to be among the richest
and most highly-developed of nations.3 It is noteworthy that in recent years Canada
has joined the Western Summit powers but, like Italy, falls just outside their inner
circle. Canada is the next most important Western actor to be considered when the
United States, the European Economic Community (acting as a unit) and Japan have
set their directions. In a forum such as the Multilateral Trade Negotiations, Canadas
position can be important, particularly as it influences the balance among giants
(Canada is still the largest trading partner of the US). On the other hand, the
Canadian impact apparently can safely be ignored in setting Western policies for an
OECD steel cartel.

30

While Canadas freedom of action has always been shaped, for good or ill, by
continental realities,4 Canadas breadth of vision has sometimes not only been
unconstrained, but even somehow bolstered by the overwhelming US presence.
John W. Holmes has traced the ways in which Canada has maintained a vigorous
commitment to multilateralism and collective internation action, true to Lester
Pearsopns view:
as a Canadian that our foreign policy must not be timid or fearful of
commitments but activist in accepting international responsibilities To me,
nationalism and internationalism were two sides of the same coin. 5
Others, however, have seen a waning of Canadas prudential internationalism from
the disproportionately energetic Canadian response to community interests in the
post-war period. One seasoned American observer has commented that:
Canadian diplomacy in recent years has in fact reflected a rather narrow
conception of Canadas problems and interests. In multi-national meetings,
Canada has been less and less likely to propose general solutions or to act as a
middleman. Instead, when multi-lateral proposals were made by one of the big
three or by international secretariats, Canada would seek to differentiate itself
and to seek exceptional treatment or inclusion of a Canadian reservations. 6
In some areas, however, and for a variety of reasons, multilateralism remains a
constant in Canadas external action and promotes interaction with other countries
(many in the Third World) whose size and vulnerability incline them too to seek
safety in numbers and in a diversity of international links and contacts.
This multilateralizing imperative has found tangible expression in Canadian
support for international trade and monetary regimes, UN peace-keeping activity,
multilateral development programmes; NATO membership and the search of a
Contractual Link, with the European Community and in leading participation in
both the Commonwealth and la Francophonie. Canadian commitment in several of
these fields promotes specific contact and sometimes commonality of interests with
Third World countries. Canada has come to see the Commonwealth and
Francophonie associations, in particular, as invaluable linkages, cross-cutting the
North-South divide. Thus it was at the Commonwealth Heads of Government
meeting in Jamaica in 1975 that the Canadian Prime Minister sharpened his
governments perception of the demands of the New International Economic Order
and undertook a firm moral commitment to try to accommodate them. Although the
government machinery failed to follow up this top-level commitment adequately,
the theme remained close to the centre of Canadian foreign policy statements, at
least until the disillusioning 1977 outcome of the Conference on International
Economic Cooperation with Canada, as co-Chairman, had worked at the thankless
task of trying to achieve some bridging of North-South differences.
Although Canada lacks the colonial or other long-standing Third World links of other
industrialized countries, Canadian relations with the Third World have grown to
substantial proportions even beside Canadas much closer overall relationships with
other Northern countries. In 1977, the Third World (including oil-exporting countries)
accounted for nearly nine per cent of total Canadian exports and over 11 per cent of
imports, while 23 per cent of the stock of Canadian-based foreign direct investment

30

was found in Third World countries at the end of 1975. By one significant noneconomic yardstick, that of immigration to Canada, Canada clearly had established
closer Third World connections. By 1977 Third World arrivals (at 48 per cent) almost
equalled those from traditional European sources and the United States.
Canadian perceptions of the Third World and the relationship, however, have been
slow to change since the initial impetus given by the creation of the Colombo Plan in
1950 to assist new-independent nations of Asia. Throughout the 1950s,
development assistance continued to be the focal point of interaction; the Colombo
Plan led to similar efforts for the Commonwealth Caribbean) one region of longstanding links) in 1958 and for Commonwealth Africa in 1960, the same year that
an External Aid Office, to be responsible for the Assistance programme, was
established within the Department of External Affairs.
Canadas basic outlook towards the Third World during the 1960s followed the
pattern established in the previous decade. New regions were included within the
development assistance programme Francophone Africa in 1961 and Latin
America in 1964 through the Inter-American Development Bank, and in 1970 on a
country-to-country basis. As a reflection of an increased emphasis on development
assistance, a new structure, the Canadian International Development Agency was
created to administer the programme. The 1969 Pearson Commission report,
Partners in Development, aroused special interest in Canada because of the
chairmanship of former Canadian Prime Minister Lester Pearson, but its stress on
non-aid measures to promote development failed to make much impact. The aid
stereotype built up during the 1950s continued to predominate, and even the
strengthening of the Group of 77 after UNCTAD I and the enunciation of demands
that would eventually evolve into the call for a new international economic order,
failed to shift public or official perception in any decisive way.
In 1970, the beginning of a new Development Decade and the expectations held
fro the still-new Trudeau Government gave hope to some of the most interested
Canadians of a promising new era in Third World-Canada relations. As a result of the
foreign policy review initiated in 1968, the Governments Foreign Policy for
Canadians was published in 1970. It noted the trade and investment opportunities
in the Third World, pinpointed some of the hard choices to be faced in seeking
social justice for developing nations, and recognized that the progress of the
developing countries can be affected through every aspect of their relationship with
the more-developed countries.7 This foreign policy review explicitly anticipated the
eventual pressure for structural changes in the world economy without, however,
presenting any accompanying indications of a positive Canadian response to this
pressure. The review also ratified the compartmentalization of the non-aid
relationships affecting developing counties outside any integrated developed
assistance approach. For example, the discussion of international development
policy tacitly dismissed these other issues, such as trade investment and monetary
relations, as those whose primary consideration lie outside the Canadian
development assistance program.8
In the course of the 1970s the basic Canadian approach to the Third World
continued to exhibit similar characteristics. The rhetorical response from Canadian
officials to the NIEO demands formulated at the Sixth Special Session of the UN
General Assembly has often been eloquent and supportive. An excerpt from Prime

30

Minister Trudeaus speech at the Mansion House in London in March 1975 perhaps
best exemplifies this:
The demands of developing countries have been carefully formulated and
powerfully articulated. They reflect a sense of frustration and anger. Those
countries seek no piecemeal adjustments but a comprehensive restructuring of
all the components fiscal, monetary, trade, transport and investment. The
response of the industrialized countries can be no less well-prepared and no
less comprehensive in scope. But we should be very wrong, and doing
ourselves and our children a great disservice, if we regarded this process as an
adversary one. We should be foolish as well, for solutions are not beyond our
reach.9
With kind of declaration, Mr Trudeau gave recognition to a profound long-term
mutuality of interests, long before the theme of interdependence became common
international parlance. Even in its own principal foreign policy guidelines, however,
his government continued to find it impossible to translate such wide vision into an
integrated approach to North-South relations. The gap between rhetoric and policy,
let alone practice, was strongly evident in the governments five-year strategy
Strategy for International Development Cooperation released in 1975.10 While the
documents first section, Analysis, looked towards new relationships with the
Third World and the role of non-aid policies in development, the operative section
of policies was directed almost exclusively to aid issues. As will become apparent
below, subsequent measures have also fallen far short of achieving the
comprehensive and organic approach to development promised in the Strategy.
Consistent with this continuing aid-fixation in Canadian policy, it is only in the area
of development assistance that Canadas record in North-South relations has been
notably forthcoming.11 At least until the later years of the 1970s, the government
was making steady efforts to move towards the international aid-volume target of
0.7 per cent of GNP and was firmly committed to putting priority on aid to the
poorest countries. Even in the assistance field, however, Canada has remained
particularly unresponsive to the need for untying aid procurement, resisting even
the limited proposals to open up aid contracts for developing-country-bidding. One
Canadian initiative, however, which went beyond conventional aid measures on one
important frond, and placed Canada among the most responsive donors, was the
1977 decision to write off aid-related debts owed to the CIDA by some of the
poorest debtor-countries.
However, in relation to providing access to the Canadian market for manufactured
and processed goods from the Third World, the Canadian record is far from one of
leadership. While Canada protects the traditional market share of suppliers such as
the United States, Third World imports have been heavily restricted, in spite of
obligations under the GATT and the Multi-Fibre Arrangement. Canada was, like the
United States, tardy in its introduction of the Generalized System of Preferences and
failed to give any evident priority to Third World interests in Multilateral Trade
Negotiations.
In the area of commodity trade, it is even more difficult to explain, the ways in
which Canadian interests appear to have been defined and pursued. While there
was early and lively interest, at the highest levels of the Canadian government, in
the Integrated Program for Commodities and the Common Fund, Canadian

30

negotiators have sometimes been among the hardest-line OECD bargainers on

these issues. Canadian resistance here has consistently been explained in the root
opposition to interventionism and to cartels and producer-only agreements in
international commodity markets. Yet there was apparently official encouragement
for Canadian participation in a uranium cartel in recent years, and some legislators
appeared receptive at one point to going beyond present consultative arrangements
to the possibility of establishing a wheat producers cartel.
To provide a basis for assessing Canadas interests in Third World development in
the 1980s and beyond, it is important to try to understand the domestic background
to this past performance and then to analyze several aspects of Third World-Canada
relations in greater depth. []
Even in this brief review of some of Canadian interests involved in Third World
relationships reveals a striking range of possibilities. The evidence does not support
the most simplistic assertions that Canada may have a generalized identity of
interests with Third World countries, but it also demands a re-examination of the
prevalent assumption that Canada fits comfortably into another group of nations
whose interests lie in resistance to many Third World demands. Even more than
most OECD countries, Canada has solid reasons to abandon the view of North-South
dialogue as a zero-sum game to be handled through a strategy of obduracy and
frugal philanthropy.
Aid, indeed, can be seen to be a relatively small part of the total Canadian
response to the Third World, but a critical one in its reflection of the seriousness and
clarity of Canadian purpose. It also tests, under adverse economic conditions, the
capacity to act strategically with decency, rather than merely to capitalize on every
tactical advantage.
There is competition, to be sure, between certain Canadian and Third World
interests and, interestingly, even some of the competitive elements make Canada
quite distinctive. In grouping towards a satisfactory modus vivendi with the
transnational corporation, or in attempting to secure a minimum of order in
international commodity markets, Canadas perspective must be similar to that of
some Third World countries, and on some points they will be formidable competitors
to be reckoned with. The competitive potential of developing countries in
manufactured trade has begun to have a profound impact in Canada, but the
opportunities for expanded Canadian exports to these buoyant markets have not
yet been properly recognized. With both imports and exports, the new impact of
Third World helps expose fundamental changes required in the Canadian economy
itself some of them long overdue and strikingly consistent with the emerging
regional and sectoral opportunities for Canadian industrial strategy.
The complexity of some of these relationships, however, and the imperfect and
cumbersome machinery for identifying and pursuing Canadian national interests,
dictates a long process of analysis, debate, bargaining and adjustment within the
Canadian community. On the strength of the analysis here, there is clear Canadian
interest in moving urgently, before the costs of change rise higher and opportunities
slip away. There is also still a Canadian state in moving co-operatively, through
multilateral action where possible, since the traditional Canadian commitment to
collective international response is as firmly rooted as ever in the Canadian interest.

30

Woods, Ngaire (2005), The Shifting Politics

International Affairs, Vol. 81, No. 2, pp. 393-411.

of

Foreign

Aid,

in

Development assistance which prioritizes the achievement of human development

goals is at risk. A rapid increase in aid has been channelled to meet new security
imperatives. But with acute budgetary pressures besetting Japan, France, Germany
and the United States (among others), it is virtually a fiscal certainty that much of
the new aid flow (generated largely to fund the war on terror, as defined by the
United States) will dry up. Development agencies, with their more stable budgets,
will then be urged to give priority to the development needs of countries at the front
line of the war on terror.
Paradoxically, previously rational efforts to enhance coordination and coherence
among donors may now in some instances be counterproductive. The case of the
EU highlights the possibility that while greater European coordination and
coherence could in theory direct very significant aid flows towards the shared
commitments of the Millennium Development Goals, in practice, current institutional
shifts and political pressures suggest that the common European agenda will
instead be driven by foreign policy concerns. This is but one case where, in the
name of coherence, a greater diversion of aid flows for geostrategic purposes may
take place, and increased coordination would magnify that effect. This is the global
security scenario for foreign aid.
An alternative scenario is one in which development agencies continue to prioritize
human development and the achievement of the Millennium Development Goals,
which include human security, leaving to other agencies preoccupations with
counterterrorism and WMD. Rather than attempting greater coordination and
coherence of foreign, aid and security policies in general, this scenario calls for a
better differentiation and allocation of goals at the global level. This would require a
commitment by donors to use existing multilateral institutions rather than
perpetuate the erosion of multilateralism evident at present in increasing bilateral
aid budgets. It would also require some protection within donor governments of the
development assistance remit, to prevent a return to the Cold War patterns of
almost purely geostrategically led aid which so obstructed rather than facilitated
human development.
The development-led scenario requires two further things from donors. First, they
must rationalize the demands they place on recipient governments. A recent study
by major donors details the duplication and gaps left by donors imposing a plethora
of different financial audits on recipients. Most damning it concludes that although
the World Bank and IMF would continue to take the lead in conducting most
assessments of public expenditure management, all other parties should have
access to information and the views of governments (and other local stakeholders)
should be taken into account. 41 That finding highlights the extent to which donor
efforts have increased auditing of their own loans, but failed to build capacity and
accountability in public finances within recipient countries. The wider aid picture
reveals a multiplicity of donors not only failing to strengthen governmental
processes within countries, but probably even hindering their development. Amid a
growing cacophony of donors, very little space is left for local agencies to build,

30

coordinate among themselves and strengthen local governance. Scarce resources

are used up strengthening and maintaining external relations with donors and
undertaking externally demanded actions, some of which are contradictory. The
problem is likely to increase as the number of goals and institutions involved in
development assistance increases. At the very least what is needed here is a very
focused form of coordination among groups of donorssuch as shared, streamlined
reporting requirementsso as to lessen diversion of local resources to managing
donors.
A second area where better coordination within the development assistance
community is sorely needed concerns the timescale and predictability of aid flows.
Donors need to join together in providing a long-term financial compact between
themselves and recipients. Volatile or unpredictable aid flows do little to bolster
good governance, coherent government expenditure planning, or the development
of sound institutions of accountability in recipient countries. Yet aid is proving to be
even more volatile than fiscal revenues in most developing countries, 42 in spite of
the evidence that shortfalls in aid produce poor policies. 43 The new security-driven
aid flows are already proving to be volatile and short-term. But in other sectors as
well where new resources are being promisedsuch as the global fight against
HIV/AIDSthere is little guarantee that new flows will be sustained in the long term,
or that the multiplicity of donor institutions which are supposed to disburse the
assistance will not change priorities. What is needed is specific donor coordination
with a view to committing long-term, predictable flows of resources.
Finally, a development-led foreign aid system kept separate from global security
concerns needs to be part of an overarching mechanism which holds international
agencies and governments to account for a range of shared international goals,
including the downstream effects of security on development goals and vice versa.
Such a mechanism might be led by the G8, or by a wider grouping such as the
Leaders-20 group favoured by Canadas prime minister. It will become all the more
crucial as the international development architecture begins to straddle a greater
mixture of security and development goals.
The international development community has not yet been swept up into the war
on terror, but it stands on the threshold. The international development architecture
is already being transformed. Donor governments must act quickly to ensure that
their development aid mission to deliver effective aid and to meet specific human
development goalseven as they pursue other goalsstays at the forefront of the
emerging aid regime.

Woods, Ngaire (2008), Whose Aid? Whose Influence? China, Emerging

Donors and the Silent Revolution in Development Assistance, in
International Affairs, Vol. 84, No. 6, pp. 1205-1221.
A silent revolution is taking place in the development assistance regime. This article
has argued that the development assistance offered by established donors has
become less generous and less attractive (on its own terms), while emerging
donors aid has become more generous and more attractive. Since the 1980s most
established donor aid has failed to address developing countries demand for aid

30

and investment which expands the productive parts of poor countries economies.
Recent trends seem only to have increased donor deafness to this call. Furthermore,
where changes in conditionality have been promised, donors seem to have been
unable to confer promised degrees of ownership on aid-receiving countries.
By contrast, emerging donors robustly defend sovereignty and non-intrusion in the
politics of recipients of their aidalthough in several cases there is a geopolitical
conditionality that accompanies their assistance, such as requiring support for an
emerging donors foreign policy. The emerging donors offer aid amid trade and
investment and against a background of flourishing growth within their own
economies. Alongside their aid they offer technology, advice and professional
assistance that many aid-receiving countries find more useful and more appropriate
to their needs than that offered by established donors. It is no surprise, then, that
emerging donors are stepping into relations with the development partners of
established donors.
This is a silent revolution because emerging donors are not overtly attempting to
overturn rules or replace them. Rather, by quietly offering alternatives to aidreceiving countries, they are introducing competitive pressures into the existing
system. They are weakening the bargaining position of western donors in respect of
aid-receiving countrieswith a mixture of implications. On the one hand, the
competition exposes standards that are either out of date or ineffectual. It also
highlights the extent to which some donor standards are more about aspirations
than reality. While DAC donors have agreed to meet standards to facilitate
coordination among themselves, they have said much more than they have done.
On untying aid (from the requirement that it must be spent in the donors own
economy), as the head of the DAC notes, not all DAC donors have made requisite
progress, while some non-DAC donors (such as Middle Eastern funds) already meet
the benchmarks.67 Better standards of donorship are important but still very much
in their infancy.
The silent revolution is unlikely to be manageable from within the existing
multilateral development assistance regime. While some hold up increased donor
coordination as part of a solution, this seems unlikely. Established donors are finding
coordination among themselves very challenging. Multilateralism in the
international development assistance regime is weakening; and there are very few
incentives in the existing governance structure of multilateralism to give emerging
donors an incentive to engage.

Wright, Joseph and Winters, Matthew (2010), The Politics of Effective

Foreign Aid, in Annual Review of Political Sceince, Vol. 13, pp. 61-80.
Since Burnside & Dollar (2000) opened the aid/growth floodgate a decade ago, we
have seen a profusion of cross-country regression analysis trying to determine what
effect, if any, foreign aid has on economic growth. In this vast literature, scholars
have changed model specifications, first-stage instruments, treatments of outliers,
lag structures, definitions of aid, interaction terms, and more in attempts to find a
robust link between aid and growth. In this article, we have emphasized that, for all

30

that has been done already, much works remains, especially in explicitly
recognizing how politics enters into the aid/growth relationship.
First, we pointed out that international politics affects aid allocation as well as the
credibility of aid conditions. In looking for a relationship between aid and growth, we
need to be attentive to whether or not international politics constrains how aid
money can be used and whether or not a recipient government thinks future aid
money will be forthcoming.
Second, we discussed the ways in which governments might use an influx of
revenue, depending on the political institutions that exist. From studying the politics
of redistribution and the politics of rent-seeking, political scientists have a
comparative advantage in analyzing the causal pathways through which aid might
lead (or not) to capital investment, economic reform, and ultimately economic
growth. We have stressed throughout this article that many studies in the
aid/growth literature have come up short in specifying exactly how aid could lead to
growth. Future research must pay more attention to what happens to the money
once it enters a countrys national budget. This becomes more pressing if aid
agencies do not even know where their aid money goes, much less how it is spent
(Ravishankar et al. 2009).
Some scholars have thought a lot about how aid affects the governing institutions
and politics of recipient countries. This work is and will continue to be a crucial part
of studying aid and growth. Foreign aid is not only exogenously affected by political
institutions but alsoparticularly in countries with a sizeable aid-to-GDP ratio
endogenously determines the form of those institutions.

Younas, Javed (2008), Motivation for Bilateral Aid Allocation: Altruism or

Trade Benefits, in European Journal of Political Economy, Vol. 24, No. 3,
pp. 661674, Elsevier.
This paper argues that bilateral aid from developed OECD countries is
disproportionately allocated to recipient nations who have a greater tendency to
import goods in which donor nations have a comparative advantage in production.
We first develop a theoretical model to derive simultaneous optimization decisions
of donors. To verify the predictions in the theoretical model, we empirically estimate
the determinants of aid allocation by simultaneously controlling for altruistic and
self-interest motives of donors. This approach aims to correct the ad hoc
econometric treatment and to appropriately assess the determinants of aid
allocation.
The empirical results largely confirm the theoretical predictions in our model. The
estimations indicate that a substantially larger amount of bilateral aid per capita is
provided to the recipients who import capital goods, while imports by other
individual category groups have no significant effects. Given that developed donor
nations are major producers and exporters of capital goods, this result at least
partially supports their trade benefits motive. On the other hand, aid may also be
given as a reward to the recipient nations for promoting imports of capital goods
and removing trade restrictions. The recipient nations also gain because greater

30

imports of machinery and transportation equipment help increasing their production

(and subsequently consumption), and in turn, they receive more aid. On the flip
side, poor countries lacking resources, both private and public, to import capital
goods get penalized in two ways: First, their production capacity remains low
without importing those goods and, second, they receive a lower amount of aid.
Our findings also suggest that donors are more concerned about alleviating physical
miseries (infant mortality) and rewarding good human rights conditions, but they
are less focused on reducing economic hardships (low income per capita). This
implies that residents of the recipient nations with bad human rights conditions
endure sufferings both at the hands of their rulers who deny them basic freedoms,
and also by donors who curtail aid. Our study also indicates that economic and
political self-interests of donor countries dominate their stated objectives for
reducing poverty and promoting development through aid in developing countries.
This also provides some insight into the fact that why the majority of the authors
seem to agree that aid has no significant effect on growth. This study does not
delve into the political economy aspects of trade and aid allocation, however, this
can be an interesting area for future research.

Zahariadis, Nikolaos, Travis, Rick and Ward, James B. (2000), U.S. Food
Aid to Sub-Saharan Africa: Politics or Philanthropy? in Social Science
Quarterly, Vol.81, No.2, pp.66376, Austin: University of Texas Press.
We have examined the impact of two motives, politics and philanthropy, on two
food aid programs in Sub-Saharan Africa, expecting differences to be pronounced as
each serves different objectives. We have found this to be the case. Food under Title
I [PL 480, Title 1 focus is Economic Assistance and Food Security] is more subject to
political or philanthropic motives than under Title II [PL 480, Title 2 focus is
Emergency and Private Assistance Programs]. Food power and recipient need are
most influential in determining whether, rather than how much, a state will receive
in food aid. Moreover, different administrations treat Title I aid differently.
Our findings lend partial support to but also refine both the food power and basic
human needs perspectives. Three points are of particular significance. The first is
that allocation decisions differ by program. Both perspectives tend to make
sweeping generalizations about food aid, but our analysis reveals a more
complicated picture. What makes allocations more sensitive either to food power or
to recipient need is the ability of the U.S. government to exert direct influence on
the recipient. Title I disbursements, which consist of mostly direct government-togovernment aid, are more sensitive to political manipulation. Title II aid, on the
other hand, which consists primarily of food given to and distributed by private
organizations, was supposed to put food aid above politics. Our findings confirm it
has succeeded. Democracy plays a role in Title II disbursements. Maintaining a
democratic polity brings positive rewards in the form of higher levels of emergency
relief because private organizations are able to function more efficiently and
effectively in more politically open environments. The point remains that the study
of food aid should be nuanced.

30

The second point is that predictions by either perspective must be qualified by

reference to time period and administration. Food aid allocations can be explained
on the basis of both perspectives but not equally well in the short term. Our analysis
of Title I disbursements found variation between administrations, illustrating the
point that presidents respond to different stimuli depending partly on their
ideological predilection and partly on contextual factors, such as the occurrence of
famines. In the long term, however, assistance under Title I appears amenable to
both explanations.
The third point refers to the spheres of influence effect. U.S. policy makers expect
patrons with colonial links to Sub-Saharan African countries to be large food aid
donors. As a result, Washington ties its contributions to that of other countries. Such
a finding in Title II but not Title I aid is significant. Although U.S. policy makers do
respond to African disasters consistently, they loosely divide the continent into
spheres of influence depending on the manipulability of the program. Washington
uses food aid effectively by funding programs susceptible to donor interests,
irrespective of what others are doing. In contrast, the level of American
humanitarian response is tempered not only by the size of the disaster and the
intensity of need, but also by colonial ties and the level of aid offered by others.
Concerning the policy implications of our study, it is unfair to accuse aid of not
achieving objectives it is not disbursed to achieve. Current Republican hostility to
aid stems from the charge that it does not promote U.S. interests. Such assertions
are based on the assumption that food aid is allocated primarily with this objective
in mind. We tested for this and found it to be partially untrue, and in the case of
Title II aid, inaccurate. Food aid may not promote U.S. interests because it is not
always allocated to do so. What matters is not the program itself but the willingness
of politicians to use it to such ends. Regans early years in office illustrate this
willingness and contrast nicely with Carters unwillingness.
Our focus on Africa illustrates most vividly the apparent paradox of food aid. The
decision to disburse Title I aid in response to U.S. interests and recipients needs in a
continent where need is greatest would lead one to suspect that food aid has come
of age as a program that balances both political and philanthropic motives. Yet, with
the waning of the Cold War, the ability to use food aid as a foreign policy tool seems
to have ceased. From 1994 to 1998, Title II aid allocations remained constant while
Title III allocations fell from $230 million to $30 million. For Title II aid, this is an
indication that food aid has been placed above politics. For Title II aid, which is the
successor to Title I in terms of government-to-government aid, the recent cuts show
that there will be little opportunity to use it to pursue political goals. The factor that
propelled food aid to success has also brought its failure because it undermined the
rationale for continued heavy U.S. involvement abroad. It is precisely the inability of
critics to formulate concrete interests around the globe in the post-Cold War era
that has seriously weakened the rationale to pursue such interests through food
shipments. Similarly, advocates of need have been unable to convince an
introverted and tax-leery American public that meeting recipient needs abroad is a
humanitarian goal worthy of a few pennies from their tax dollars. So, paradoxically,
in these times of budget cuts, the programs to be saved are not the ones that fulfill
their mandates most successfully but those that can simply justify their existence.

30

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STELLENBOSCH.____________________________________________________________________459

30

DAVIES, PENNY (2007), CHINA AND THE END OF POVERTY IN AFRICA TOWARDS MUTUAL
BENEFIT?, SUNDBYBERG: DIAKONIA.___________________________________________________461
HAAN, ARJAN (2009), WILL CHINA CHANGE INTERNATIONAL DEVELOPMENT AS WE KNOW IT?
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COOPERATION._____________________________________________________________________469

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DOLLAR, DAVID (2008), LESSONS FROM CHINA FOR AFRICA, POLICY RESEARCH WORKING
PAPER 4531, WORLD BANK._________________________________________________________470
EISENMAN, JOSHUA AND KURLANTZICK, JOSHUA (2006), CHINAS AFRICA STRATEGY, IN
CURRENT HISTORY, MAY 2006, PP. 219-224.__________________________________________471
FOSTER, VIVIEN, BUTTERFIELD, WILLIAM, CHEN, CHUAN AND PUSHAK, NATALIYA (2008),
BUILDING BRIDGES: CHINAS GROWING ROLE AS INFRASTRUCTURE FINANCIER FOR SUB-SAHARAN
AFRICA, TRENDS AND POLICY OPTIONS, NO. 5, WASHINGTON, DC: THE WORLD BANK.______471
GILL, BILL, HUANG, CHIN-HAO AND MORRISON, J. STEPHEN (2007), CHINAS EXPANDING ROLE IN
AFRICA: IMPLICATIONS FOR THE UNITED STATES , WASHINGTON DC: CENTER FOR STRATEGIC
INTERNATIONAL STUDIES.____________________________________________________________472
GOLDSTEIN, ANDREA, PINAUD, NICOLOAS, REISEN, HELMUT AND CHEN, XIAOBAO (2006), CHINA
AND INDIA: WHATS IN IT FOR AFRICA ? PARIS: OECD DEVELOPMENT CENTRE STUDIES.______476
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177-210, AMSTERDAM UNIVERSITY PRESS.____________________________________________484
INFORMATION OFFICE OF THE STATE COUNCIL OF THE PEOPLE'S REPUBLIC OF CHINA (2005),
CHINAS PEACEFUL DEVELOPMENT ROAD.______________________________________________487
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KAPLINSKY, RAPHAEL, MCCORMICK, DOROTHY AND MORRIS, MIKE (2008), CHINA AND SUB
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African Forum and Network on Debt and Development (AFRODAD) (2008),

Mapping Chinese Development Assistance in Africa: A Synthesis Analysis
of Angola, Mozambique, Zambia and Zimbabwe - DRAFT, Harare:
AFRODAD.
Opportunities and Challenges
For some of the studied countries, foreign debt portfolio is improving. The significant
improvement in the ratio of Angolas external debt stock is explained in part by high
oil prices and Chinas ever increasing consumption.
China and Zambia signed a protocol on remitting partial debt in 2001 with the aim
of supporting Zambias efforts in developing its national economy and reducing the
debt burden. However, a substantial amount of Chinese loans to Zambia still require
reconciliation.
Observers suggest that China has encroached the traditional domain of influence
and control of the African economies by IFIs through their less stringent lending
terms. The traditional control of domestic policy and affairs of the debtor nations is
undermined by flexible Chinese loaning terms. This is both a challenge and an
opportunity. On the one hand it makes Chinese aid more attractive and beneficial in
the short term to the huge infrastructural needs of the continent, even creating a
renewed interest in African markets but on the other hand can threaten the

30

sustainability of these developments within regimes that repress fundamental

freedoms and human rights.
Chinese capital in the continent, especially the financial assistance, is an important
opportunity for topping up resources and financing poverty reduction strategies,
especially infrastructure projects. The Export Credit arrangement under the mutual
benefit approach ostensibly allows recipient countries to exploit untapped resources
thereby accelerating growth. To benefit from opportunities pushed by Chinese
capital emergence, countries require clear programmatic visions and strategy for
Chinese financing.
New standards pertaining to labour and employment conditions, tax regulations,
environmental standards, and export standards are required. These would also
require increased collaboration between inter-governmental agencies (i.e. finance,
planning, standards, procurement) to reduce incidences of corruption and improve
implementation modalities.
Another challenge relates to the need for more analysis, information disclosure and
transparency on Chinese development assistance and its impact on the African
continent.
But also African governments have the opportunity to undertake further research
around Chinas engagement with their respective economies and regions so that
they can maximise their benefits. More information should be shared amongst the
governments on their relations with China to facilitate beneficial relations. This
framework can be driven by a continental interlocutor such as the NEPAD
secretariat. If well implemented, this would result in greater development impact
from Chinas involvement in African economies. This can also be a recommendation.
Conclusions and Recommendations
Chinese involvement in Africa seems to be of major benefit to the continent. On a
positive note, it appears to have led to huge investments with some good impacts.
China is assisting African countries to rebuild their infrastructure and provide
support to sectors like agriculture, water, health and education. Increased exports of
raw materials to China have also earned them much needed foreign exchange
revenue. However, the Chinese windfall has ignored necessary reforms in
administrative and governance systems of African countries that would enhance
policy making autonomy and better oversight over development assistance.
Although important distinctions exist in Chinese model of foreign investment and
infrastructure loans lauded as a model of development that takes seriously
developing state aspirations ignored by the West, African countries have failed to
exploit this apparent alternative.
China is perceived as different in that it provides some investments of direct benefit
beyond elite circles (such as access to a broad range of cheaper consumer goods);
does not insist that Africas political economy steer a required course; and
contributes to Africas talent pool rather draining it.
Chinas assistance to Africa is linked to commodity production; mostly raw materials
and minerals like oil and diamonds. The concessional loans also provide
opportunities to Chinese companies and immigrant labor. The Chinese have also

30

entered high value-added sectors like telecommunications (networks, equipments

and exploration), and also capital equipment for the electricity sector and for
hospitals. In return for those commodities, China shares its knowledge in the areas
of infrastructure, construction, and public works.
The political and diplomatic relations between Africa and the Peoples Republic of
China date back to the days of the liberation struggles in the continent. This history
makes the Peoples Republic of China a natural alternative in the face of
conditionality laden development financing by Western Countries.
China boasts that its relationship with Africa is based on a win-win formula, gained
on an equal partnership and reinforced with its historical solidarity with the
continent in the common struggle against colonialism. In return, Africas trade with
China has increased tremendously although the balance of trade still favours China.
There remain reasonable doubts that Chinese aid offers meaningful, widespread and
long term benefits to ordinary citizens of recipient countries. African trading
partners with China must still make the necessary institutional and governance
reforms to transform Chinese investments into maximum benefits for their
countries.
In actual sense, Chinas trade benefits in Africa do not give it the incentive to go
against the liberal international order, especially the overall system dense with
multilateral rules and institutions. According to Ikenberry (2008), not only is China
on its way to becoming a formidable global power, it is also aware that integrating
into the globalised capitalist system; WTO and other multilateral economic
institutions, is healthy for its prosperity. As such, it also wants the protections that
the systems rules and institutions provide (Ibid: 32)
This view dilutes the fears expressed by many scholars whose main question about
Chinese ties to Africa is whether it is meant to overthrow the existing western
dominated world order. In other words, if the rise of China is equivalent to a
declining hegemony to the western order, represented by United States and other
multilateral economic institutions like the World Bank and IMF that have been very
active in African economies. This is hopeless and short-sighted. Although China has
been using its growing influence to reshape certain rules and institutions that run
African governments, the ascendance of Sino-African relations, if managed properly,
should assist in the development of the countries involved without any hostile
opposition to the relative balance in global power system.
Chinas engagement of the continent can be leveraged positively to offer significant
development opportunities for the uplifting of African economies. However the
African countries need a coherent understanding of the main determinants of
Chinas strategies. Chinas investment in the countries in this study takes care of
Chinas foreign commercial policy projection. African countries should therefore
make necessary policy responses and regulatory frameworks comparable to the
Peoples Republic of China foreign commercial policies in these states. These should
be key to enabling environment in terms of local private sector growth and skills
and technology transfer that will contribute to long term benefit for those countries.
This will maximize and reinforce more broad based benefits for engagement.

30

Chinese rise should find room for more African countries at the table of key global
economic and political institutions, bringing emerging countries into the governance
of the international order. Even if it is not the four countries discussed in this study,
Zimbabwe, Angola, Zambia and Mozambique, African countries such as South Africa
and Nigeria can together play substantive roles in these international institutions
than is presently the case. Less formal bodies, including the G-20 can provide
alternative avenues for this representation.
In conclusion, China has offered a number of African countries an alternative from
the Paris Club. However, it is not obvious that China recognizes that her medium
term interest may not be in the best interests of African countries in terms of
stability and sustainability. Nevertheless, it is also imperative that these countries
maintain strategies for other sources of development financing even as they secure
new aid from China. But the strength of Chinas position with respect to many of its
African partners even those that can b considered as pariah states is a reality
and an opportunity. It can still balance its defensive insistence on solidarity with
these countries with greater role as a broker between them and the international
community for sustained international understanding and development.

Alden, Chris (2005), China in Africa, in Survival, Vol. 47, No. 3, pp. 147164.
At a time when the world seems preoccupied by events in the Middle East and the
global war on terror, Chinas growing engagement with Africa has gone little
noticed in the West. Yet in a span of less than a decade trade between the two
regions has increased from US$10 billion in 2000 to US$28bn in 2005. China has
expended significant resources in foreign assistance towards African states, has
started negotiations towards a regional economic free trade area with the Southern
African Customs Union, and has embarked on an unprecedented peacekeeping
mission in Liberia. These activities are all bolstered by a steady stream of highprofile diplomatic and commercial missions.
For most analysts, the drive to secure energy resources is behind Beijings renewed
engagement with Africa.1 This certainly captures an important dimension of Chinese
interests in the continent, but it would be a mistake to ascribe a single motive to the
relationship. Conversely, the impetus for Africas embrace of China has not been
adequately examined.
Chinas Interests in Africa
During then-President Jiang Zemins tour of Africa in May 1996, he presented a Five
Points Proposal establishing the terms of a new relationship with Africa, centring
around a reliable friendship, sovereign equality, non-intervention, mutually
beneficial development and international cooperation. Jiangs position was a
deliberate contrast to the period between 1963 and 1976, when ideological
considerations shaped Chinas Africa policy. There was now a shift towards diversity
of form and mutual benefit accompanying the economic reforms of the post-Mao
era.2 The one continuity, to be sure, is Beijings insistence on a one China
recognition policy, which has led a number of African states to cut off diplomatic

30

relations with Taiwan.3 Four factors in particular shape Beijings contemporary

approach to the African continent: Chinas drive for resource security, new markets
and investment opportunities, symbolic diplomacy and development cooperation,
and forging strategic partnerships. []
Africas Interests in China
Africas interests in China complement much of the agenda being promoted by
Beijing. Governing and business elites within Africa see new opportunities in China:
trade and investment opportunities, ways to bolster regime stability, and
strategically significant partnerships.
The steady deterioration in foreign direct investment (FDI) in Africa, especially when
compared to Asia, is widely perceived to be a major factor in Africas persistent low
level of development.30 With a dramatic fall in foreign assistance after the end of the
Cold War, the introduction of Chinese FDI is welcome. There is genuine enthusiasm
on the part of African governments for providing the requisite licensing for Chinese
entrepreneurs investing in their countries and the opening of new businesses in
heretofore neglected areas. 31 []

Asche, Helmut and Schller, Margot (2008), Chinas Engagement in Africa

Opportunities and Risks for Development, Eschborn: Deutsche
Gesellschaft fr Technische Zusammernarbeit (GTZ) GmbH.
Description of the Situation
The Peoples Republic of Chinas (PRC) interest in obtaining supplies of energy
and raw materials is the driving force behind Chinas rapid economic expansion
on the African continent which is accompanied by a wholes series of political
initiatives. The exponential growth in foreign trade, direct investment and
development cooperation (DC) between China and Africa since the end of the 1990s
has shocked the Western public.
Although the block of Western industrialised countries as a whole will remain
Africas most important trading partners in the medium term and will retain a key
position as foreign investors, China is gaining ground quickly and is thus increasing
the intensity of global competition, including in Africa. Since 1998 foreign trade
between the African countries and China has grown tenfold, reaching an all-time
high of $55 billion in 2006. Realistic forecasts assume that foreign trade will
continue to grow, to about $100 billion by 2010.
Almost three-quarters of all of Chinas imports from the region are accounted for by
crude oil. In mid-2006, China obtained one third of its oil imports from Africa. China
has built very close economic ties with virtually all significant oil-producing
countries in Africa. A number of them still have large untapped reserves, even
though Chinese companies are rarely granted access to the best oil fields. Chinas
oil diplomacy has been highly successful in terms of diversifying its supplier
countries, but its tolerance of human rights violations and poor governance in these
countries has increasingly attracted criticism from Western industrialised countries.

30

Direct investment by Chinese state-owned energy and commodity corporations

as well as private enterprises in the manufacturing industry, the construction sector
and the services sector has risen rapidly over recent years. Government support
programmes with low-cost loans reduce market development costs for Chinese
companies, thus distorting the market. State banks, currently the Export-Import
Bank of China (EXIM) but in future also the China Development Bank (CDB), play a
key role in the expansion of enterprises and financing development cooperation.
There are fears that project financing by Western development banks and private
commercial banks could be crowded out.
Chinese development cooperation has increased markedly in terms of both
volume and the number of countries supported since the Tiananmen incident. The
Chinese state-owned EXIM Bank in particular offers interesting alternatives to
International Financial Institutions (IFI) and bilateral Western loans. Because of
limited transparency, however, the quantity and quality of cooperation cannot be
compared on an international basis and are difficult to determine conclusively. In
2006, the Chinese government announced ambitious targets for expanding DC with
a doubling of financial inputs and an increase in low-interest loans through the
banks. The priority areas for DC are infrastructure, health care, agriculture and the
education sector. Chinas advance in Africa follows a characteristic basic pattern
(see box).
Four pillars four characteristics
The four pillars on which the upsurge in Chinese-African relations rests are the
intensification of a) trade, b) investment, c) development cooperation, and d)
immigration. In combination, these exhibit the following four characteristics:
1. A distinct underlying sectoral pattern with (a) the focus on securing
resources (oil, mining, timber, agricultural commodities) plus (b) a large
variety of economic interests in almost all African industries and countries.
2. Seamless complementarity of trade, direct investment, DC tied to supplies
from China, and immigration or the deployment of migrant workers.
3. Coordinated effort by Chinese state-owned corporations as trailblazers for
private enterprises.
4. Huge deployment of state financial promotion instruments with fluid
boundaries between preferential and commercial loans.
It is this broad sectoral approach and the systematic economic linkages that give
the Chinese economic offensive its strength. The impact on growth and poverty
of the various factors of the China boom is ambiguous and difficult to analyse; on
the whole it is presumably positive for Africa, but there are major regional and
sectoral differences.
Chinese engagement in Africas textile and clothing sector has a double-edged
effect. Whereas Chinese exports to African countries have greatly increased, despite
the dismantling of trade barriers these countries have not been able to consolidate
their position in global value creation in this sector on a sustainable footing. The
textile sector, leather goods and footwear manufacture and other consumer goods

30

industries in Africa are acutely threatened by both preference erosion in the EU/USA
and Chinese imports to Africa. Even Chinese companies in Africa are suffering
economically. This presents challenges for the trade and structural policies of
African governments and their partners in industrialised countries.
Negative impacts of the Chinese presence are also discernible in the construction
sector. Admittedly, Chinese enterprises have contributed to swift improvements in
infrastructure and hence to economic growth in Africa, generally acting in the
context of projects negotiated at an intergovernmental level. There is a risk,
however, of domestic construction companies being crowded out, and there are
sizable shortfalls in the transfer of know-how and employment of local workers.
China is criticised internationally for wide-ranging violations of anti-corruption,
environmental, labour and social standards in Africa. In particular well-documented
illegal logging by Chinese companies in various countries has predictably critical
implications for tropical forests in Africa and hence also for global climate change.
This overexploitation of African forests is probably by far the most serious harmful
effect on the environment arising from the involvement of Chinese companies in
Africa. In general, however, Chinese violations of Corporate Social Responsibility
(CSR) standards are not comprehensively documented. This makes the promotion of
transparency in oil and mining revenues, particularly in the context of the
Extractive Industries Transparency Initiative (EITI), all the more significant;
Chinas limited willingness to enter into cooperation within the framework of the EITI
must be utilised. Supporting African governments in their management of the
effects of Dutch Disease is equally important.
China is willing to become more closely integrated into the NEPAD process. If this
is successful, however, it is hardly likely to occur without a shift of emphasis in the
NEPAD agenda upgrading infrastructure problems and downgrading governance
issues. China is criticised for undermining improvements of governance through its
involvement in Angola, Sudan and Zimbabwe. The criticism is basically justified,
but it must not be used to conceal crucial weaknesses in Western policy vis--vis
Angola, Zimbabwe and other African countries.
Chinas unconditional loans and development assistance are mostly welcomed in
Africa as they are often regarded as a second liberation from Western dictates.
The Organisation for Economic Cooperation and Development (OECD) member
countries are thus faced with the challenge of both improving the presentation of
their Africa policy and further enhancing its content and forms. Growing
contradictions in the public perception of China in Africa offer an opportunity for
rational, unprejudiced dialogue.
Faced with the choice between a confrontational strategy and a more dialogueoriented approach, the study argues clearly in favour of a critical, yet constructive
integration of China into various processes and structures of a common Africa
policy. Among the potential platforms for constructive exchange, possible forums
within the trilateral EU-China-Africa dialogue are ranked particularly high. The
Federal Republic of Germany can be assigned the role of intermediary in key areas
on account of its relative lack of political and economic self-interest in Africa.
Recommendations for Action

30

In bilateral and multilateral cooperation with China, interfaces emerge in relation to

Chinas Africa policy, for which a series of recommendations for action are
presented at general, multilateral and bilateral levels (see Section 4). The
main areas of focus are directed at the fields of trade policy, industrial policy and
development cooperation. Their common denominator is:
1. Greater efforts to build the capacities of African partners to master the
Chinese challenge.
2.

Patient endeavours to integrate the

coordination and consultation processes.

Chinese

partners

into

joint

3. Systematic elimination of political shortcomings that place the West in a

difficult position in the trilateral debate with China and Africa, above all in
the field of trade and agricultural policy and in dealing with regimes in
Africa suffering from poor governance.
4. Improvement of basic information sources.

Asche, Helmut (2008), Contours of Chinas Africa Mode and Who May
Benefit, in China Aktuell, Vol. 3, pp. 165-180.
Western/European policy learning with regard to the multipolar challenge posed by
China in Africa is, on average, painfully slow. As a rule of thumb, Western attempts
to integrate China into pre-established schemes and fora such as OECDDAC, DSF,
Joint Country Assistance Strategies etc. will hardly be successful in the foreseeable
future. At lower levels, many recent studies contain proposals on triangular modes
of cooperation, and some of them are actually gaining ground in technical
cooperation projects not the least by a flexibility of Chinese authorities that caught
some by surprise. This is the good news, in a longer story where it is not yet
altogether clear if it brings good news.
What else can be said of Chinese development aid in Africa? On average, Chinas
aid is quick, inexpensive, and highly visible three attributes not normally
associated with established Western development co-operation. However, speed,
low price and visibility may come at the expense of other criteria: quality,
participation, sustainability, and lasting poverty reduction. In this sense,
comprehensive evaluations of the effectiveness of Chinas aid to Africa are rare and
do not comprise this decades events. Therefore, for both reasons structure and
effect it once again remains unclear who benefits in aggregate terms and how
much Western donors have to re-adapt their recently built new aid architecture,
which turned out to be a complex edifice with cumbersome procedures. Also, in
terms of tying aid to Chinese deliveries and execution by own contract labourers,
Chinas aid is rather below OECD standards, and Western co-operation has little to
learn from this.
Altogether, a considerable amount of further research is needed to establish more
firmly what increased Chinese aid, trade, investment, and migration achieved in
Africa, while the overall positive China effect on GDP growth is beyond doubt.

30

Likewise, what is execution of a strategic design and what is left to market forces in
Chinas Africa mode, remains to be investigated further. Our conclusion is
therefore a word of caution to Western politicians and some academic critics: As
long as the total socio-economic effect of China in African countries is unknown, and
the exact degree of control Chinese authorities exert over operations in Africa is not
known either, observers and politicians should be warned against coming up with
short-sighted accusations of the damage China allegedly does to African economies
and should rather explore all avenues of effective triangular cooperation on the
ground.

Brutigam, Deborah A. and Tang, Xiaoyang (2009), Chinas Engagement

in African Agriculture: Down to the Countryside, in The China
Quarterly, Vol. 199, pp. 686-706.
Chinese images of their involvement in rural Africa contrast sharply with images
increasingly prevalent in the media outside China, both in Africa and around the
world. On the Chinese side, engagement in rural Africa has been presented
primarily as the acts of a socialist brother or a capitalist friend (depending on the
era). The outside world sees much more threat, as symbolized by a growing number
of news articles and blogs focused on the land grab theme. At the same time,
very little research has been done on this issue, and there are as many myths as
realities in stories about Chinas current engagement in rural Africa. As with oil,
Chinese interest in African land pushes buttons for many people, particularly in a
region where the alienation of land to outsiders has long been controversial. The
Chinese governments efforts to make diplomacy-based aid more sustainable by
incorporating incentives for Chinese businesses may have political ramifications, as
some Chinese analysts have already warned.
The differences between rural China and rural Africa are vast, and this creates areas
for misunderstanding. Used to intensive agriculture, some Chinese misinterpret the
situation in rural areas of some African countries, where shifting cultivation depends
on fallow systems that make it appear as though vast expanses of land are empty
and available. Land is plenty in this country, a Chinese technician in Sierra Leone
told one of the authors: No one uses it! In reality, land scarcities were already
putting pressure on local fallow systems in Sierra Leone long before the civil war. As
the Magbass experience shows, land has many kinds of use and ownership claims,
and a straight purchase or lease under a formal legal system is liable to violate
many other traditional uses for the land, and traditional rights. Governments may
assure Chinese investors that they can allocate land to them freely, but experience
shows that without proper safeguards, this kind of eminent domain land takeover is
risky for local people, who may easily be left worse off.
There are three other areas of sensitivity: competition between Chinese and African
growers in African markets, cash crops as competition with subsistence crops, and
the likelihood that large-scale production could push people off their own land, using
them as seasonal workers. Competition is already a feature of local African markets.
The growing presence of Chinese investors with imported skills and technology
should yield the benefits of competition: an expansion of local supplies while

30

providing examples of imported skills and cheaper technologies that can be copied
by profit-oriented African farmers. An expansion of cash crops can increase the risks
of disruption in the traditional gender division of labour where, in many areas,
women are responsible for food while men grow crops for the market. While these
disturbances may be part of the evolution of farming systems in Africa from
subsistence to market-orientation, there is little evidence that Chinese experts are
even aware of these cultural production issues, or that they take any steps to
ameliorate their impact.68
The time is not far off when China will run out of farmland to maintain a 95 per cent
self-sufficiency in food supply. As Japan, Korea and other land-scarce Asian countries
are already doing, the Chinese will produce greater quantities of food abroad. The
unhappy experience with land alienation in much of Africa (and Asia and Latin
America can be added to this) suggests that any efforts by foreigners, including the
Chinese, to produce on a large scale are likely to continue to be controversial.
Systems of outgrowing, where farmers maintain control over their own land but
have incentives to produce under contract to a central company, could be a middle
ground. A Chinese company with an unhappy experience trying to produce on a
large scale in Laos has planned to introduce hybrid rice into Tanzania using just such
a system of outgrowers. 69 Chinas Tianze tobacco company, a subsidiary of stateowned China National Tobacco Import and Export Group, uses 150 Zimbabwean
farmers to produce tobacco for shipment to China. Tianze provides tractors,
fertilizer, agro-chemicals and generators to the farmers, and guarantees purchase
of their crop.70 Outgrowers bear more risk than farm labourers, but also have the
potential for more reward.
Today the Chinese government uses training opportunities in China to promote
understanding of Chinas model. In agriculture, there is a vast gulf between Chinese
and African systems. These one-way trainings will do little to close that gulf for
Chinese experts or investors. Ultimately, the Chinese government could do more to
help its companies and individual investors move up the learning curve by
sponsoring deeper understanding of Africas challenging rural realities culture,
society and history and not simply extolling its potential for profit.

Brutigam, D. (2009), The Dragons Gift: The Real Story of China in Africa,
Oxford: Oxford University Press.
Conclusion: Engaging China (pp. 307-312)
Is China a rogue donor, as pundit Moiss Nam argued in the pages of the New
York Times? I do not believe so. Chinas rise in Africa is a cause for some concern,
but it need not evoke the level of fear and alarm raised by some who have
condemned Chinas aid and engagement as destabilizing, bad for governance, and
unlikely to help Africa to end poverty. Many of the fears about Chinese aid and
engagement are misinformed, the alarm out of proportion. First of all, Chinas aid is
not huge; the traditional donors give far more aid to Africa. Chinas export credits
are much larger than its aid, but not as large as commonly believed. Their novel
approach in Angola, the Congo, and elsewhere applies the system China learned
from Japan: using very large credits, at competitive market rates, tied to Chinese

30

machinery, equipment, and construction services, with repayment in oil or other

resources. This is the essence of the win-win approach.
These credits are by no means risk-free. Debt sustainability is an issue, a concern
that deepened as the global financial crisis washed over Africa. The credits are tied
to Chinese goods and services, reducing choice. Although in Angola at least three
Chinese firms bid on each project, it is not clear how transparent bidding will be
elsewhere. Still, this approach provides a new opening for the construction of badly
needed infrastructure. Chinese banks can act as agencies of restraint for African
leaders beset by patronage demands. This is a practical way to address the natural
resource curse that plagues so many African countries.
The Chinese say: to end poverty, build a road. The Four Modernizations China
launched in the 1970s emphasized infrastructure. They built roads, ports, and rural
power plants, modernized agriculture, invited in factories. They experimented with
different approaches: special economic zones, for example. Chinas Beijing
Consensus may simply be about embracing experimentation (what works?) and
avoiding easy certainties. The deals they offer Africa are based on similar deals
Japan and the West offered China decades ago, and which the post-Mao Chinese
accepted in the belief that they could also win from an approach that was not about
aid, but business. Where the West regularly changes its development advice,
programs, and approach in Africa (integrated rural development in the 1970s, policy
reform in the 1980s, governance in the 1990s, and so on) China does not claim to
know what Africa must do to develop. China has argued that it was wrong to impose
political and economic conditionality in exchange for aid, and that countries should
be free to find their own pathway out of poverty. Mainstream economists in the West
today are also questioning the value of many of the conditions imposed on aid over
the past few decades. Exchanging view, rather than lecture, on lessons learned and
approaches to aid and cooperation could lead to more useful engagement between
China and the West.
Concerns about Chinese exports crushing African manufacturing are very real.
Although Africa still represents only 4 percent of Chinas overall trade, this is 4
percent of an economic juggernaut. African wax print fabric industries in Nigeria,
many based on an import substitution model with outmoded equipment and
hampered by poor roads and epileptic electricity supplies, are rapidly going out of
business. Yet some industries in some countries leather, shoes and plastics,
consumer appliances, for example seem to be competing with Chinese imports.
Indeed, these are the industries now attracting investment from China, even in
Nigeria. The overseas economic zones Chinese firms are building in Nigeria and
elsewhere in Africa are intended to foster Chinese investment in African
manufacturing, enabling Chinas mature industries to move offshore in groups.
Contrary to popular belief, they are creating employment for Africans. There has
been almost no attention in the West to the role African countries might play in
attracting investment from these Chinese firms.
Chinas early aid to African industry and agriculture was not sustainable. Getting
Chinese companies involved to consolidate the projects helped sustain the benefits
in some instances, but not in others. The new win-win initiatives are only just
starting, but we can see that Chinese companies have already served as industrial
catalysts for some African firms, just as Japanese and Korean firms have done so for

30

decades in South and Southeast Asia. The flying geese model has a long way to go,
but it has proven its potential, in the miracle environment of Mauritius, and even
in the tough conditions of Nigeria.
On agriculture, I am less sanguine. African lands may seem empty, but signing over
large tracts of land to foreign concessionaries without the informed consent of local
communities is a strategy unlikely to end poverty in Africa, even if it does boost
domestic food production. Patented hybrid seeds as the entry point for Chinese
seed companies may help more modern farmers, but present risks to the
subsistence farmers eking out a precarious existence in rural Africa. Using
smallholders as voluntary outgrowers, as Chongqing Seed Company is doing in
Tanzania, may be a socially and economically sustainable compromise. At the same
time, however, outgrower systems shift many of the risks of farming directly onto
the contract farmers. Chinas own rural development strategy focused first on land
reform, then incomes for rural farmers, only much, much later opening up to foreign
investment in agribusiness. Were more African countries to shift toward the land
inequalities of South Africa, Zimbabwe, or even Brazil, it would be a tragedy.
As I was researching and writing this book, China was already changing rapidly, with
Chinese leaders moving from old alliances (Mugabe in Zimbabwe) and stepping into
an unaccustomed new role as a mediator in Sudan. Chinese naval patrols were
rescuing European ships in the pirate-infested waters of the coast of Somalia. New
domestic pressures for corporate social responsibility and environmental and social
protections were growing inside China. New laws were put in place for labor rights in
China, new guidelines published outlining the environmental and social
responsibilities of banks and forestry companies overseas. This is a practical move,
even if these norms are not yet taken to heart. As Chinas state-owned companies
move to develop global reputations, they are learning that corporate social
responsibility will help them avoid expensive reputational risks.
The Chinese are many things in Africa: touring presidents delivering grand promises
for partnerships, provincial companies with very long names, huge global
corporations, resource-hungry and profit-motivated. They are factory managers
demanding long hours of work, tough businesswomen, scrap metal buyers, traders.
They offer frank deals that they expect to work well for China, but also for Africa:
roads, broadband, land lines, high-tech seeds. They bring aid workers: vocational
teachers, agricultural specialists, water engineers, youth volunteers, and others who
have come, as so many from the West have done, out of curiosity, a sense of
adventure, or a desire to help the por. And they have not just arrived on the scene.
Some Chinese families came to Africa in the 1820. Sino-Africans Eugenia Chang,
Jean Ping, Jean Ah-Chuen, Manual Chang, Fay King Chung, and others have served
African governments as parliamentarians, finance ministers, and ministers of foreign
affairs.
Their long history in post-independence Africa gives China legitimacy and credibility
among many Africans. Arriving after independence, they never really left. The West
simply did not notice the Chinese teams laboring upcountry building small
hydropower stations and bridges, repairing irrigation systems, managing stateowned factories, all usually without the kind of billboards other donors favored to
advertise their presence. Today, Africa fits into the strategy of going global, not
simply for its natural resources, but for opportunities in trade, construction,

30

industry: business. The Chinese are linking business and aid in innovative ways. Aid
subsidizes Chinese companies to set up agro-technical demonstration stations, or
economic cooperation and development centers. The Chinese are experimenting,
hoping that the profit motive will make these efforts sustainable, releasing the
Chinese government from having to return again and again to resuscitate its aid
projects. They will continue to change, and grow, and learn from these experiments,
and we would do well to follow this progress and learn from it too.
By Western standards, China is secretive about its aid and export credits. This lack
of transparency understandably raises suspicion and concern. Beijing could easily
address this by using reporting standards adopted long ago by the OECD. But, on
the other hand, private banks and corporations in the West have long maintained
secrecy about their deals with African leaders. Transparency is good, by the West
should lead the way. It would be unrealistic to expect Chinese corporations to be the
first to publish their own business contracts.
The United States, Europe and Japan should continue to engage China as a
responsible stakeholder in Africa, while recognizing that the traditional donor
countries have their own credibility gaps as development partners. Aid pledges
made by Western leaders go unfunded by Western parliaments. Promises to untie
aid are hedged by simply not counting some areas technical assistance, for
example. As the Center for Global Development points out in its annual
Commitment to Development index, several OECD countries (France, the UK, the
US, Belgium) continue to profit from arms sales to undemocratic, militaristic
governments. A shared commitment to improve in all these areas would do much to
make similar demands of China more credible.
China is now a powerful force in Africa, and the Chinese are not going away. Their
embrace of the continent is strategic, planned, long-term, and still unfolding. The
global economic recession created a pause in this engagement, but the Chinese
government still lived up to the pledges they made in Beijing in November 2006: to
double aid, to set up agro-technical stations and special economic zones. Ambitious
Chinese companies used that pause to buy assets at bargain prices, as they first
began to do in the 1990s.
Ultimately, it is up to African governments to shape this encounter in ways that will
benefit their people. Many will not grasp this opportunity, but some will. The West
can help by gaining a more realistic picture of Chinas engagement, avoiding
sensationalism and paranoia, admitting our own shortcomings, and perhaps
exploring the notion that Chinas model of consistent non-intervention may be
preferable to a China that regularly intervenes in other countries domestic affairs,
or uses military force to foster political change.
At the end of the day, we should remember this: Chinas own experiments have
raised hundreds of millions of Chinese out of poverty, largely without foreign aid.
They believe in investment, trade, and technology as levers for development, and
they are applying these same tools in their African engagement, not out of altruism
but because of what they learned at home. They learned that their own natural
resources could be assets for modernization and prosperity. They learned that a
central government commitment to capitalist business development could rapidly
reduce poverty. They learned that special zones could attract clusters of mature

30

industries from the West and Japan, providing jobs and technologies. These lessons
emphasize not aid, but experiments; not paternalism, but the creative destruction
of competition and the green shoots of new opportunities. This may be the dragons
ultimate, ambiguous gift.

Broadman, Harry G. (2007), Africas Silk Road: China and Indias New
Economic Frontier, Washington DC: The World Bank.
Overview (pp. 1-40)
Conclusions and Policy Implications
Market opportunities for trade and investment in the world economy will no doubt
continue to grow for the countries of Sub-Saharan Africa. However, as the
international economy continues to globalize, market competition from other
regionsespecially those in the Southwill only become stronger. This poses a
challenge to African policy makers to make better use of international trade and
investment as levers for growth.
China and Indias rapidly growing commerce with the African continent presents to
its people a major opportunity. In particular, the intense interest by these two Asian
economic giants to pursue commercial relations with Africa could lead to greater
diversification of Africas exports away from excessive reliance on a few
commodities and toward increased production of labor-intensive light manufactured
goods and services. It could also enable Africa to build on the strength of its
endowment of natural resources and develop backward and forward linkages to
extract more value from processing, and in some cases participate in modern global
production-sharing networks. This intense interest could also lead to enhanced
efficiency of African businesses through their being more exposed to foreign
competition, advances in technology, and modern labor skills; and to greater
international integration, not only with other regions of the world, but perhaps most
important within Africa itself, where most domestic markets are too shallow and
small to allow for the scale needed to produce exports that are internationally
competitive.
To be sure, there are major imbalances in the current commercial relationships that
Africa has with China and India. For example, whereas China and India are emerging
as increasingly important destination markets for African exports, from the
perspective of these Asian countries, imports from Africa represent only a very small
fraction of their global imports. At the same time, FDI inflows to Africa from China
and India, although still small in an absolute sense, are growing rapidly. But both the
level and growth rate of African FDI going to China and India remains extremely
limited.
Absent certain policy reforms, the opportunities presented by China and Indias
interest in Africa may not be fully realized, while the existing imbalances could
continue for the foreseeable future. All other things equal, taken together, these
could reduce the likelihood of a boost in Africas prospects for economic growth and
prosperity.

30

The reform experience in Africa, as well as in other regions of the world, shows that
reform success in such an environment requires a combination of actions. In
particular, the lessons from these experiences are that it is not only important to
implement sound, market-based, at-the-border trade and investment policies, but
also to take actions that deal with the impediments to trade and investment that
exist behind the border as well as between the borders. Indeed, these experiences
suggest that, if anything, behind-the-border and between-the-border reforms
actually provide for trade to have greater leverage on growth than do at-the-border
formal trade and investment policies. Moreover, the evidence suggests that these
reforms should be designed in such a way as to exploit the growth-enhancing
complementarities between trade and investment.
The study of which this Overview is a part discusses such policy implications based
on the empirical findings presented. Below, the principal policy implications that
deserve priority attention are summarized. A division of labor for the
responsibilities of the various stakeholders with policymaking roles in furthering
Africa-Asian trade and investment is also suggested.
It is important to emphasize that, because of the significant heterogeneity among
the 47 countries of Sub-Saharan Africa, the enunciated policy reforms should not be
interpreted as being one-size-fits-all actions. Indeed, in practice, the reforms must
be designed to take into account country-specific circumstances. These
circumstances will affect not only the actual contours of actions to be taken, but
also the speed and sequencing of their implementation. []

Chapter 2: Performance and Patterns of African-Asian trade and Investment Flows

(pp. 59-128)
Africas trade with China and India has grown rapidly in both directions. This is
based on high demand for natural resources by China and India and their industrial
advantage in manufactured products against African countries. This reflects
complementarities between African countries and China and India based on factor
endowment of natural resources in Africa versus skilled labor in China and India.
Africas exports to China and India have not directly contributed to its export
diversification in terms of products and trading partners. Even though the boom of
natural resource exports to China and India may provide short-term benefits, African
countries need long-term strategies to leverage the current export-boom revenue to
create opportunities for long-term economic benefits through export diversification.
Three types of complementarities between Africa and China and India are emerging:
(i) vertical complementarities along the cotton-textile-apparel value chain; (ii)
exports based on endowed natural resources with greater processing work
(aluminum, for example) done locally; and (iii) increased intraindustry trade with
emerging African industrial hubs such as South Africa and Nigeria. These
complementarities provide opportunities for African countries to increase and
diversify their exports by focusing on policies and activities (i) to increase
participation in global network trade, (ii) to develop diversified value-added local
industries through forward and backward linkages to resource-based products, and
(iii) to enhance subregional economic integration and to maximize its benefit.

30

In addition to trading in goods, Africa-China-India economic relations are deepening

in service trade and FDI. Asian FDI in Africa targets various trading opportunities
using Africa as the production base; examples include natural resources for
overseas markets and construction services for local markets, as well as tradefacilitation service providers. This implies the existence of a strong synergy among
trade in goods, trade in services, and FDI, which in turn enhances economic
relations between Africa and China and India.
Through quantitatively analyzing bilateral trade flows between Asian and African
countries, the evidence presented strongly suggests that, while formal trade policies
matter in promoting Africas exports to Asia (as well as elsewhere), behind-theborder and between-the-border constraints are every bit as, if not more, critical.
This means that, if African countries are to enhance their trade performance in Asia,
it will take far more than simply liberalizing trade policies to reach that objective.
Indeed, the deeper, more complex, and longer-run challenge is to confront the
behind-the-border and between-the-border constraints. Improving trade policies is
necessary but not sufficient. []

Chapter 3: Challenges At the Border: Africa and Asias Trade and Investment
Policies (pp. 129-186)
Tariff structures of African countries as well as China and India still have some
unfavorable elements that constrain mutual trade. Some Asian tariff rates are high
for many of African countries leading exportsthose that account for about twothirds of total African exports to Asia. Product-specific analysis of tariffs on African
exports to Chinese and Indian markets suggests that in certain cases tariff
escalation in these markets has been discouraging the export of higher value-added
processed products from Africa. However, China is a relatively liberalized market,
with zero or close to zero tariffs on 45 percent of its imports. China also has plans to
further lower its tariffs and bring about lower dispersion in the structure of tariffs by
the end of 2007.
Although African tariff barriers have been lowered significantly recently, Asian
products still face relatively high tariff barriers on the African continent. In fact,
some high tariffs on intermediate inputs into African countries constrain African
manufacturing exports. This bias against exports is an obvious target for reform.
Nontariff barriers, such as inappropriate use of technical standards in African exportdestination markets in China and India pose special challenges to African exports. At
the same time, most countries in Africa lack the institutional capacity as well as the
resources to fully implement or effectively enforce internationally recognized
standards. This limits the ability of domestic producers to penetrate certain export
markets, not only in more developed countries, but also in Asia, especially China
and India.
While export and investment incentives, such as Export Processing Zones (EPZs), to
date have been successful in China and India, their potential to stimulate exports
has not materialized in African countries, with a few exceptions. The preceding
analysis suggests that the ineffectiveness of these incentives in African countries is
due in part to significant implementation and enforcement challenges in the face of

30

generally weak institutional capacities, as well as the lack of the requisite

infrastructure and labor skills. Export incentives in African countries have also had
mixed results in creating backward production linkages.
The proliferation of regional and bilateral trade and investment agreements in
recent years on the African continent comprises not only reciprocal agreements
among other countries in the South, including those in Asia (China and India among
them), but also preferential arrangements provided by developed countries in the
North to facilitate market access for exports from Africa. The size of the benefits
derived from such preferential treatment diminishes significantly when market
barriers for other competitors are lowered. Trade diversion from such regimes
challenges their desirability and sustainability. No bilateral free trade agreements
are currently in effect between Asian and African countries, with the exception of a
few unilateral preferential treatments of limited scale.
RIAs on the African continent are still very much nascent and have yet to
significantly foster regional trade. To Chinese and Indian investors, they are not
seen as particularly trade- or investment-facilitating. Some Chinese and Indian
businesses already operating in Africa complain that these agreements spaghettilike character actually inhibits rather than promotes international commerce.
In addition to formal international agreements, African-Asian trade and investment
flows are also influencedin varying degreesby other instruments. Investment
Promotion Agencies (IPAs) and public-private investors councils in African and Asian
countries play an important role in facilitating international commerce between the
two regions. China and India have also established various other mechanisms in the
hopes of stimulating trade and investment with Africa. One of the more recentand
certainly most notableinitiatives is the January 2006 release in Beijing of Chinas
Africa Policy, a white paper that identifies a large set of economic issues over
which China proposes to cooperate with Africa, including trade and investment. []

Chapter 4: Behind-the-Border Constraints on African-Asian Trade and Investment

Flows (pp. 187-234)
The basic diagnostics of behind-the-border conditions, based on the WBAATI survey
data, find that surveyed larger firms outperform surveyed smaller firms both in
productivity and exports. Among the surveyed firms, export propensity is lower for
domestically owned firms than for Chinese or Indian firms.
An assessment of the sources of competition in these African markets at the country
level suggests that, not only do imports play an important role, but so do low
domestic entry and exit barriers, the incidence of FDI in the market, and access and
integration into global production networks. Not surprisingly, firm turnover is found
to be more prevalent among smaller businesses, while larger firms enjoy longer
tenure and higher market shares. Again, this is true regardless of firm nationality.
The data suggest that entry via FDI is an important channel through which
competition is introduced into these surveyed African markets, a finding consistent
with research on other regions of the world. International integration into production
networksthe focus of chapter 6particularly upstream in the value chain, appears
to stimulate competition among the surveyed firms.

30

The evidence from the degree of competition among different nationalities of firms
indicates a clear role played by Chinese and Indian investors in fostering domestic
competition in African markets. In fact, a mutually reinforcing effect is found: African
firms that face more competitive markets at home have greater involvement with
Chinese and Indian capital, while the African markets where Chinese and Indian
investors are most prevalent tend to be the most competitive. The analysis also
shows that the major source of the competition engendered in the African markets
by the presence of Chinese and Indian investors is competition from imports
indeed imports from China and India themselves. Chinese and Indian investment
also provides opportunities for indigenous African firms to form joint ventures or
backward-forward linkages with such investment. The question is whether skills and
technology are effectively transferred from such business relations.
African countries continue to face high business transactions costs due to poor
infrastructure quality, inefficient and insufficient factor markets such as shortages in
credit access and skilled labor, labor market rigidity, and heavy regulatory burdens
and weak governance and judiciary systems. As is the case elsewhere in the world,
the analysis suggests why such factors constitute integral roles in Chinese and
Indian (as well as other) investors location choices in Africa. To be sure, there have
been visible efforts made by several African governments in reforming their
domestic business environments. But African countries overall still lag other regions
with whom they are competing, both in terms of attracting investment and
exporting to foreign markets. []

Chapter 5: Between-the-Border Factors in African-Asian Trade and Investment

(pp. 235-288)
This chapter assessed various between-the-border factors that facilitate trade and
investment, particularly in the context of Africas trade and investment ties with
China and India. First, foreign market information on potential demand and
investment opportunities is essential in facilitating trade and investment. Given the
imperfect information flows now in existence for trade and investment with African
countries, public information services, run by both the government or by private
firms, have proven to be very important. While they also may work as a barrier to
trade (chapter 3), standards and accreditation schemes may also reduce difficulties
in assessing the quality of a product by enhancing the availability of reliable,
accessible information on aspects considered important by exporters, importers,
and consumers. Also, although they run the danger of restricting domestic
competition by segmenting markets (chapter 4), ethnic networks that operate
across national borders can help overcome between-the-border barriers by
providing efficient circulation of market information within the networks that link
African countries and India and China.
Also presented was how flows of technology and people between Africa and Asia
facilitate the formation of business links that lead to trade and FDI flows, and how
the latter two enhance technology transfers and migration simultaneously. The
WBAATI survey as well as business case studies clearly suggest such two-way links
in the context of China and Indias trade and investment ties with African countries.
For example, Chinese investors operating in Africa tend to bring their workforce

30

from China. Also, exporting firms tend to rely more on foreign workers, whose skills
and knowledge help firms to link themselves with overseas markets. The
complementary relationship among people flows, trade, and capital flows suggests
that any removal of between-the-border barriers should facilitate all of these flows.
Increases in these three flows are likely to accelerate the pace of technological
diffusion throughout Africa and Asia.
However, local technological transfer or skills transfer is also somewhat
compromised when foreign skilled workers are simply brought in with foreign capital
without effective skills transfer to local workers either through subcontracts or
employment opportunities. Furthermore, the emerging agenda for African firms is
how to effectively capture opportunities for acquisition of technology and skills
through participating in the international production network as discussed in
chapter 6. At the same time, this chapter also showed how Chinese and Indian
governments have increasingly invested their resources in providing technical
cooperation to African countries to foster technological transfer to African countries.
The ability to enhance trade facilitation could offer significant opportunities to
reduce direct and indirect costs in Africa. African, Chinese, and Indian firms have
been hampered by inadequate and costly transport and logistics services in Africa.
African firms continue to experience difficulty in accessing necessary trade
financing tools, which is a particularly acute issue among small and medium
enterprises. At the same time, it was found that investment by Chinese and Indian
firms in Africa has been significantly aided by public trade finance programs by the
Export-Import Banks of those two countries. []

Chapter 6: Investment-Trade Linkages in African-Asian

Integration, and Production Networks (pp. 289-360)

Commerce:

Scale,

Firms in Africaboth domestic and foreign ownedhave had international

operations and trading relationships for decades. But in recent years the worlds
marketplace has witnessed the formation of new global-scale economic systems
that are tightly integrated, and the rise of trade in intermediate goods constitutes a
fundamental shift in the structure of the global trading system. These
transformations pose a major challenge for African policy makers in their
understanding of how their countries fit into todays international division of labor.
Under traditional notions of international trade, the direction of trade (that is, which
countries produce what goods for export) was determined by the principle of
comparative advantage and a country specialized in the production and export of
the good (or goods) for which its relative productivity advantage exceeded that of
foreign countries. It is clear, however, that a radically different notion of
comparative advantage has now emerged due to the significant role that
intermediate goods play in overall international trade, giving rise to intraindustry
trade. This is true whether the trade is done within firms as a result of FDI or
through more arms-length transactions, such as through subcontracting. 59 In this
environment, it is hard to imagine that the future of Africas economic development
can be isolated from these systems.
Summary of Main Findings

30

It is in this context that a key issue facing the countries of Sub-Saharan Africa is how
they can successfully leverage the newfound investment and trade interest of China
and India so that the continent can become a more proactive player in modern
global network trade. Over the last 15 years, Asia has already been Africas fastestgrowing export market and is much more open to trade than are Europe and
America. And there is no evidence to suggest that this trend will not continue. Yet,
in spite of the many opportunities offered by trade in global supply chains, few
African countries have been able to make the leap and exploit these opportunities.
As the preceding analysis suggests, investment and trade activities by China and
India with Africa can facilitate the continents ability to avail itself of such
opportunities.
Evidence presented in this chapter from new firm-level survey data and original
business case studies developed in the field provides strong support for the notion
that, as is happening elsewhere in the world, in Africa, trade flows and FDI are
complementary activities, rather than substitutes. (This finding at the firm level
parallels that presented at the country level in chapter 2). The data clearly point to
the fact that Chinese and Indian firms operating in Africa have been playing a
significant role in facilitating this complementarity. For one thing, Chinese and
Indian businesses tend to achieve larger-sized operations than do their African
counterparts within the same sectors, and this appears to allow them to realize
economies of scale. It is not surprising, then, that the evidence shows that, all other
things equal, Chinese and Indian firms have significantly greater export intensity
than do African firms. Moreover, the exports from Africa produced by Chinese and
Indian businesses are considerably more diversified and higher up the value chain
than exports sold by domestic firms.
The corporate structures of Chinese and Indian firms also differ from those of
African businesses: the former tend to have more extensive participation in group
enterprises or holding companies (with headquarters in their home countries). At
the same time, relative to their African counterparts, Chinese and Indian firms
engage more extensively in regional integration on the continent. They also exhibit
more extensive integration into a greater variety of third countries outside of Africa
than do African businesses. And Chinese and Indian firms tend to be vehicles for the
transmission of advances in technology and new equipment to the African
continent.
But the data also suggest that there are significant differences between Chinese
and Indian firms operating in Africa. Chinese businesses in Africa tend to have a
different risk-aversion profile than Indian firms, as reflected in their foreign
investment entry decisions, their degree of vertical integration, the origin of source
markets for their inputs, and the strength of affiliation with state (as opposed to
private) entities in conducting transactions, among other attributes. Chinese
businesses in Africa pursue business strategies that yield them greater control up
and down the production line, resulting in enclave types of corporate profiles, with
somewhat limited spillover effects. Indian firms, conversely, pursue African
investment strategies that result in greater integration into domestic markets and
operate extensively through informal channels, indeed even into facets of the local
political economy, surely a result of the fact that there is a longer tradition of Indian
ethnic ties to Africa.

30

That global value chains offer real opportunities for African countries to use Chinese
and Indian investment and trade activities to increase the volume, diversity, and
value-added of exports from the continent is corroborated by the evidence
presented. Indeed, as has happened elsewhere in the world, even landlocked
countries in Africawith the right mix of policiesmay well be able to engage in
network trade. Value-chain analysis of particular industry cases in Africa shows that
certain factors are likely to be especially critical in successful network trade. These
include implementing a pricing scheme that fully takes into account market
conditions, such as production and distribution costs, the strength of competition,
and so forth; enhancing product quality; organizing the business to be flexible and
responsive to changes in market conditions; enhancing labor productivity; and
developing the capacity to maximize speed to market. As the analysis shows, there
are several industries in Africa that have either already engaged in or have strong
prospects to engage in buyer-driven network trade, including food, fresh-cut
flowers, apparel, and fisheries, among others. These are all products where African
exports face far tougher competition in international markets than the continents
traditional raw commodities, and they must meet world-class standards. However,
there are also examples where Africa can exploit its endowment of natural
resources and climb the value chain.
The prospects for African industries to engage in producer-driven network trade in
the short- to medium-run, apart from some sectors in South Africa, such as
automotive assembly and parts and components, are far more limitedwithout
attracting substantial FDI by firms plugged into such networks. Increasingly, as the
chapter suggests, Chinese and Indian firms have these attributes. Still, the barriers
to entry to global production sharing are significant.
Finally, there is evidence that African services exports can engender significant
supply-chain spillover effects domestically. Some countries already are doing so,
such as Ghana, Senegal, and Tanzania in back-office services. A second concrete
opportunity for growth in services exports is tourism. With rising middle classes in
China and India looking to spend a significant part of their increased disposable
incomes on holidays, there is clear potential for Africa to reap the benefits. Through
positioning itself as a relatively close and attractive holiday destination, the gain for
Sub-Saharan Africa would not just be direct (in tourism services, hotels, restaurants,
and the like) but also indirect: the fact that more and more flights arrive in African
airports makes transport cheaper and Asian markets more readily accessible for
African goods and services.

Chaponnire, J. R. (2009), Chinese Aid to Africa: Origins, Forms and

Issues, in van Dijk, M. P. (ed.), The New Presence of China in Africa, pp.
55-82, Amsterdam University Press.
Conclusion: Convergence or Divergence?
Chinas aid to Africa has a long history. In the early 1960s, the first overviews of the
subject32 displayed the same surprise that we see today, though sometimes for
different reasons. After decades of turmoil, China was a poor country, where the
excesses of the Great Leap Forward caused a famine and millions of deaths in the

30

late 1950s. It was much poorer than the Maghreb countries with which it signed its
first aid agreements and than Sub-Saharan Africa, to which it started providing aid
in 1960. China, just emerging from the embargo caused by the Korean War,
exported very little. Its aid to Africa was greater than its trade with Africa, and it
made no investments. Today, trade with Africa is larger than aid and investment. In
February 2007, President Hu Jintao announced that trade between China and Africa
would amount to 100 billion US$ in 2010 and, thanks to the surge in raw material
prices, bilateral trade has exceeded this objective in 2008. This trade may diminish
in value as prices have tumbled, but nevertheless China will probably become the
largest trade partner of Africa, and one could expect that this will be followed by
more investment and that investment will outstrip aid.
At the 2005 Gleneagles summit, the G8 countries gave a commitment to double
their aid to Africa, and China made the same promise in Beijing in November 2006.
Three years later, it appears that OECD countries are not on track to meet their
targets. As they are confronted with the severest crisis since 1929, OECD countries
would need to make unprecedented budgetary efforts to reach their objective since
debt cancellations, which account for nearly half of the aid, come to an end. While
OECD will not achieve their target, China will probably encounter less difficulty in
achieving its objective, even though China may experience a hard landing in 2009.
The fall of raw material prices will directly impact trade relations between China and
Africa.33 Nevertheless, as China will continue to grow and OECD economies will
contract, the share of China in African exports will increase in volume while in value
it will diminish. Thus the bilateral trade may intensify at a lower level. The world
recession has not changed the Chinese view on the strategic importance of Africa.
Economic and social problems in China have not prevented Hu Jintao from
undertaking a fourth trip in Africa in February where he visited Mali, Senegal,
Tanzania and Mauritius. His choice illustrates a sense of continuity (Zhou En Lai
visited Mali and Tanzania in the sixties) and by choosing to visit countries that are
not primary commodities exporters, he showed that Chinese interest goes beyond
the procurement of raw materials. Chinese are preparing for the next Sino-African
summit to be held in Cairo in November 2009, and, on this occasion, Beijing will
promise to double its aid to Africa between 2009 and 2012. Thus at the end of the
present decade, China will eventually be the largest donor to Africa.
China emphasizes the fact that its relations with Africa are distinct and
substantively different from those of the West. Nevertheless, the nature of its trade
relations with Africa is North-South and this may lead Beijing to adopt Western
practices instead of maintaining a friendship between most unequal equals. 34 Will
China position itself as an alternative to the OECD or will Western efforts aimed at
socializing China as a responsible power in Africa influence currently prevailing
standards (Alden, 2008)? There is clearly a debate in China between those who
think that European aid to Africa has failed and that there is nothing to be learned
from the DAC countries experience and those who take a less black-and-white view
both of the Western experience and of the overall results of Chinese aid to Africa.
The probable outcome is a trend towards convergence between Chinese and
Western practice. World Bank and bilateral donors are discussing MOU with ExIm
banks and some have started to cooperate in joint projects with China. This trend
will benefit from changes in Chinese practices. On the issue of social and
environmental responsibility, for example, an official of the Peoples Congress stated

30

in January 2007 that Chinese firms could face sanctions if they committed abuses
abroad. In March 2007, the National Development and Reform Commission (NDRC)
removed Sudan from the latest list of countries with preferred trade status and
China will no longer provide financial incentives to Chinese firms investing in Sudan
(Gill et al., 2007).
The pace of convergence will depend on the quality of the dialogue established
between China and the traditional donors. Chinese embassies have already begun
to attend donor round-tables. This dialogue could be improved if all parties made
their objectives clear. The Chinese are accused of having a hidden agenda in their
march to Africa and of assisting African countries only to better strip them of their
resources, whereas Western aid is held to be directed exclusively to the well-being
of the people. The Chinese make the same criticism in return. If China has an
agenda in Africa, so do the United States and European Union, whether that agenda
concerns security of supply or migration. Acknowledging these agendas and
discussing them would be a first step towards dialogue and cooperation.

Chan-Fishel, Michelle (2007), Environmental Impact: More of the Same?

in Manji, F. & Marks, S. (eds.), African Perspectives on China in Africa,
Oxford: Fahamu.
While conventional wisdom posits that Chinese multinationals treat their workers
and the environment more poorly than their Western counterparts, not enough
research has been done to actually prove this hypothesis. What is clear, however, is
that Chinese companies are quickly generating the same kinds of environmental
damage and community opposition that Western companies have spawned around
the world.
For communities adversely affected by these mega-projects (regardless of the
corporate sponsor), the question is: first, do they give their free, prior and informed
consent to the investment? If the answer is yes then the challenge becomes, How
can communities and governments negotiate with the sponsor to receive the best
deal possible, in terms of economic benefits sharing, human rights, sustained
livelihoods, environmental quality, and cultural and community integrity?
Evaluated this way it is evident that in some cases, what private companies can
provide through corporate social responsibility e.g. health clinics that may or
may not be furnished with medicines, books for local schools pales in comparison
with the deals that Chinese state-owned companies can offer (e.g. debt relief,
concessional lending).
Furthermore, African leaders and policy makers are faced with additional question
when it comes to Chinese investment: Is the Chinese model of development, which
admittedly has been characterised by spectacular economic growth, worth
emulating? Based on the unlimited extraction of natural resources, ultra low-wage
manufacturing, and the export of cheap goods (due especially to throwaway
societies in the West), this paradigm which is in essence one of corporate
globalisation, not of China alone is simply not sustainable.

30

This low-price development model actually comes at a very high cost to societies,
both inside and outside China, as well as to the environment. The untold story of
Chinas rapid economic growth is one characterised by vast levels of income
disparity, unfair treatment of workers and lost livelihoods, especially in the rural
areas. These problems are so acute that they threaten political stability.
Environmental problems are similarly acute: breathing the air in Chinas most
polluted cities is the equivalent of smoking two packets of cigarettes a day. On an
international level, meanwhile, the effects of corporate globalisation (particularly
Western consumption) are leading to the destruction of the ecological support
systems on which all life depends.
It is tempting for African leaders to simply want to play Western and Chinese
extraction companies off against each other in an effort to get a better deal, and
doggedly follow Chinas path of economic growth. Indeed, it is important for them to
carefully conceive extraction projects in order to secure the best possible deal for
their people. But ultimately, it will be important to realise that this low-price/highcost economic model will not work: not for Africa, nor for China, nor for the rest of
the world.

Cheng, Joseph Y. S. and Shi, Huanggao (2009), Chinas African Policy in

the Post-Cold War Era, in Journal of Contemporary Asia, Vol. 39, No. 1,
pp. 87-115.
Multipolarity has become a significant goal of Chinas foreign policy in the post-Cold
War era. Chinese leaders have adopted this as a long-term objective; and, given the
dominant position of the USA, China strives to maintain good relations with
America, avoiding any sharp deterioration in the bilateral relationship. The Chinese
government has established various strategic partnerships with other major powers,
emphasising the promotion of common interests, while abandoning the Maoist
united front strategy (Cheng and Zhang, 2002). Meanwhile, China seeks to maintain
a peaceful international environment and concentrate on its modernization
programme, while building its comprehensive national power. In many ways, China
has been pursuing a modernisation diplomacy in the era of economic reforms and
opening to the outside world since the end of 1978 (Cheng, 1989); and developed
countries play a more important role than developing countries in terms of markets
as well as sources of investment, advanced management and technology, and so
on. Ideology and revolution the main Maoist objectives now have a limited role in
this modernisation diplomacy.
Sanctions from Western governments in the aftermath of the Tiananmen protests
and violent crackdown reminded Chinese leaders of the significance of the Third
World, especially African countries. This was reinforced by the depreciation of
Chinas strategic weight in the eyes of the Western world, with the disappearance of
the strategic triangle in the context of the break up of the Soviet Union and the
dramatic changes in Eastern Europe. Diplomatic support from the African countries
has thus become indispensable when China comes under criticisms for its human
rights record in international organisations, and when it chooses to exert pressure
on Taiwan. The cultivation of a network of friendly supporters on the African

30

continent therefore becomes a significant task in Chinas diplomacy. The strategic

cooperation relationship with Egypt, the strategic partnerships with Nigeria and
South Africa, and the Forum on China-Africa Co-operation are landmarks in the
building of this network.
As Chinas economy continues its impressive growth, it wants to expand its markets
and secure reliable supplies of resources in support of its economic development.
Resource diplomacy, therefore, becomes a prominent feature of its modernisation
diplomacy. Chinas rising economic status also means that it has more resources at
its disposal to ensure success in its African policy. In turn, many African countries
perceive political and economic ties with China to be an important asset, which
strengthens their international bargaining power, especially with Western
governments. These new features of Sino-African ties have attracted the attention
of the Bush administration and the international media. Their criticisms are against
the Chinese authorities intention to present China as a responsible major power in
the international community and to enhance its soft power in the Third World, while
neglecting co-operation and co-ordination with Western governments in its
approach to Africa.
In view of the substantial resources spent in support of Beijings African policy, the
Chinese leadership, Chinas foreign policy think-tanks and the official media tend to
present Africa as a lucrative market and an important source of badly needed raw
materials. African countries are also depicted as reliable political and economic
partners. In fact, however, a large part of the continent still suffers from domestic
instability, poverty, AIDS, rampant corruption and a range of other developmental
problems, so optimism regarding Africas peace and development in the near future
may be misplaced. Many small African countries have been switching diplomatic
recognition between Taipei and Beijing, playing the two off against each other for
economic assistance, and so they are obviously not reliable political partners.
Regime changes take place often in some African countries, too. Hence, setbacks for
Chinas African policy will not be surprising.
Chinese leaders would like to avoid engaging in open and ongoing diplomatic and
strategic confrontation with the USA and the European Union in Africa, but they
certainly want to push for multipolarity and to ensure a reliable supply of resources
from Africa in support of domestic economic development. Whether China can
achieve this balance remains a fundamental dilemma of its African policy, which
exacerbates the risks of its foreign policy and commercial initiatives in Africa.

Cornelissen, Scarlett and Taylor, Ian (2000), The Political Economy of

China and Japans Relationship with Africa: A Comparative Perspective, in
The Pacific Review, Vol. 13, No. 4, pp. 615-633.
Though both China and Japans primary focus is naturally on the East Asian region,
both countries in the 1990s conducted a relatively active African policy. For both,
Africa is a strategic ally, albeit in different means, and to the attainment of different
policy objectives.

30

By vigorously supporting the theme of non-interference in domestic affairs and

promoting a cultural relativist notion of human rights, China has been able to secure
its own position in the international system and, at the same time, appeal to African
elites mindful of the Wests pressure on their own governments. In addition, Chinas
emphasis on economic linkages with Africa has appealed to those elites who have
consciously embraced the dictates of the hegemonic neoliberal model. By offering
itself up as a possible model of a country that has moved from a command
economy to that of a market-driven one (however incomplete), China has further
been able to project itself on the continent. As a result, China maintains its
commercial and political links with Africa as a tool by which Beijing hopes to foster
economic interaction and by which China may have a reserve pool of friends and
sympathizers from which it can draw moral and political support from within in the
international system. In an attempt to offset the Wests position vis--vis China and
promote its own independence (despite the negative effects globalization has had
and continues to have on any notion of real sovereignty), Beijing has and will
continue to seek improved relations with non-Western powers. Africa has not been a
exception to this policy and this is likely to continue.
Japans involvement in Africa has distinctly different bases to these of China, but
notably cognate ends. Where Japan fostered selective commercial and aid linkages
with viable African recipients in the early post-independence era, its entanglements
with the continent have become broad-ranging in the contemporary era. It has also
become decidedly more political. As Japans application of its ODA Charter shows,
the country is more willing to utilize aid as an overt diplomatic instrument. This is no
new feature of Japans aid-giving in Africa; indeed Japans earlier aid programme in
the continent was extensively (though subtly) built on diplomatic ties. What is
different is that the ODA Charter is seen as a more legitimate instrument of
diplomatic coercion, as the principles which it enshrines human rights,
democratization, military non-proliferation are (supposedly) universal.
But this is also where the discrepancy in Japans policy towards Africa is evident: by
being a prominent power in Africa, the continent does provide Japan with a means
to heighten is international political prestige. Japan thus keenly takes the lead in
multilateral fora on African economic and political development. It does so,
however, through an odd juxtaposition of purported (Western) universal principles,
and Asian paths of growth. If one considers that Japans dual posing as a developed
and a non-Western power has increased its appeal in the continent, one could
construe that this policy aims towards a similar end as Japans earlier multilateral
diplomacy in Africa to service its UN ambitions. To this extent, Japans political
agenda in Africa converges with that of China. To amplify supplication for this
agenda Japan thus invokes a widely diffused aid programme. However, Japan is also
driving a more concentrated economic cooperation programme in Africa, zoning in
on Southern Africa. Whilst, as in the case of China, these linkages are essentially
commercial and apolitical, these ironically dovetail with the explicit political and
economic agendas of both in the continent. The fact that this is, as we have noted,
encumbered with inconsistencies makes it uncertain whether China and Japans
enhanced involvement in Africa in the 1990s will as a consequence contribute to the
true placing of Africa as a participant in the international system, or help to foster
the entrenchment of the continent as a spectator.

30

Dalhe Huse, Martine and Muyakwa, Stephen L. (2008), China in Africa:

Lending, Policy Space and Governance, Norwegian Campaign for Debt
Cancellation, Norwegian Council for Africa.
The report findings show that Chinese lending is generally welcome in Africa. The
loans that China provides often contribute to financing infrastructure and other
projects that African countries need. However, it is of concern that China is lending
to countries that already have large debts outstanding. It is not the lending per se
that is problematic, since it seems that Chinas lending occurs in resource rich
countries. What makes China a risk to debt sustainability in poor countries is the
lack of transparency in loan contraction processes. Loan contracts between China
and African countries are not open to public scrutiny. This leaves a lot of power in
the hands of a few African leaders. As our case study from Zambia shows, loan
contracts are often made at the highest political level, and because of the lack of
transparency, the agreements are not available to parliament, civil society or
media.
The lack of transparency makes it difficult to assess how much debt is being
contracted and on what terms. It also increases the risk that funds will not be used
for the intended purposes and might turn out to be cases of illegitimate debt in the
future. The report concludes that in order to prevent irresponsible loan contraction,
there is a need for responsible lending practices to be put in place.
The report also aims to show that Chinas presence as a lender in Africa provides an
alternative to the traditional donors within the development paradigm. Chinas noninterference policy implies that China does not have any conditions attached to
loans apart from the requirement to support the one-China principle and to reject
the legitimacy of Taiwan as a country. Traditional donors on the other hand, have
applied conditionality aiming to change African countries economic policy. Following
the recent debt relief initiatives, traditional creditors such as the World Bank and the
IMF have less resources to draw on, and their leverage in African countries is
diminishing as countries have benefited from debt relief and graduated from debt
relief programs monitored by these institutions. The presence of new lenders,
including China as an alternative on the creditor arena, is also increasing the
leverage that African countries have when dealing with traditional creditors. In
many countries policy space has increased as a result of Chinas presence as an
alternative to creditors that apply policy conditionality.
While the non-interference policy might be positively affecting countries because it
opens up policy space, it also has negative consequences. China seems to be less
concerned with human rights standards and environmental safeguards than other
creditors. Chinas presence in states that oppress the population is also very
controversial, and China has been criticised for playing the role of a bystander in
contexts where the international community have urged Beijing to use its leverage
to influence oppressive regimes to improve their conduct.
Although it is too soon to conclude, so far it would seem that China is likely to have
a negative impact on debt sustainability and perhaps contribute to debt crisis in
countries where governance is week. Lack of transparency and accountability to the
inhabitants does not seem to stand in the way of Chinese lending if a country is able
to use natural resources as collateral for loans. The development of responsible

30

financing and framework for implementation of such is therefore paramount to

ensure the rights of future generations to freedom from vicious circles of
indebtedness.
Recent Chinese lending underlines the urgent need to establish internationally
recognised legal standards for responsible lending. The need for transparency,
accountability and inclusiveness in loan contraction processes should be recognised
by international society. Our case study from Zambia concludes that the Zambian
public should have a right to know about and question borrowing, from new and old
lenders, before loan agreements are signed. It also recommends that oversight and
watchdog institutions such as the parliament, the auditor-general and the attorney
general must have clear mandatory authority over the loan contraction process.

Davies, Martyn, Edinger, Hannah, Tay, Nastasya and Naidu, Sanusha

(2008), How China Delivers Development Assistance to Africa, Centre for
Chinese Studies, University of Stellenbosch.
The Centre for Chinese Studies at Stellenbosch University embarked on this
research project to gather information and gain insight into Chinas aid policies vis-vis Africa. The research is intended to inform both Chinese and traditional donor
efforts toward the continent.
Chinas new foray into Africa is attracting much international attention and
contentious debate. China is seemingly engaging Africa on new terms terms that
are not shaped by traditional powers, nor perhaps even by Africans themselves. It
represents a new approach to the continent that the authors have termed Chinas
coalition engagements in Africa a collaborative state-business approach to
foreign policy. Chinas foreign aid forms an integral component of this paradigm.
Chinese foreign policy towards Africa at the turn of the century underwent a
dramatic shift. As China Inc. started to internationalise after 1998, Africa became
a strategic focus for Chinese outward-bound companies, especially in the extractive
industries. Beijing accorded Africa renewed importance. This resulted in the
conceptualisation and creation of a new vehicle, the Forum for China-Africa
Cooperation (FOCAC) housed within the Ministry of Foreign Affairs, to coordinate
Chinese foreign policy objectives toward Africa.
Through FOCAC, Chinas Ministries of Foreign Affairs and Commerce are starting to
align their respective responsibilities toward more effective coordination and
implementation of a Chinese foreign and aid policy toward Africa. This attempt at
formulating a coherent foreign policy between two government departments is
playing out in Africa but this joint departmental coordination is being made more
difficult by the dramatic increase in aid spending by Beijing.
The government of the Peoples Republic of China has a broad and, at times, vague
definition of what constitutes foreign aid. While there may be gradual alignment of
Chinese aid with the OECD-DACs definition of the constitution of aid over the
medium term, some unique components of Chinas approach will remain. The

30

monitoring of its aid commitments and their implementation is proving difficult,

even for the Ministry of Commerce, as well as government think-tanks.
Chinas approach has been one of mutual respect, also awarding small African
countries with relatively little economic or political significance, with aid and
investment support. However, it is likely that resource-rich countries such as
Angola, Sudan, Nigeria and Zambia, as well as more politically strategic countries,
such as South Africa, Ethiopia and Egypt, are priority countries in Chinas broader
African engagement.
Figures on Chinas aid disbursements to Africa remain vague. In absence of a central
aid agency, the lack of general time series data on aid flows and the nontransparent nature of Chinese loans complicate the process of defining, calculating
and monitoring Chinas development assistance to the continent.
The Chinese Government delivers bilateral aid in terms of grants, interest-free loans
and concessional loans and the aid policy formulation process for these is outlined
and discussed in this report. China EXIM Bank, one of Chinas three policy banks and
the sole provider of concessional financing, had financed over 300 projects in Africa
by mid-2007, constituting almost 40 percent of its loan book. The Banks lending
practices are often linked to Chinas foreign aid policy providing concessional loans
mostly to infrastructure development. The recent MOU between China EXIM Bank
and the World Bank holds out the promise of donor collaboration between both
institutions in African infrastructure programmes of which the first potential project
for cooperation is said to the Mphanda Nkuwa Dam in Mozambique.
Extending financing on commercial terms is China Development Bank. The Bank, in
May 2007, was designated to manage the $5 billion China-Africa Development Fund
announced at the FOCAC 2006 Summit. Even though it is termed a development
fund, it has been put in place to finance the market entry of Chinese firms into the
African economy.
Part of Chinas strategic industrial plan toward Africa is to establish five preferential
trade and industrial zones for Chinese business entry in Africa. Located in Zambia,
Mauritius, Egypt, Nigeria, and possibly Tanzania, this initiative emanated from the
Beijing Action Plan announced at FOCAC 2006. A financing and infrastructure
component of these zones will be categorized as foreign aid by the Ministry of
Commerce at the next FOCAC summit to be held in late 2009 in Cairo.
The research incorporated in-market visits to Ethiopia, Ghana and Zambia. In
Ethiopia, China is providing assistance across various fields and has become an
important development partner for the country. Whilst Chinese engagement in
Ethiopia initially emerged in the construction sector, controlling 50-60 percent of
road construction, China has made commercial inroads into the manufacturing
industry.
Compared to Ethiopia, Ghana has been awarded several loan agreements across
the construction and infrastructure sectors. The construction of the Bui Dam,
financed by China EXIM Bank, is the single largest Chinese financial commitment to
Ghana to date and will have a significant impact on the power generation capacity
of the country.

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In Zambia, Chinese companies have been involved in more than 35 aid projects in
agriculture and infrastructure development. This has included the construction of
the Government Complex and more recently the construction of the first Chinese
Special Economic Zone in Africa, in the Chambishi copper belt.
While it is a challenging task to evaluate the aid policy and practice of the Chinese
Government to Africa, the authors outline the main drivers of this process, with
emphasis on South-South Cooperation, a focus on the intersection of the aid and
commercial incentives, political drivers and Asian competition, as well as the issue
of conditionality.
In conclusion, the authors provide recommendations to relevant stakeholders that
are engaged in the aid process. Recommendations for African countries include
developing a better understanding of the Chinese approach to aid; facilitating
regional coordination; avoiding poor coordination which may lead to Chinese aid
fatigue; avoiding the division of traditional and emerging donors; strengthening the
African voice; improving the reporting mechanisms within recipient countries as well
as aid monitoring; and improving debt reporting.
For the PRC Government, recommendations are structured around managing aid
policy efficiently; cooperation with traditional donors; greater transparency in the
aid system; broadening the FOCAC constituency; and engaging African institutions.
Traditional donors are encouraged to work towards constructive partnerships; to
avoid political suspicion; as well as to coordinate and pursue dialogue around
harmonisation to build a partnership for Africa to meet the MDGs.
The turn of the millennium marked the prioritisation of Africa in Chinese foreign
policy thinking. The continent has not received attention from China to this extent
since the 1970s. This strategic shift in international relations between China and
Africa is attracting a great deal of interest and commentary. It is imperative that this
engagement be channelled toward the development of Africa economies and
societies. This, however, is as much the responsibility of Africans themselves as it is
the Chinese.

Davies, Penny (2007), China and the End of Poverty in Africa Towards
Mutual Benefit?, Sundbyberg: Diakonia.
1. Introduction
In November 2006 China hosted the Third Ministerial Conference of the Forum on
China-Africa Cooperation (FOCAC) attended by 48 African countries. This
unprecedented high level meeting manifested the increased cooperation between
China and Africa in recent years.
Undisputedly, Chinese policies, including trade and investments and its role as a
donor and creditor, will have an important impact on the future of developing
countries in Africa and the joint global challenge to combat poverty.

30

The purpose of this report is to contribute to an increased knowledge and

understanding of Chinas role in Africa. The target group is foremost Civil Society
Organisations (CSOs) across the world engaged in various types of development
work.
The focus of the report is Chinese development assistance policies, i.e. Chinas role
as a donor to Africa, an area not so much written on in comparison with trade and
investments. The report explores Chinese views on Chinas role as an important
player in development policies and what responses China has to concerns
expressed by external stakeholders about the increased Chinese cooperation with
Africa.
The report builds on desk studies between March and July 2007, as well as 27
interviews with foremost Chinese decision makers, institutions, organisations and
researchers but also donors to both China and Africa, carried out in Beijing March
April 2007.
2. China goes into Africa an overview of Chinas increased engagement
2006 marked a historic year in China-Africa relations. The FOCAC Summit witnessed
the birth of the establishment of a new type of strategic partnership between
China and Africa featuring political equality and mutual trust, economic win-win
cooperation and cultural exchanges. In the Action Plan for 20072009 adopted at
the meeting, China has made a number of concrete pledges. The same year China
adopted a specific African Policy drawing up the principles and areas for future
cooperation.
China is moving rapidly ahead forging ties with African countries manifested in
increasing trade and investment figures. In 2006 trade surged to US$55 billion and
is set to reach US$100 billion by 2010. China has become Africas third largest trade
partner. The share of Africa in total Chinese outward FDI has been marginal up till
now, but is increasing rapidly. In May 2007 China announced that it will provide
about US$20 billion in infrastructure and trade financing to Africa over the next
three years.
Chinas so called march into Africa is to a large extent linked to its growing
economy. Access to raw materials and oil in particular is a key motive for Chinas
engagement in Africa. There are also more politically motivated drivers stressed by
Chinese scholars. Africa is important for Chinas foreign policy agenda and the
building of alliances.
In much of the debate in a western context on Chinas role in Africa, China is often
viewed as a threat and competitor to industrialised countries for access to Africas
natural resources. This disregards the fact that much of the resources imported into
China are re-exported in the form of value added inputs or products to uphold
consumption in industrialised countries. China also has a legitimate claim to
develop and lift its population out of poverty for which it will need resources. While
China is responsible for its actions in Africa, these two aspects pose challenges not
only for China and Africa relations, but for rich countries whose consumption and
production patterns are unsustainable.

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There is an evolving international debate about the benefits and drawbacks for
Africa of this new strategic partnership. Most analyses point to the fact that the
picture is not black and white.
A key question is how African countries are to make the most of the possibilities and
address the challenges which China brings for poverty reduction and development
at large. This has implications for domestic policies in Africa, for negotiations
between Africa and China, and for traditional donors who need to attune their
policies towards Africa and China and find a new role as the Sino-African
cooperation grows stronger.
3. China a developing country and an emerging donor
China has an interesting dual role as both donor and recipient country. China has
achieved remarkable success in lifting hundreds of millions of people out of poverty.
Nevertheless, China is facing a number of challenges, many of them similar to those
facing African countries.
China has been the largest aid recipient for much of the past 20 years but has
recently slipped behind. ODA to China reached US$1.757 billion in 2005 according
to OECD. Given Chinas successful economic performance, donors have had
discussions whether to phase out aid or not. Most donors will probably stay
engaged, but from 2008 Chinas net ODA will fall sharply.
The aid levels are small in comparison with the size of the population and there is
no significant direct impact on poverty through the provision of funding. However,
according to both donors to China and Chinese scholars, aid is very important in
terms of the exchange of ideas. This is also stressed by the State Council Leading
Group Office of Poverty Alleviation and Development (LGOP) suggesting a triangular
exchange of ideas where China could learn from developed countries and at the
same time share experiences with developing countries on Chinas success in lifting
large parts of its population out of poverty.
Chinese scholars stress that China and African countries share similar challenges
and experiences as developing countries. On another level, it has been said that
Chinas development model offers an alternative to African countries to the
structural adjustment policies prescribed by the World Bank and the IMF. Initiatives
are underway for experience sharing.
4. The evolution of Chinas assistance to and cooperation with Africa
2006 marked the 50th anniversary of diplomatic ties between China and African
countries. Chinas African policy has in modern history gone through roughly three
phases:
A first phase, during which Chinas policy was primarily politically and
ideologically driven in supporting African people in their struggle for national
independence.

A second phase with a move away from ideology to a focus on economic

cooperation. This meant a decrease in Chinese aid to and trade with African
countries.

30

A third phase, when China again intensified its cooperation with African
countries.

Since the 90s Chinas African policy has had both a political and economic focus,
and other forms of cooperation, including cultural, have been added to this. The
present strategy is thus described as more inclusive and holistic in its approach,
which is manifested in the FOCAC.
Chinese scholars put emphasis on the continuity of relations with African countries.
The eight principles for providing aid to foreign countries, first laid out by Premier
Zhou Enlai in the 60s, are still relevant principles that continue to guide policies.
There has however been a move towards more specific commitments and pledges.
A fundamental principle, enshrined in Chinas 2006 African Policy, is to provide
assistance with no political strings attached (see further below). Another of the
eight principles dating from the 60s, is the principle of equality and mutual
benefit. Aid is carried out within the framework of South-South cooperation as one
of several forms of cooperation. China does not use the language of donor and
recipients when giving aid, but mutual benefit.
5. Chinese development assistance to Africa
The following are the main institutions involved in assistance to African countries:

The State Council is the highest executive organ as well as the highest organ
of State administration, above the government ministries.
The Ministry of Commerce (MOFCOM) is the main government body in charge
of Chinese aid and coordinates aid policies with foremost the Ministry of
Foreign Affairs, but also with other government ministries and bodies
involved.
The Ministry of Foreign Affairs has an advisory role on aid and economic
cooperation and is in charge of diplomatic contacts and of coordinating
concrete policies in the bilateral undertakings.
The Finance Ministry is in charge of the budget as well as multilateral aid.
The Chinese Embassies monitor the implementation of projects and report on
their progress to the Chinese government.
The Export-Import Bank of China (China Exim Bank) is in charge of Chinese
government concessional loans.

There are also other government ministries involved in channelling aid and banks
which play a role in the Chinese governments going out strategy.
Chinese development assistance processes are complicated with many actors
involved. China has no development cooperation agency to coordinate the policies,
but there have been talks of setting one up. The FOCAC process has however
resulted in an institutionalised coordination process of cooperation with African
countries in general.
China has made a commitment to double its 2006 assistance to Africa by 2009.
However, China does not disclose how much aid it gives to foreign countries and it
is unknown what the doubling will mean in actual figures. In 2006, Premier Wen

30

Jiabao, for the first time according to Chinese scholars, gave a figure when in a
statement he said that China from 1949 to date has spent 44.4 billion yuan
(approximately US$5.6 billion) assisting African countries. This figure is however
thought to be too low according to Chinese scholars. The China Exim Bank stated in
February 2007 that it has extended concessional loans to Africa with a total
outstanding balance of approximately US$89 billion.
In the absence of officially reported annual aid flows, various estimates have been
made based on press reports and pieces of information from official government
speeches. Regardless of the exact figure it is clear that China will continue to
substantially increase its aid to African countries.
One set of reasons given why China does not disclose its aid figures relate to
cautiousness or lack of will on the part of the government to report the volume. A
second set of reasons relate to government constraints and that the government
itself might not know the exact figure. China has no clear criteria for how aid is
calculated. The government is according to MOFCOM currently looking into what
could be defined as aid. There is a strong case for developing and disclosing both
criteria for and volume of Chinese aid.
There are three forms of assistance:

Grants in kind not in cash, provided by MOFCOM;

Interest free loans often converted into debt cancellations, provided by
MOFCOM;
Concessional loans introduced in 1995 and provided by the China Exim
Bank.

Debt relief: The Chinese government has announced three packages of debt relief;
in 2000, 2005 and 2006. As of April 17 2007, the first package had been delivered
to a value of 10.9 billion RMB (approximately US$1.38 billion) to 31 African
countries.
Chinas assistance is exclusively project based. Projects are mostly part of bigger
package deals which include other types of cooperation with the recipient countries.
Over the past 50 years China has, according to MOFCOM, assisted African countries
with 133 infrastructure projects, 38 hospitals and has dispatched 16 000 medical
personnel to Africa.
China does not concentrate on specific countries; the recipients include all 53
African countries. Top recipients, according to Chinese scholars, are Angola, Sudan,
Tanzania, Zambia and Ethiopia. It is difficult to get aggregated information of the
compilation of loans and grants, to which countries and what projects China directs
its assistance.
Chinas development assistance is mostly bilateral. China channels some aid via
multilateral institutions including UN agencies, the ADB and the AfDB, and will do so
increasingly.
China adheres to the principle of multilateralism in its general political priorities. In
particular China stresses the need to promote the interest of developing countries in
the international arena.

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6. Aid effectiveness
Aid effectiveness has become a key word in discussions around development
finance. CSOs have long highlighted the need for not just more but better aid.
External analyses state that little is known about the quality and impact of Chinese
assistance to Africa and of how Chinese authorities assess such issues.
A common answer to the question what aid effectiveness means for China, was that
Chinese aid is effective as it is concrete; it is providing Africa with concrete things
they can use, like buildings and roads.
According to MOFCOM an evaluation is done for each project and there is an
institutionalized process for this. A Chinese scholar however stated that there are
only rough evaluations of the social benefits of aid. On the issue of the risk of
corruption, scholars and MOFCOM said that the fact that China does not give aid in
cash but in kind (material, roads, hospitals etc.) means there is less risk of
corruption.
Officials and scholars stated that China in general is interested in learning from
other donors with a longer experience of providing aid; at the same time there is
strong confidence in the Chinese model.
China has signed up to the Paris Declaration on Aid Effectiveness thereby
committing to its five principles including ownership, alignment and harmonisation.
According to donors to China, China probably signed up in its capacity as a recipient
rather than as a donor country.
China is said to put a lot of emphasis on ownership of recipients and aligns its aid to
national priorities, but through other mechanisms than that of traditional donors.
The Chinese way of aligning aid and its concept of ownership are however focused
on governments as opposed to a model of broad based participation when setting
national priorities.
Concerns raised by external actors are Chinas use of tied aid and that Chinese
projects are carried out with Chinese labour, inhibiting local employment, capacity
building etc. The Chinese government has said it has no preference per se for
Chinese labour. Pledges have been made to prioritise local capacity building and
technical support is given to prepare local people to take over and run projects.
Whether these measures are sufficient or not, needs to be studied in the respective
African countries.
Donors to China and Africa try to engage China in joint discussions on Africa and
development. The UN was stated to be Chinas first choice if engaging in joint donor
initiatives. China participates in donor meetings in African countries if the recipient
country governments invite them, but they do not want to be associated with donor
driven initiatives.
A key challenge ahead in terms of aid effectiveness is the fact that annual aid
figures are not disclosed. There is a need for independent and transparent audit and
reporting processes, involving the African countries at the receiving end. In terms of
donor cooperation, a main challenge will be to overcome the barriers of suspicion
which seem to exist. African countries and their citizens are key in this, as they in

30

the first place are the ones to define what aid effectiveness means in their
respective contexts and what kind of assistance donors could provide.
7. No political strings attached
According to Chinas African Policy, China will provide assistance with no political
strings attached. The one political condition China does have for the establishment
of its relations with African countries is the one China principle, i.e. not to give
formal recognition to Taiwan. However, China does give assistance to all 53 African
countries, not just the 48 it has formal diplomatic ties with. Albeit China does not
push for reforms in recipient countries, tied aid is a type of condition China has, as
stated above.
The no political strings attached policy has raised much debate and reactions from
external actors. According to CSOs there is a risk that the Chinese policy will: 1)
strengthen repressive regimes/elites that are not working in the interest of poor
people or development at large 2) weaken social and environmental standards and
not benefit poor people and the environment 3) weaken efforts to combat
corruption and promote good governance. Other donors to Africa have expressed
concern and lashed out with fierce criticism.
There is clear evidence that there are grounds for the concerns expressed by CSOs
and donors to Africa, although more impact analyses are needed.
Three general motivations for the principle were given by Chinese stakeholders:
First, the non-interference policy is deeply rooted in Chinas historical experience of
western interference and China is therefore careful not to interfere in African
countries. Second, the Chinese government is careful not to interfere as it sees its
political problems in Taiwan and Tibet as internal affairs. Third, the principle is based
on Chinas own experience of being able to develop according to its national context
without facing conditionalities.
A general view among Chinese scholars is that China is willing to learn from both
positive and negative experiences, and find a middle way if dilemmas arise. If
African countries raise issues of environmental and social concerns China will listen,
more so than if western countries raise them.
Regarding the concern that China supports regimes like those in Zimbabwe and
Sudan, which western donors have shunned due to their human rights violations,
Chinas way is said to be to conduct quiet diplomacy in support of African regional
organisations for them to solve their own problems. Several scholars stated that
Chinas attitude in Sudan has changed, illustrating that China is not immune to
critique raised by the international community. This is not to say that the initiatives
are sufficient.
According to Chinese scholars the government is very aware of environmental and
social concerns in relation to Chinese companies activities abroad and is making
efforts to address these. This is said to be a priority issue as China realises the risks
of negative images of its companies.
The Chinese view is that Chinese aid is less afflicted by corruption as the aid is
given in kind not in cash. However, the problem of corruption as such has been

30

acknowledged by the Chinese government and initiatives have been taken to

address this. The view is that solving the problem of corruption by using aid money
to pressure for change, will not work.
Looking ahead, although some measures have been taken to deal with the issue of
social and environmental standards it is clear that this remains a huge challenge for
the successful implementation of Chinas African Policy. On the one hand it reflects
the complexity of several different driving forces and conflicting interests involved.
On the other hand, it reflects some of the challenges China is facing and grappling
with on a domestic level.
The key question is whether Chinas no political strings attached policy will benefit
African people and the environment. It is clear that the notion of sovereignty of the
nation state is valued very highly by China. Therefore, whether the no political
strings attached policy will be beneficial or not is left in the hands of the
governments in place. The question is what happens in cases where governments
either lack the will or capacity to protect and work for the benefit of people and the
environment. This is where the non interference policy will leave poor people and
the environment short.
Some analyses suggest that as Chinas presence in Africa expands it will be more
difficult to stay out of domestic policies. The non interference is more and more
difficult to reconcile with Chinas other objective of being a responsible international
stakeholder.
There is a need for a global agreement between new and old donor countries and
recipients on responsible financing standards.
8. Debt sustainability
The substantial increase of loans from China has generated a concern among
development institutions that new non-concessional or low concessionality loans will
threaten the debt sustainability of poor borrowing countries and thereby trigger a
new debt crisis. This would undermine the debt cancellations granted so far.
A common response from Chinese scholars to the question of the risk of a debt build
up is that China does not expect African countries to pay back if it is a government
to government loan and the recipient is facing pay back difficulties. China has
provided debt relief to 31 African countries to the amount of 10.9 billion RMB
(approximately US$1.38 billion) and has made further pledges.
Another common answer to the concern raised is that Chinese lending is still small.
Chinese stakeholders also point out that Western countries are responsible for the
debt crisis.
As China steps up its lending to African countries, the question of how the potential
debt distress is assessed by China is still very relevant. New lending pledges
indicate that China in the near future will no longer be a small provider of loans.
According to the Exim Bank, China deals with debt sustainability in the lending
agreements in three ways: They ensure project returns will be robust; they will
consult with the local IMF office to discuss the loan in the context of the debt

30

sustainability framework; they ensure that the project is part of the countrys
development plans.
According to the President of the AfDB, Chinas view of debt sustainability differs
from that of traditional donors. The Chinese, he has said, look at the potential of
African countries in the long term, rather than assessing their immediate ability to
repay loans.
As there is little transparency on the exact terms of Chinese loans and to which
countries what loans are given, it is difficult to know if Chinese lending is a threat to
the debt sustainability of poor countries, and if so how big a problem it is. The
concern is however not difficult to motivate. Failed export credit lending was behind
much of the previous debts of African countries and China is rapidly moving ahead
in providing such loans.
The reactions of traditional lenders have been criticized by CSOs and others, who at
the same time share the concern for the debt sustainability of African countries. In
particular the IDA/World Bank so called free rider policy, which punishes poor
borrowing countries who take on new more expensive loans, is seen as
counterproductive.
It is clear that China as a new lender has accelerated the debate on responsible
lending practices among traditional donors. In the best case scenario, this could
result in traditional donors stepping up their commitments and reforming some of
the existing mechanisms which fall short of providing a long term solution to the
debt crisis, as well as result in an agreement with China on debt sustainability and
other aspects of responsible lending.
Mutual understanding and dialogue are needed between new and old lenders and
borrowing countries.
9. Conclusions and possible ways forward
The last chapter identifies a number of conclusions and possible ways forward that
might be of relevance for different stakeholders: CSOs in western countries, in Africa
and China, and governments: the Chinese, African and western. The headings are
listed below:
1. Chinas assistance to and cooperation with Africa are changing the rules of
the game and threaten to leave governments, institutions and organisations
that do not act strategically by the wayside;
2. Triangular dialogue approaches are needed;
3. Western governments should practise what they preach;
4. The Chinese government should convert words into action from a narrow
non-interference to a broad based non-indifference;
5. Chinas growing role as a lender and donor to Africa challenges current
development paradigms towards joint standards for responsible lending and
effective aid;

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6. Chinas economic rise and so called march into Africa challenges

unsustainable consumption and production patterns towards global
cooperation for sustainability.

de Haan, Arjan (2009), Will China Change International Development as

We Know It? ISS Working Paper No. 475, Den Haag: Institute of Social
Studies.
The answer to the question whether China will change international development is
both no and yes. The newness of the different experiences that China presents
should not be over-stated. Its development record is almost unparalleled, but the
explanations may not be as unique as sometimes suggested: its land reform,
strategies of industrialisation, export-promotion, newly emerging global financial
and soft power, can all be described without having to refer to necessarily unique
characteristics. And, as Chinese academics would be first to emphasise, the
development model has created many of its own problems, notably domestic
inequality, environmental degradation, and global financial instability. What makes
China fairly unique but its explanations not exceptional is the commitment and
ability to address existing and emerging development problems.
But there are lessons that can be drawn from Chinas development success, and I
believe the international community is rightly playing a growing role in promoting
such lessons, and can do much to ensure this becomes less supply-led than is
currently the case. There are lessons from Chinas records in reducing poverty,
providing food security, promoting alternative industrial models, how it has provided
and funded infrastructure, etc. Perhaps notably though much less easy to
replicate there is great significance in understanding Chinas processes of policy
reforms, the experimental and incremental nature of addressing development
problems. Chinas experience needs to be better understood globally, and needs to
be articulated in a way that makes it understandable to an international audience,
while retaining the Chinese characteristics of the narrative.
In any case, China growing economic and political role, increasing confidence, and
intentions to take its deserved position in the international community, all are
already changing international development as we know it. Its approach to aid will
have a growing influence in Africa, whatever the views of the old donors. It is too
early to assess what that impact will be, as Chinese approaches are evolving very
rapidly, and it is not impossible that a whole new different aid structure will emerge
(though that is certainly not a current priority). As with all new forces, the impacts
will be varied, and better mutual understanding arguably can help to make
international development efforts of all parties more effective.

de Haan, Arjan (2010), Will Emerging Powers Change International

Cooperation? Implications of Chinas Foreign Aid for Dutch and Other
Donors, Mimeo, submitted to The Netherlands Yearbook on International
Cooperation.

30

I would hazard a guess that it will not be very long before Chinas global role is no
longer seen as exceptional as it is at the moment. A main reason for that would be
that China itself does not want to be seen as exceptional: it wants to reclaim its
rightful global role and status, but it does not have an interest in standing out too
much, and the recent experience suggests that if it does, it is likely to increase
expectations to levels that prove unhelpful (and some people have suggested that it
is also a lesson it learned from South Korea). There are clear signs that China is
becoming an ever-more important part of the international fora. When it does this it
will both modify and adapt to the mode of discourse in all its diversity including
within Africa where serious engagement with and analysis of Chinas role is rapidly
emerging and to some extent its practices. Maintaining distinctiveness should not
be too problematic, given for example enormous differences within the community
of old donors. Some would argue that it is taking long before China is taking place at
the tables of the old donor, but in ten to twenty years we will probably look back at
an amazingly rapid transition of Chinas role as aid recipient to that of a donor.
Many of the international agencies have been proactive in working with
China, including the World Bank, UNDP, the DAC, DFID etc. During the January 2010
(in The Hague) conference of Dutch Ambassadors in Africa there was besides a
growing wealth of experience and diversity of experience regarding Chinas role
also an enormous amount of interest in finding out how to engage with China. Those
having worked in Beijing on this issue have realised that currently there is more
pressure from the old donors for this collaboration, than demand from Chinese
agencies, which by comparison are enormously under-staffed, thus limiting the
mere capacity to respond to calls for collaboration. But most people agree that the
interest for collaboration is mutual, and this should not stop international agencies
to explore new venues of collaboration. For each country venues for collaboration
will be different, and a discussion on possible collaboration with China on
international development could very well reinvigorate the post-WRR discussion on
needs for specialisation and professionalisation.
In the process, there is much to learn for the old donors, about Chinas own
development model, and how it is making thus almost-unique transition from being
an aid recipient to an aid donor. The international community could for example
play a role in facilitating the process of learning from Chinas own development
successes and challenges about which less is known within the international
community than about other emerging economies or at least stop articulating
mistaken notions about China. At least, the old donors and indeed China itself
could draw on lessons from aid provided to China to understand the conditions
under which aid can work, thus also countering critiques aid has been a complete
failure.

Dollar, David (2008), Lessons from China for Africa, Policy Research
Working Paper 4531, World Bank.
Each developing country faces unique challenges and has to find its own way
forward. Countries, however, can learn from each other and adapt lessons taken
from other experiences. Chinas success with growth and poverty reduction over a

30

quarter century provides many interesting lessons. On the positive side I have
focused on the sound investment climate, openness to foreign trade and direct
investment, cost recovery as a basis of infrastructure expansion, and support to
agriculture combined with rural-urban migration as interesting areas that other
developing countries might want to study further.
The way in which China has approached reform also provides interesting lessons.
Chinese reform is sometimes characterized as gradual, but I do not think that this is
an accurate characterization. The actual change in institutions and policies in China
over a 25 year period is one of the most remarkable transformations in history. It is
hard to find other examples in which there has been so much change in such a short
period of time. Rather than gradual, I would call Chinese reform pragmatic and
experience-based. China is a large and diverse country. In many sectors there has
been a process of pilot testing reform, evaluating results, and scaling up good ideas.
Sometimes this has been top-down and deliberate: foreign trade and investment
were initially liberalized in special economic zones, and as good results were
achieved the trade and investment reforms were then extended to more and more
locations. But the experimenting has often been bottom-up as well. Much of the
enterprise reform, privatization, and creation of a sound investment climate has
been the result of experimentation at a local level. Localities were given the
objective of growth and the freedom to experiment. Competition among cities has
then led good ideas to disseminate broadly.
If there is a lesson here for other developing countries, it is to be pragmatic about
reform. Try out new ideas, evaluate results, and then expand ones that work. There
is also a useful lesson here for development agencies such as the World Bank. The
World Bank has never had a particularly important financial role in China, but it has
financed pilots and innovations in a broad range of sectors. In the early days of
reform World Bank projects supported the development of grain markets, the power
tariff reforms discussed above, the use of tolls to finance road construction and
management, commercialization of rail and ports. More recently the focus of the
program has shifted to environmental and social issues. World Bank-financed
projects today support renewable energy technologies (wind, biomass), waste water
treatment and clean-up of lakes and rivers, aforestation, urban transport
management, rural health and education reform, and programs to help rural
migrants integrate into urban employment. China uses the World Bank to help it
introduce, evaluate, and disseminate innovations, providing a good model for how
the Bank can help in successful middle-income countries.

Eisenman, Joshua and Kurlantzick, Joshua (2006),

Strategy, in Current History, May 2006, pp. 219-224.

Chinas

Africa

Competing Values
Ultimately, Africa will provide a test of whether Beijing can be a successful great
power, exerting influence far from its borders. In some respects, Chinas influence
may prove benign, as China shares burdens in Africa with other nations like the
United States, becomes a greater source of investment in the continent, and funds
much-needed aid programs.

30

Even as the United States has largely ignored African nations in UN forums, China
has supported a range of proposals favored by African countries on UN Security
Council reform, peacekeeping, and debt relief. In so doing, Chinese officials often
portray Beijing as a champion of the developing world that listens to other
countries, drawing an implicit contrast with the United States, which China portrays
as uninterested in developing nations needs. As Chinese Prime Minister Wen Jiabao
put it, As a permanent member of the UN Security Council, China will always stand
side by side with developing countries in Africa and other parts of the world.
Yet Beijings influence must be weighed in light of the fact that China, at least for
now, does not share American values of democratization and good governancein
Africa or anywhere else. Because Chinas influence might constrain the existing
powers in Africa, including the United States and France, the temptation may be to
match some of Chinas efforts on the continent in order to win resources. But it is
more important that the United States leverage its values, which are still more
appealing to average Africans.
For the United States, Chinas growing role in Africa should be a wakeup call.
Washington needs to convince both average Africans and their leaders that their
future is better served, over the long term, by working more closely with the United
States, the European Union, and international financial institutions. After all, a
Chinese victory on the continent could come back to haunt the struggling residents
of Maputo and other African capitals.

Foster, Vivien, Butterfield, William, Chen, Chuan and Pushak, Nataliya

(2008), Building Bridges: Chinas Growing Role as Infrastructure
Financier for Sub-Saharan Africa, Trends and Policy Options, No. 5,
Washington, DC: The World Bank.
This study documents the emergence of China as a major new financier of
infrastructure in Sub-Saharan Africa. Chinese financing commitments rose from less
than US$1 billion per year in the early 2000s to exceed US$7 billion in 2006, which
was Chinas official Year of Africa. Such indirect evidence as exists on the
financing terms of these loans suggests that they are more favorable than the
private capital markets, though not as soft as ODA. Thus, Chinese loans were found
to have an average grant element of 36 percent compared with 66 percent for ODA.
China is not the only non-OECD financier to be playing a major role in Africa. Indian
finance for African infrastructure projects is not far behind, with commitments
averaging US$2 billion per year over the period 2005 to 2006. Chinese and Indian
finance share many common characteristics; including their channeling through the
respective countries ex-im banks and their focus on countries that are becoming
major petroleum trading partners, such as Nigeria and Sudan. In addition to China
and India, the Arab donors are also playing a significant role in African infrastructure
finance, with their resources being channeled primarily in the form of soft loans
through development funds focusing on roads and other social infrastructure
projects.

30

Chinas approach to its intergovernmental financial cooperation forms part of a

broader phenomenon of south-south economic cooperation between developing
nations. The principles underlying this support are therefore ones of mutual benefit,
reciprocity and complementarity. Unlike traditional ODA, financing is not channeled
through a development agency, but rather through the Ex-Im Bank with its explicit
mission to promote trade. Given the export promotion rationale, the tying of
financial support to the participation of contractors from the financing country is a
typical feature. A similar approach is currently being taken by the India Ex-Im Bank,
and has in the past been used by export credit agencies of other countries.
Even compared to other developing regions, Sub-Saharan Africa faces a serious
infrastructure deficit that is currently prejudicing growth and competitiveness. The
estimated infrastructure financing needs are on the order of US$22 billion per year
with an associated funding gap of over US$10 billion per year. Against this context,
the growth of Chinese (and other emerging) finance presents itself as an
encouraging trend for the region, and can potentially make a material contribution
to closing the deficit. In the power sector, for example, the six hydropower plants
currently under construction amount to 6,000 MW of capacity and when completed
would represent a 30 percent increase over and above existing hydro capacity in
the region.
To put these findings in perspective, the combined contribution of China and the
other emerging financiers at more than US$8 billion for 2006 is broadly comparable
to PPI and exceeds the combined official development assistance of the OECD
countries that topped US$5 billion in the same year. The analysis shows a significant
degree of complementarity in the sectoral and geographic focus of traditional and
emerging finance. Non-OECD donors tend to focus on productive infrastructures,
mainly power (in particular hydroelectric schemes) and railways, and direct their
resources primarily to major petroleum trading partners. Traditional donors tend to
focus on public goods such as roads, water, sanitation, and electrification and
spread their support more evenly, reaching non-resource-exporting countries to a
greater extent.
The advent of China and other non-OECD players as major financiers presents itself
as a hopeful trend for Africa, given the magnitude of its infrastructure deficit. The
aid provided by these emerging financiers is unprecedented in scale and in its focus
on large scale infrastructure projects. With new actors and new modalities, there is
a learning process ahead for borrowers and financiers alike. The key challenge for
African governments will be how to make the best strategic use of all external
sources of infrastructure funding, including those of emerging financiers.

Gill, Bill, Huang, Chin-hao and Morrison, J. Stephen (2007), Chinas

Expanding Role in Africa: Implications for the United States, Washington
DC: Center for Strategic International Studies.
China, in its quest for a closer strategic partnership with Africa, has increasingly
dynamic economic, political, and diplomatic activities on the continent. As
demonstrated in the third Forum on China and Africa Cooperation (FOCAC) in
November 2006, the high-profile summit marked a historic moment in China-Africa

30

relations. Chinas highest leadership actively espoused the summits ambitious

vision, which was enthusiastically embraced by a broad range of African leaders.
Forty-eight African countries were present, including 43 heads of state. The Chinese
push forward in Africa raises the promise of achieving future gains that benefit
Africa in significant, constructive ways, raising hopes that China will seriously turn
its attention to long-neglected areas such as infrastructure development and that its
strategic approach will raise Africas status globally, intensify political and market
competition, create promising new choices in external partnerships, strengthen
African capacities to combat malaria and HIV/AIDS, and propel the continents
economic growth, enabling African countries to better integrate with the global
economy.
This report identifies six key factors that significantly undergird the Chinese
approach:
1. Chinas quest to build a strategic partnership with Africa fits squarely within
Beijings global foreign policy strategy and its vision of the evolving
international system.
2. Chinese leaders and strategists believe Chinas historical experience and
development model resonate powerfully with African counterparts, thereby
creating a comparative advantage vis--vis the West.
3. Chinas history of friendly, respectful, and helpful political linkages with Africa
is thought to provide a durable foundation for a future strategic partnership.
4. China believes Africa is on the verge of a developmental takeoff.
5. Chinas policymakers are confident that a state-centric approach to Africa will
build strategically on Beijings core strengths and align with the stated
preferences of African countries.
6. Policymakers believe it is in Chinas interest to engage third parties on Africa,
but cautiously, slowly, and with serious reservations.
Drawing momentum and confidence from the six key factors above, Chinas
expansive presence in Africa has been erected on an array of political, economic,
and cultural exchanges that have proliferated in recent years. These activities
visibly confirm Chinas growing interest in Africa; they also visibly signal the
continents emergent importance to Chinas burgeoning economy and rising
political stature.
While Chinas more ambitious and complex Africa policy of today may in due course
bring financial and political payoffs, alter the playing field in Africa, and create
pressures for changes in U.S. policy approaches, multiple risks also attend Chinas
strategy. In particular, Beijing faces nine core challenges in translating its vision of a
strategic partnership with Africa into a sustainable reality:
1. China will need to work assiduously to overcome obstacles tied to language,
culture, religion, and racial bias.
2. Although the FOCAC Beijing Action Plan calls for increased exchanges
between African and Chinese media, and for the two sides to facilitate the

30

placement of resident correspondents in China and in African countries,

Chinese media and popular culture have only very limited entry into African
markets thus far. Knowledge and expertise about Africa in Chinas policy
advisory and think tank communities is thin and lacking in up-to-date, on-theground experience.
3. Evolving African popular opinionthe African streetis not currently
factored systematically into Beijings thinking.
4. The Chinese approach is neither familiar nor well equipped to engage with
the emergent and increasingly vocal and influential nongovernmental groups
in Africa.
5. Adhering to a formal policy of noninterference and putting it into consistent
practice will be difficult and likely clash over time with deepening Chinese
interests.
6. In the future, China will be under increasing pressure to define how it will
direct and coordinate internally the complex bundle of ambitious policy and
programmatic initiatives it is advancing.
7. The Chinese diaspora business community poses special reputational risks
related to bribery and counterfeiting, among other controversial practices.
8. Pressures will mount for China to do more to harmonize its donor activity in
Africa with ongoing international assistance, especially with respect to debt.
9. Pressures will mount on Beijing to manage its relations better with its most
important bilateral partner, the United States, vis--vis Africa.
Chinas expansive engagement in Africa inherently carries significant implications
for U.S. interests in Africa and around the world, as well as for U.S.-China relations.
Like China, the United States is in the midst of an expansive phase of ever-greater
engagement in Africa. U.S. foreign assistance levels to Africa have more than tripled
during the Bush administration. Signature White House initiatives have been
launched that have had a predominant focus on Africa: the five-year, $15-billion
Presidents Emergency AIDS Relief Plan (PEPFAR); the U.S. Malaria Initiative; and the
Millennium Challenge Corporation, which seeks to reward states that are well
governed and performing well economically with substantial new aid compacts that
will accelerated economic growth. Private-sector engagement is steadily rising,
concentrated in the energy field, and annual two-way trade reached $60.6 billion in
2005, up 36.7 percent from 2004. It is now widely acknowledged that U.S. national
interests in Africa have burgeoned to include substantial global energy stakes,
counterterrorism concerns, public health, and intensifying competition with China,
India, South Korea, and other Asian countries that have significantly enlarged their
engagement in Africa.
Up to now, the United States and China have been largely absorbed in their
separate, respective spheres, enlarging their presence and investment in Africa,
with little systematic or substantive reference to the other. Some initial think tank
research, as well as multiple media reports in the United States, has raised concerns
about China-Africa relations, often framed in apprehensive or censorious terms. The

30

United States and China did endorse in principle in 2005 a U.S.-China subregional
Africa dialogue, as part of the larger U.S.-China strategic dialogue, but since that
point there has been very little progress in building real content into that
commitment.
Chinas expansive engagement in Africa is a complex new reality that we only
partially graspfast moving, multidimensional, and long-range in its various
impactsand it calls for greater attention and action in Washington. As such, critical
work needs to be done to generate new, longer-range thinking and greater
intellectual content to help create effective U.S. policies to engage China
productively in Africa, if a costly U.S.-China clash in Africa is to be avoided. A
strategic approach can build on the reality that, broadly speaking, the United States
and China share a range of common interests in seeking a more collaborative and
constructive bilateral relationship. The relationship between the two countries is in a
period of relative stability and constructive dialogue, presenting a window of
opportunity to make further gains in expanding their common ground. Most
obviously, the two sides have become deeply intertwined economically and share a
joint interest in managing their political and security relationship in a way that
assures continued bilateral economic benefits.
Integral to any such approach, however, will be the expectation thatowing to the
weak state institutions, high incidence of conflict, and relative economic fragility in
most African countriesdevelopments in Africa, independent of U.S.-China relations,
will repeatedly test U.S. and Chinese approaches and their resolve to work
collaboratively. It will be no less important to anticipate that enduring philosophical,
ideological,
and
programmatic
differences,
mutual
suspicions
and
misunderstandings, and competitive tensions will sustain the risk of a clash of U.S.China interests in Africa. Hence the special need to anticipate flash points in
approaches to Africa and manage them preemptively: most important, at this point,
are crisis cases such as Darfur, sensitive assistance issues such as debt and
harmonization of donor approaches, and access to energy resources.
With urgent foreign and security policy concerns elsewhere around the world, and
with several major and growing U.S. diplomatic, humanitarian, developmental, and
security initiatives in process in Africa already, there is a risk that U.S. policymakers
will be unwilling or unable to give Chinas expansive presence in Africa the priority
time and policy energy it requires. This would be a mistake. The opportunities and
interests present themselves now to assess Chinas approach to Africa more
accurately, engage China more effectively, and work to shape outcomes in Africa
that are beneficial to Africans, as well as Chinese and Americans.
More specifically, this report finds several promising options for U.S.-China-Africa
collaboration at the multilateral, government-to-government, business, and civil
society levels.
Multilateral Level
Give high priority to multilateral organizationssuch as the UN Security
Council, UN operational agencies, the African Union, and African subregional
bodiesas principal mechanisms for gaining Chinese support for U.S.-ChinaAfrica collaborations in political and security spheres.

30

Encourage deeper engagement among China, the United States, and other
international donors on the issues of development assistance, poverty
alleviation programs, multilateral development banks lending, and African
debt sustainability.

Encourage engagement of China at the G-8 summit in Germany in 2007,

especially as it relates to the G-8s priority focus in 2007 on African
development.

Engage China to take part in the Extractive Industries Transparency Initiative

(EITI).

China and its African partners, under the FOCAC umbrella, should establish a
permanent secretariat or other high-level coordinating body to guide and
implement their deepening partnership.

Bilateral Government-to-Government Relations

Accelerate the development of a more substantive agenda for U.S.-China

cooperation in Africa, recognizing inherent limitations.

Increase ongoing bilateral consultations addressing immediate and emergent

challenges, especially regarding developments in the Niger Delta and in the
arc stretching from the coastal Horn of Africa and inland: Somalia, Ethiopia,
Sudan, and Chad.

Ramp up military-to-military consultations regarding Africa between China

and other key players, including the African Union, European countries, and
the United States.

Intensify collaboration on health- and education-related issues in Africa.

Business, Economic, and Trade Activities

Expect increased Chinese interest in business partnerships.

Encourage Chinese public-private partnerships in Africa.

Seek trilateral ways to work with African authorities to assure that the
massive increases in U.S. and Chinese development and trade assistance
complement one another.

Civil Society and Nongovernmental Organizations

Facilitate interaction among Chinese, African, and international civil society
organizations to meet on issues of common research interest, including
observation of grass-roots elections, cooperative activities to support
environmental protection or worker safety, and other civil society activity
related to good governance, religious practice, community health, and rights
of women and girls.

30

Facilitate interaction between U.S. and Chinese Africanists to deepen the level
of Chinese scholarly understanding of contemporary Africa.

Goldstein, Andrea, Pinaud, Nicoloas, Reisen, Helmut and Chen, Xiaobao

(2006), China and India: Whats in it for Africa ? Paris: OECD
Development Centre Studies.
China and India have fuelled the demand for African natural resources. Through
their high rates of growth, export surpluses and reserve accumulation reinvested in
US treasury bonds, they have contributed to dampen world inflation pressures,
lower global interest rates, raise raw material prices and improve Africas terms of
trade. This is however no reason to remain complacent. With the proceeds of that
demand, the future of labour-rich and skill-friendly activities may be compromised,
inequalities deepened and rent-seeking get more pervasive. Governments should
also avoid policies that crowd out other industrial activities, particularly policies that
support an appreciating currency. They should also seek to utilise increased tax
revenues from primary product exports to fund pro-poor initiatives.
There are a number of potential conduits through which African growth prospects
might be affected by the rise of the Asian Drivers. One conduit of change lies in
trading relationships. China and India are markets for African goods as well as
competitors, especially in the export-oriented clothing and textile markets in which
quotas to protect African exporters were removed in January 2005. On the other
hand, African consumers gain from cheap consumer goods sourced from the Asian
Drivers and African investors from cheap and appropriate capital goods. Another
conduit is investment. China and Indian firms are increasingly outward-oriented and
resource-hungry. Authorities will have to use the opportunity of higher Asian
corporate presence in Africa to turn them into a source of technology, skill formation
and world market access, apart from foreign finance that come with the investment.
African countries will have to define how to fit into China/India-centred global value
chains that are taking shape and not be confined to the role of primary products
suppliers.
Resource rich Africa will have to balance the need to match the promotion of jobcreating sectors (agro-business, textile, tradable services, etc.) with the desire to
capitalise on a windfall gain generated by higher commodity prices. Monetary
authorities might have to pursue a monetary policy that guards against the
appreciation of the currency to the detriment of industries competing with imports
and exporters outside the resource sector. Fiscal authorities are required to limit
public spending on services and construction in order to limit real exchange rate
appreciation. Prudent investment of windfall gains from exhaustible raw materials
will also be needed, either to close financing gaps in reaching national Millennium
Development Goals, through investment abroad or the reduction of domestic public
debt. Increasing net assets will ensure higher consumption levels beyond the
windfall period.
While a range of industries will face a real fight for survival over the next decades
partly due to unit labour cost competition from China and India, there is a list of
industries that are either complementary to the rise of Asian Drivers or relatively

30

secure from competition, such as food production. Catering for the demand
originating from China and India requires that Africa generate investment, technical
skills and capacity in the field of agriculture, a tremendous task which in turn needs
assistance from donors. Governments should also seek to ensure that smallholders
are able to participate in new export markets.
Donors need to consider whether to adapt existing policies (e.g. market preferential
access) aimed at reducing poverty and diversifying local economies in the light of
China and Indias expansion. Policies, such as emphasising the expansion of labourintensive manufactured exports as a means of poverty reduction, may need to be
fine tuned, in light of the increasing competition and falling prices for many such
products (e.g. textile in a post-MFAcontext), while vertical integration in resourcebased industries will have to be supported increasingly. Chinas and Indias
competition also make it imperative for donors to stem the process of trade
preference erosion, improve the effectiveness of existing trade preference schemes
targeted at Africa, and thereby uphold African preferential access to developed
countries markets.

Goldstein, Morris and Lardy, Nicholas, R. (2005), Chinas Role in the

Revived Bretton Woods System: A Case of Mistaken Identity, Institute for
International Economics Working Paper Number WP 05-2, Washington D.C.
BW2 has attracted considerable attention because it offers a relatively parsimonious
explanation both for recent exchange rate policy in a number of Asian countries and
for recent exchange rate and interest rate behavior in the United States.
However, the BW2 model is at variance with Chinese reality at many important
points.

It suggests that China should focus exclusively on undervaluing its exchange

rate vis--vis the dollar, but more than half of Chinas exports go to markets
other than the United States or to countries with currencies not pegged to the
dollar.
The exchange rate that matters most for Chinas competitiveness and for
employment in the export sectornamely the real trade-weighted exchange
rateexhibited a nearly 30 percent appreciation between 1994 and early
2002. That is not consistent with the view that keeping the real tradeweighted exchange rate undervalued has been an integral part of Chinas
development strategy.
BW2 implies that Chinas currency has been significantly undervalued for
about a decade whereas significant undervaluation of the renminbi is, in our
judgment, a phenomenon that dates from early 2002.
BW2s argument that an important benefit of undervaluation is a large,
efficient FDI-financed capital stock ignores the fact that foreign investment in
China has financed under 5 percent of fixed asset investment over the past
few yearsfar too small a share to offset the misallocation of investment
financed through Chinas weak domestic banking system.

30

China also appears not to conform to the DFG hypothesis that undervaluation
will bias domestic indigenous investment strongly in favor of tradable goods,
thus adding further to the superior foreign-financed capital stock. Goods that
are exported from China, and thus meet what DFG call the acid test of
efficiency, are produced with only about 6 percent of the stock of fixed
assets, of which only about half is purely indigenously owned. Without the
capital stock argument, BW2 is just another employment-oriented case for
exchange rate undervaluation.
BW2 underestimates the costs of sterilization, particularly those associated
with financial repression. Focusing on the low interest rate for central bank
paper is misleading because such instruments are placed primarily with the
four largest state-owned banksnot sold on a competitive, auction market.
Also, rates of interest on sterilization bonds and bills should include
potentially large capital losses on Chinas reserves associated with a
revaluation of the renminbi against reserve currencies. And everything
suggests that in the absence of exchange rate action, sterilization costs
would rise appreciably if, as seems likely, both US current account deficit and
Chinas reserve accumulation became much larger in the future.
The argument that supranormal profits generated by foreign firms exporting
from China will provide them with both the incentive and the resources to
lobby to maintain trade openness in the United States appears to
misunderstand several dimensions of reality in China. The profits of direct
investors in China are modest, at best. And US firms investing in China for the
most part are interested in selling on the domestic market and do little
exporting back to the United States and thus have no direct stake in
maintaining the openness of the US market. In contrast, Taiwanese and Hong
Kong firms producing in China, which do earn somewhat higher profits, are
most dependent on the US market. But they appear to make no attempt to
influence US trade policy.
Finally, BW2 sets out a faulty development strategy for China over the
coming decade. Rather than seeking to promote an enclave economy based
on a significantly undervalued exchange rate and on domestic financial
repression, China needs to accelerate the pace of financialparticularly
bankingreform; liberalize interest rates and reduce reliance on
administrative controls and window guidance; and move toward greater
flexibility in the exchange rate over the medium terms, including an
immediate 15 to 25 percent appreciation of the renminbi relative to a
currency basket (Lardy 1998, Goldstein 2004). This is what we have called a
two-stage currency reform (Goldstein and Lardy 2003a, 2003b). These
policies will promote domestic financial stability, improve the allocation of
Chinas savings to their most productive use, provide the policy instruments
necessary to manage the macroeconomy, enhance employment growth in
the tradable and nontradable sectors, and are most likely to continue good
access for Chinas exports in world markets.

Hardus, Sarah (2009), China in Africa: Consequences for Traditional Donor

Aid. A Case Study of the Possible Influence of Chinese Economic Aid on

30

Traditional Donor Conditionality in Zambia, Masters Thesis, University of

Amsterdam.
Since the end of the Cold War, traditional donors have had a dominant position in
Africa and conditional, traditional donor aid has been Africas main source of foreign
finance. However, over the last years China has re-emerged as a donor in the
continent, offering a different type of aid that consists of a combination of grants,
loans and investments. In this thesis, I looked at the possible consequences of the
availability of Chinese aid for traditional donor aid and more specifically the
conditions attached to it.
Outline of the research
In the first part of this thesis, I discussed my theoretical framework, the context in
which my research was conducted and the way in which it was operationalized. The
theory behind my research is based upon the different factors that influence aid
conditionality: the negotiating power of the recipient country, donor country
interests and the composition of the donor community, which is the focal point of
this thesis. Several scholars argue that the diversification of the donor community
increases donor competition and the bargaining power of the recipient government,
resulting in a decrease in conditionality. In this thesis, I assessed the extent to which
this theory applies to the case of Zambia and tried to answer the following research
question: To what extent is traditional donor conditionality towards Zambia
changing or expected to change because of Chinese economic aid to Zambia?.
The empirical data that were outlined in this thesis, were gathered during fieldwork
in Zambias capital, Lusaka between February and May 2009. Zambia is one of the
poorest countries in Africa and has historically been highly dependent on donor aid.
Moreover, China and Zambia have a long-standing relationship that goes back to
the 1960s. Because Zambia has recently been receiving substantial amounts of
Chinese aid again, it provided a good case to investigate the possible impact of
Chinese aid on traditional donor conditionality in Africa.
Most of my research data were collected through unstructured and semi-structured
interviews with Zambian government institutions, traditional donor agencies and
Chinese organizations. Moreover, I spoke to different Western and Zambian
organizations and several academics and consultants with knowledge on my
research topic. Through my interviews, I tried to grasp my informants perceptions
of Chinese and traditional donor aid, the possible diversification of Zambias donor
community, and the changes that might result from it. Another research method
that I used was discourse analysis. By looking at different policy documents and two
of Zambias popular newspapers, I tried to collect additional information that could
be contrasted with the data that were gathered during my interviews.
Analysis of the findings
I presented my empirical data in five chapters, which looked at different parts of my
analytical framework. In chapter four, I discussed my informants perceptions of
traditional donor aid to Zambia. I found that the current perceptions of my Zambian
informants are still influenced by their negative experiences, induced by SAPs and
the withdrawal of traditional donor aid in the past. Although they value recent
changes in traditional donor aid, they argue that too much aid goes to the social

30

sector, compared to infrastructure, and that traditional donor aid is still insufficiently
harmonized. My informants perceptions of traditional donor conditionality vary to a
great extent. While most Zambian informants argue that there is still a lot of oldstyle conditionality attached to traditional donor aid, several people within the
MoFNP and the donors themselves, claim that there is no real conditionality
anymore. According to them, donor requests that are aligned with Zambias national
priorities, address a good cause or are inevitable, cannot be considered as
conditionality.
In chapter five, I looked at Chinese economic aid. In contrast to the history of the
traditional donors, Chinas history in Zambia is looked back upon in a positive way. I
found that my informants use different definitions of Chinese economic aid, which
influence their perception of the volume of Chinese aid and the range of activities
that China is involved in. The traditional donors and most government officials use a
narrow definition, which only includes grants and loans. Because of this, they argue
that the amount of Chinese aid is negligible compared to traditional donor aid and
China is only doing some small-scale projects. Most Zambians, however use a
broader definition that also includes investment. Using this definition, the volume of
Chinese aid comes close to the amount of traditional donor aid and Chinese aid
flows into a broad range of sectors. All my informants agree that China attaches
fewer conditions than the traditional donors and does not look at the political
context and governance issues in the recipient country. However, Chinese aid is not
unconditional since Zambia cannot recognize Taiwan and there are several
commercial conditions attached to it. China however provides easy aid, thereby
ensuring continued access to Zambias natural resources and political support for
the foreseeable future.
In chapter six, I assessed to what extent the availability of Chinese aid leads to
diversification of Zambias donor community. I showed that Chinese and traditional
donor aid are different in their historical background, their aid policy and on the
content, volume, activities and conditions attached to it. The two types of aid are
also being portrayed in a different way in Zambias popular newspapers. Whereas
China is put forward as a friendly country providing aid, the traditional donors are
often represented in a paternalistic way. I concluded that China gives a different
type of aid than the traditional donors. Although there have been several initiatives
for cooperation between China and the traditional donors, China is still operating
outside the traditional donor frameworks in Zambia. Because of this, Zambias
donor community is diversifying.
My theoretical framework predicts several changes that would result from the
diversification of Zambias donor community: donor competition, an increase in the
bargaining power of the Zambian government, and a resulting decrease in
conditionality. In chapter seven and eight, I discussed the extent to which my
informants think these changes are becoming reality in Zambia. I found that many
Zambian informants agree with the sequence of events, as predicted by the theory.
The traditional donors and most officials in the MoFNP, however argue that these
changes are unlikely to occur. The difference of opinion between my informants, can
be traced back to their different perceptions of Chinese and traditional donor aid.
Most Zambian informants argue that traditional donor aid is still highly conditional.
Because of this, they think that the government is looking for a less conditional
alternative, which it finds in China. Moreover, because they see investments as a

30

form of Chinese aid, it is argued that Chinas aid is substantial enough to compete
with traditional donor aid. The traditional donors and officials in the MoFNP, however
claim that the government does not have a problem with current conditionality and
is not looking for less conditional aid. Furthermore, they use a narrow definition of
Chinese aid and argue that the volume of Chinese aid is too small to compete with
traditional donor aid. According to them, Chinese aid is an additional instead of a
competitive source of finance.
The people that see competition between China and the traditional donors, argue
that the availability of Chinese economic aid gives the Zambian government more
policy space, since it enables the government to finance projects that the traditional
donors are unable or unwilling to fund. Moreover, they claim that the government
no longer has to meet all the conditions that the traditional donors put forward.
Most people however argue that the government is unable to use this policy space
in order to increase its bargaining power towards the traditional donors. As
discussed in my theoretical framework, next to the composition of the donor
community, there are several national factors that influence the negotiating power
of the recipient government. Because of Zambias high dependence on donor aid
and a lack of capacity, the government is said to be unable to negotiate the aid it is
being offered, let alone play off donors in order to get more desirable aid.
Furthermore, the traditional donors are said to have penetrated Zambias policy
making process, which allows them to influence Zambias choice of donors.
Possible changes in donor competition and the bargaining power of the Zambian
government, are also thought to be influenced by the amount of interests that
traditional donors have in Zambia. The theory argues that donors are more likely to
compete and be responsive to requests of the recipient country if they have
national interests to protect. Although some Zambian informants argue that the
traditional donors have more or less direct interests in Zambia, most people say
that the traditional donors have few strategic interests in Zambia. This reduces the
likeliness of competition between China and the traditional donors and an increase
in the bargaining power of the Zambian government.
Even though there are several factors that limit the probability of a decrease in
traditional donor conditionality because of Chinese economic aid to Zambia, in
chapter eight, I looked at my informants perceptions of changes in past, current
and future donor conditions to Zambia. Although they cannot come up with any
specific cases, some Zambian informants argue that the traditional donors have
adjusted their conditions. Most people however claim that traditional donor
conditionality has not changed and is unlikely to change in the future. Several
informants state that current donor conditions are based on deep beliefs, which the
donors see as a prerequisite for development. Because of this, they cannot do away
with them. Other informants take a realist perspective and argue that the donors
will not lower conditions because they do not have any interests in Zambia, for
which they will stay and compete. The donors have a general interest in having a
good relationship with Zambia, in order to keep Zambias support in international
institutions. This is however unlikely to be enough for the donors to change their
conditions. They are therefore more likely to refuse to make a deal or withdraw than
compete by lowering conditionality. This might however be different in African
countries that have strategically important natural resources or are less stable,
thereby creating a possible threat for international security.

30

Based on current perceptions, I conclude that traditional donor conditionality

towards Zambia is not changing and is also unlikely to change in the future because
of Chinese economic aid to Zambia. The perceptions of my Zambian informants that
argue the opposite, seem to be based on wishful thinking. Because of negative
experiences with traditional donor aid in the past, many Zambians still long for an
alternative, which they hope to find in China. Their expectation is reinforced by
Zambias popular media, which frequently reports on Chinese aid to Zambia and
portrays China as an attractive alternative for traditional donor aid. Furthermore,
the MoFNP and the traditional donors, who are the main actors involved in
negotiations over donor conditionality, say conditionalities will not change because
of Chinese aid. Since they are the ones making the decisions, their perceptions
carry more weight than the perceptions of my Zambian informants, who do expect
changes in traditional donor conditionality. Finally, traditional donor conditions are
unlikely to change in the future, because the Zambian government cannot influence
all the factors that limit the likeliness of adjustments in conditionality. It can try to
increase its capacity and reduce its dependence on donor aid, but it cannot
influence the national context within the donor countries or change the interests
that the donors have in Zambia.
Some theoretical reflections
In order to be applicable to the Zambian case, my theoretical framework needs
several adjustments. All informants agree that Chinese economic aid leads to
diversification of the donor community. Not everybody however thinks that this
diversification will result in lower conditionality. In order to explain this difference of
opinion, the theory should take into account the various definitions of traditional
donor conditionality and Chinese economic aid that are being used, since these
influence informants perceptions of possible changes in donor competition.
Moreover, the theory should consider that next to the composition of the donor
community, there are different national factors that influence a countrys bargaining
power, such as its donor dependence and the capacity within the government.
Finally, my theoretical framework is based on the Cold War period, in which African
countries were of strategic geopolitical importance. According to the theory, donors
need to have a certain amount of self-interest in order to stay, compete and adjust
their conditionalities. The theory should however take into account that several
African countries have long lost their strategic importance. Most traditional donors
do not have any major political or economic strategic interests in Zambia at the
moment. Because they do not have any interests to protect, they are unlikely to
adjust their conditions in order to be able to compete with Chinese less conditional
aid.
It will however be important to do further research on the possible consequences of
Chinese economic aid for traditional donor aid and the conditions attached to it,
both in Zambia and in other countries. Further research in Zambia is important
because China has only recently re-entered Zambias donor community and its aid
is increasing rapidly. As I discussed before, it is still quite soon to see any real
changes. Moreover, changes in the Zambian presidency and the end of the financial
crisis, can be expected to alter the current situation. It will therefore be important to
do more research in a later stage. Since no empirical research has been done on the
consequences of Chinese economic aid for traditional donor aid, it not yet possible
to compare my findings with other research data and assess the extent to which my

30

data can be generalized. It is therefore important to conduct similar research in

other African countries. In my research, I outlined different variables, which make it
unlikely that traditional donors will adjust their conditionalities in Zambia. In order
to be able to verify my findings, it is important to do comparable research in
countries with different circumstances, especially countries that are of strategic
importance to the traditional donors, like Angola, Nigeria, Sudan and Zimbabwe. If
my argument is correct, the donors will be more inclined to change their aid
conditions in countries that are less aid dependent, have more government capacity
and are of strategic importance to the donors.
Since my research took place in an early stage, it would have been impossible to
link possible changes in traditional donor conditionality to Chinas presence in
Zambia. In future research, it might however be relevant to measure
conditionalities in aid contracts and MoUs between the traditional donors and
African countries, which appeared after Chinas re-entrance into the donorcommunity. Moreover, the method of CDA has much to offer and could in further
research be used more thoroughly. It would be worthy to explore the difference
between reality and perception more in depth, since perceptions seem to carry a lot
of weight when looking at the donor-recipient relationship. Next to this, because
research on traditional donor conditionality deals with the policy level, it is hard to
go beyond the public discourse that is being put forward. If possible, future research
should therefore try to collect data through participant observation in discussions
amongst the donors, and during negotiations between the donors and the recipient
government. Furthermore, it would be useful to do interviews at the donors head
offices, since this is where the strategic policy towards China in Africa is decided
upon. Finally, it is also important to do research on topics that are related to my
research. As I discussed in chapter five, there are several risks attached to Chinese
aid. Although my research focused on the opportunities and did not deal with the
possible negative consequences of Chinese aid in depth, research on this topic is
important, since it might hinder development in African countries.
As I stated in the beginning of this thesis, over the years, traditional donor
conditionality has become highly intrusive on the policies of African states. In my
research, I found that many Zambian informants think traditional donor
conditionality is over-ambitious and time-consuming, which can have damaging
consequences for the recipient country. Because of this, they express the hope that
something will change because of Chinese economic aid to their country. In this
thesis, I however concluded that traditional donor conditions are not changing at
the moment and the traditional donors are also unlikely to adjust their conditions in
the future. If the government uses its increased policy space in a wise way, Chinas
re-entrance into Zambia, can however still allow Zambia to discard conditions that
are damaging, ineffective, or out of date, thereby giving it more space to try new
development paths.

He, Wenping (2007), The Balancing Act of Chinas Africa Policy, in China
Security, Vol. 3, No. 3, pp. 23-40.
[] Helping Africa Help Itself

30

Perhaps the most salient feature of the Sino-African relationship is that it is

progressive and forward-thinking. China is looking to further cooperation with Africa
both horizontally and vertically to increase interaction between China and Africa at
a multitude of political, social and cultural levels while also expanding economic
cooperation beyond traditional sectors to all areas of commerce, industry and
technology.30 Released by the Chinese government in 2006, Chinas first white
paper regarding its relations with Africa, Chinas African Policy, elaborates a detailed
plan for future relations with Africa including political cooperation (on international
affairs and between political parties and political organizations), economic
cooperation (resource exploration and financial dealings), and cooperation in the
fields of education, science, culture, health and social work, as well as peace and
security.31
While Chinas African Policy is a blueprint for future relations, FOCAC is the vehicle
to explore and implement effective methods to realize the goals of the white paper.
This forum is the culmination of a half-century of Chinas active diplomacy on the
African continent. Established in October 2000, it is also the first multilateral,
consultative mechanism between China and Africa. Since the Cold War, there is an
increasing awareness among African countries of the need to unite to increase their
power by speaking with one voice to the outside world in order to effectively
pursue goals of self-development and independent conflict resolution. The establishment of the African Union reflects a deep desire to achieve this. A collective
multilateral mechanism, such as FOCAC, provides Africa with a platform to take
action and strengthen its position through integrated and strategic policy
formulation on a comprehensive range of African issues. Lastly, it reduces redundancy and increases efficiency in diplomatic interaction, no small cost-saving
when considering the number of sovereign nations in Africa.
Unlike the many clubs around the world that allegedly provide assistance for
development in Africa, FOCAC does not attempt to exhibit its work like a showcase
for acts of benevolence. Rather it is a low key, concrete, stable and yet very
important platform to build relations between China and African countries. Back in
2005, the Group of Eight countries made an historic decision to forgive $50 billion in
debt to 18 of the poorest countries in the world (14 of them in Africa) and to vastly
increase their aid to Africa.32 Yet, to date, these promises have not been honored.
China, on the other hand has taken action toward debt reduction and other
commitments over its past six years of aid expansion in Africa. Up to 156 debts
totaling $1.4 billion from 31 poor and heavily-indebted African countries have been
reduced and/or exempted by China. Furthermore, approximately 200 commodities
from the least developed countries in Africa have been given tariff-free status in
Chinese markets.33 China and Africa continue to explore new ways to effectively
combine FOCACs action plans with The New Partnership for Africas
Development,34 which is set to inject new impetus into future cooperation.
China must continue to focus on its growing relationship with Africa not only to
rectify current criticism and doubt from the international community, but in an effort
to carry out its promises and commitments. The Sino-African relationship is
deepening in an array of political, economic, foreign policy, social development and
environmental areas, all of which are important for domestic stability in both China
and African nations, their bilateral relations and the broader international
community. While China faces an extremely difficult task to follow through on its

30

commitments to Africa, there is no doubt that China will not only fulfill such
promises, and also do so with a degree of integrity that will produce effective, highquality outcomes.

Ho, Peter (2009), Beyond Development Orthodoxy: Chinese Lessons in

Pragmatism and Institutional Change, in Kremer, Monique, van Lieshout,
Peter and Went, Robert (eds.), Doing Good or Doing Better: Development
Policies in a Globalizing World, pp. 177-210, Amsterdam University Press.
Implications of Chinese Development: Some Concluding Observations
The effects of Chinas development are visible everywhere: international markets
are increasingly interwoven with the Chinese market and vice versa. China has
become the workshop of the world, and not only the proverbial sweatshop for
cheap textiles, shoes and toys. On the contrary, in recent years China has shifted to
the production of hi-tech electronics, cars and computers. This shift is testimony to
Chinas growing economic, scientific and innovative power for decades to come. The
Chinese economy generates a huge capital surplus and, in turn, attracts even
greater flows of investments. As the enormous capital surplus seeks its way out of
the country, the world is entering a new era of globalization with Chinese
characteristics. Yet, just a couple of decades ago China was still a developing
country.
How did this rapid development come about, and what might the development
sector learn from it? Many scholars see the Chinese state as decisive in fostering
development and talk about state-led development and the Chinese
developmental state (So 2001; White 1988). Others draw attention to Chinas rapid
industrialization and the local corporatist state an efficient partnership between
local government and rural industries (Oi 1995). Yet, these explanations neglect to
explore how the state channels development. In this regard, knowledge about the
change of institutions is critical. We have little information about the choices of
institutional change that Chinese policymakers faced: what form institutions should
take; whether new institutions should be established; and if so, when they should be
introduced. At a certain point in time, any national government that has started
down the development road is confronted with the question of what position
informal institutions, such as customary and communal land use arrangements,
should be accorded relative to formal, statutory institutions. Should the state
actively intervene in communal, agrarian society by setting up new institutions, or
should informal institutions be simply incorporated into the national regulatory
framework? Should traditional, informal sectors be left alone, or should they be
restructured to fit the commercial demands of national and international markets?
The Chinese case proves these questions to be a non-issue. The debate should not
be about the desired level of formality or informality of institutions, their required
level of privatization or communality, but about their current level of credibility. Only
by looking at the extent to which institutions are supported or contested by social
actors can states ultimately assess their viability. There is nothing to gain by
spending huge amounts of time, energy and financial resources on the
establishment of institutions that a few years later simply prove to be empty

30

institutions. The development sector might have much to learn in this respect,
whether we talk about large-scale land titling projects, irrigation and rural
development schemes, civil society building projects or economic restructuring
programs. One of the core institutions that moved forward Chinas development is
the Household Contract Responsibility System. It is the institutional successor of a
communist, bureaucratic Moloch the Peoples Communes. But different than the
commune system, the agricultural lease system manages to provide a stable
livelihood to the majority of the population while enabling rural industrialization, the
transfer of agricultural surplus labour, and the overall diversification and
modernization of agriculture.
It is becoming increasingly clear that Chinas agricultural lease system is converging
towards tenure systems elsewhere in the world. 58 For instance, it bears a striking
resemblance to the system of long lease in some parts of the Netherlands under
which municipal governments own land, but lease it to individuals for 55 or 75
years. One might also say it is similar to the British system of Crown land that
entitles tenants to a freehold a lease as secure as the civil law definition of
absolute ownership.59 There was, however, never an institutional plan or blueprint
by the Chinese state to move the nation towards such a tenure system. It is the
result of institutional evolution. The main reason why the state was successful in
channelling such evolution is the result of the main features of Chinese
development: credibility and gradualism.
On institutional change, Stiglitz once remarked: Typically, institutions () develop
an internal coherency that is not too dissonant with the external environment they
must face. When it becomes too dissonant, then institutions must change (2000:
64). China proves him right about the internal coherency. The credibility that the
Household Contract Responsibility System has enjoyed throughout the reforms is all
about internal coherency. It is the reason why Chinas lease system contrary to
what axioms of neo-classical theory predict and postulate has succeeded in
coupling stable, sustained development with a high degree of insecurity,
informality, and communality. On the other hand, whether institutions must change
if their internal coherency gets out of syncopation with the environment is by no
means evident. In fact, if the Chinese case proves one thing beyond any doubt, it is
that institutional innovation is no task for the state. Contrarily, institutional
innovation was initiated at the rural grassroots.
Was Chinas agricultural lease system then a fully fledged, autonomous peasant
movement? As a Chinese scholar described with passion:
A spontaneous, unorganized, leaderless, nonideological, apolitical movement,
and it is rapidly sweeping away everything in its path. () The farmers of
China are changing China this time around not the leaders, not the
bureaucrats, not the cadres, not the intellectuals but the farmers themselves
(Zhou 1996: 1-4).
Appealing as it may seem, such a romanticized idea misreads Chinas institutional
dynamics. The evolution of credible institutions is not a matter of one or the other
state versus society, dependent versus independent variable, cause versus effect
it is a matter of interaction. Thus, while Chinas institutional innovation started at
the grassroots, it was the state that allowed it to happen, protected it when it was

30

contested, and codified and upscaled it once it had proven effective. Doing this
regardless of an institutions form or function formal or informal, secure or
insecure, private or common touches on the core of credibility. One can only
concur with Grabel that credibility is always secured endogenously (), rather than
exogenously by virtue of the epistemological status of the theory that promotes it
(Grabel 2000: 2-3).
While credibility is one crucial component in Chinese development, gradualism is
certainly the crucial other. Only if we allow for the elapse of time can we truly see
how state and society interact in the shaping of institutions. Ironically, precisely this
fact tends to be neglected now that the Household Contract Responsibility System
has proven itself. Once more, similar to the 1980s and 1990s, there are forceful
voices that call for the commercialization, privatization and formalization of land
tenure. During the drafting of the 2007 Property Law, many scholars and congress
members felt that the state should no longer postpone market liberalization, but
push forward the commercialization of rural land tenure. 60 They see the recent
sprouts of a rudimentary land market around the cities as substantiating their
argument.61 These proponents forget that it was gradualism that facilitated the
capitalist market experiments within a context of state-upheld institutional
ambiguity, and that it took two decades of local experimentation before they were
finally legalized. More importantly, the fact that in some regions the Household
Contract Responsibility System seems to be changing in nature does not preclude
that it still functions as a social welfare net for the rural populace in most parts of
China. The continued support of the majority of the farmers for an egalitarian land
distribution points in this direction.
Chinas tremendous development has effectively split the nation in two: a largely
agrarian society with the main part of the population still under-employed on smallscale, fragmented family farms versus an industrialising, urbanizing society with a
rising middle class eager to buy their own cars and houses and chose their own
political representation. Carefully balancing the hugely different institutional
constellations of these two worlds is the daunting challenge that confronts the
Chinese state. As the villages around the cities are integrated into the urban and
global economy, the central state starts to ponder how the institutional change of
the evolving lease system can be channeled. It does so by looking outside China in
the hope of finding institutional histories with converging trajectories. Chinas quest
for institutional parallels means that we have come full circle: at exactly this point,
opportunities for a new kind of development cooperation are opened up. Contrary to
the popular belief that China is no longer a developing country, the Chinese state
still faces fundamental choices of institutional design, quite different from those
faced by governments in, for instance, Western Europe and North America. Nowhere
is this more obvious than around the institutional governance of land. Important
questions that China seeks to answer in this respect are: What are the possible
drawbacks of a land lease system? Or, can land lease sufficiently ensure social
actors confidence in the value of property rights even if ownership is not theirs?
The Dutch system for instance of long lease has existed since as early as the 15th
and 16th century. Understanding why this institution has survived for so long is
critical for the Chinese authorities and can aid them in better facilitating their own
institutional experiments. And it is important for them to know the historical and
cultural reasons that caused some cities such as Amsterdam and The Hague to
adopt long lease, while others adopted private ownership (Koerts 2006: 12).

30

For one thing, China lacks a cadastre in the countryside, and the rights of ownership
and individual lease still need to be titled and registered. A basic institution in
society that facilitates economic transfers, such as a cadastre, takes many decades
to evolve and is strongly dependent on country-specific circumstances. The Dutch
cadastre, today renowned for its efficiency, transparency and accuracy, 62 dates
back almost two centuries to 1832. During this long time span the Dutch have made
certain institutional choices, for instance, to protect the truthful owner rather than
the buyer of the property. 63 Only after a verdict of the Supreme Court in 1838 was
this regulation formally established. For a country like China where the urban sprawl
has caused the forced evictions of millions of farmers and homeowners, the
protection of the true owner rather than the buyer might thus have important legal
consequences.64
China no longer needs conventional aid such as for poverty alleviation, literacy
programs, or the building of schools, roads and hospitals. But there is a heartfelt
need for new ways of development cooperation in the form of international
exchange, action research and pilot projects on institutional change. Such
development cooperation embraces country-drivenness and bottom-up
development as we are dealing with a state that drives its own development, while
knowing how to facilitate rather than to intervene in bottom-up innovation. For
China, new development cooperation can help to grasp the opportunities and
constraints of its own institutional architecture. For us, Chinas successful
divergence from widely accepted theorems is well worth studying in greater detail.
It might have profound implications for our conceptualization of development. The
balance between state and society, informality and formality, private and common,
intervention and a hands-off approach, needs serious reconsideration. As Chinas
institutional constellation step-by-step consolidates in one way or the other a
British system of Crown land or the Amsterdam system of long lease it will
prompt us to rethink theory and praxis of development, and shift to new rules of
developmental engagement. It all comes down to gradualism and credibility, or
what the Chinese call pragmatism.

Information Office of the State Council of the People's Republic of China

(2005), Chinas Peaceful Development Road.
I. Peaceful Development Is the Inevitable Way for Chinas Modernization []
II. Promoting World Peace and Development with Chinas Own Growth
Peace is the foundation for development while development is fundamental for
peace. For years, the Chinese government and people have made unremitting
efforts to create a peaceful international environment. They cherish dearly the
peaceful international environment jointly created by the peace-loving and
progress-seeking countries and peoples, concentrate on their own construction and
whole-heartedly seek development, and strive constantly to make positive
contributions to world peace and development with their own growth, and promote
human civilization and progress.

30

China's development needs a peaceful international environment. Since 1978, when

the policies of reform and opening-up were adopted, China has endeavored to
develop itself within a peaceful international environment. Its GDP has increased
from 362.4 billion yuan (about US$215.3 billion if converted directly from Renminbi
into US dollar at the average exchange rate of that year) to 15,987.8 billion yuan
(about US$1931.7 billion if converted directly from Renminbi into US dollar at the
average exchange rate of that year) in 2004, an average growth rate of over 9
percent per annum, calculated according to constant price. Its per-capita GDP has
risen from less than US$300 to more than US$1,400. China has also made new
progress in its building of political civilization, with its democratic system being
improved continuously, the freedom and rights of citizens being protected and
guaranteed by law, and its people exercising their rights of democratic election,
decision-making, administration and supervision in accordance with the law. A legal
system centered on the Constitution has taken initial shape, and the basic strategy
of ruling the country by law has been implemented. Rapid progress has been scored
in its education, science and technology, culture, health, sports and other
undertakings, and the increasing spiritual and cultural needs of the people have
been constantly satisfied. The construction of a harmonious society has been
reinforced, and the state is working hard to realize and safeguard social fairness and
justice, increase creativity of the whole society, beef up social construction and
administration, and maintain social stability and harmonious relations between man
and Nature.
China's development is an important component of global development. China has
promoted world peace with its own development and made contributions to the
progress of mankind.
China has made contributions to the sustained development of human society.
Based on previous experience and the fruits of modern civilization of mankind, it
has adopted the scientific outlook on development to transform its concepts, create
new modes for growth and enhance the quality of development. Over the years,
China has persisted in exploring a new road to industrialization, featuring high
scientific and technological content, good economic returns, low resources
consumption, little environmental pollution and a full display of advantages in
human resources, and striven to steer the entire society along a road of sustained
development of civilization, with advanced production, affluent life and favorable
ecological conditions. China's success in population control has retarded the
expansion of the population of the world as a whole. China emphasizes energy
saving, and has adopted various measures in this regard. During the period 19802000, its GDP quadrupled, but the annual consumption of energy only doubled. Due
to China's intensified efforts at environmental protection, its dust discharge has
remained the same as in 1980 despite a big increase in installed thermal-power
capacity. Its energy consumption of per 10,000-yuan GDP in 2004 dropped by 45
percent compared to 1990. China has made medium- and long-term plans for
energy conservation, aiming to keep an annual energy-saving rate of 3 percent by
2020, to save 1.4 billion tons of standard coal.
China has made contributions to reducing human poverty and improving the quality
of life. It has created a miracle by feeding nearly 22 percent of the world's
population on less than 10 percent of the world's arable land. The living standards
of its 1.3 billion people are constantly improving. The Chinese government has lifted

30

220 million people out of poverty, and provided minimum living allowances to 22.05
million urban residents and aid to 60 million disabled people. The life expectancy of
the Chinese has been extended from 35 years before New China was founded in
1949 to 71.95 years today, close to that of moderately developed countries.
China has made contributions to safeguarding world peace and promoting
international cooperation. On the basis of the Five Principles of Peaceful
Coexistence, China has developed friendly, cooperative relations with other
countries and promoted peaceful coexistence and equal treatment among
countries. China has always adhered to the principle of being a friendly neighbor;
and has constantly developed good and cooperative relationships with surrounding
countries and other Asian countries and expanded common interests with them.
China has established various cooperative relationships with major powers, and
unremittingly augmented mutual dialogues, exchanges and cooperation. China has
also expedited cooperation with a vast number of developing countries, to seek
common development by drawing on one another's advantages within the SouthSouth cooperation framework. Active in the settlement of serious international and
regional problems, China shoulders broad international obligations, and plays a
responsible and constructive role.
China has made contributions to world economic development. In recent years,
despite increasingly severe global economic fluctuations, China's economy has
maintained a stable and relatively fast growth, bringing hope and a new driving
force to world economic development. Statistics released by the World Bank show
that China's economic growth contributed on average 13 percent to world economic
growth from 2000 to 2004. In 2004, the world economy reported the swiftest growth
in 30 years, while China's economy grew by 9.5 percent and became a key driving
force for the former. Also in 2004, China's import and export figure doubled that of
three years previously, reaching US$1,154.8 billion, and its import figure nearly
doubled that of three years previously, reaching US$561.4 billion. By the end of
2004, China had made use of US$745.3 billion paid-in foreign capital, and approved
more than 500,000 foreign-funded enterprises.
China has made contributions to the stable development of surrounding areas.
China has more than 20 neighbors that either border on its territory or lie across the
nearby seas. China's sustained economic growth, social stability and its people's
peaceful life also benefit its neighboring countries. The Asia-Pacific economy kept a
6-percent growth between 1999 and 2004. To ensure a stable environment for the
continuous development of its surrounding areas, China overcame arduous
difficulties at the time of the 1997 Asian financial crisis, and stuck to the principle of
keeping the value of the Renminbi stable while expanding domestic demand, and
helped to the best of its ability the victim countries to weather the crisis. China
played its role in finally overcoming the crisis. In the case of the 2003 sudden
outbreak of SARS, the Chinese government took decisive steps, and cooperated
with its neighbors in effectively curbing it. Upon the occurrence of the Indian Ocean
tsunami in late 2004, the Chinese government and its people offered timely and
sincere aid - the largest external aid in the history of New China - to the suffering
countries in their rescue and re-construction effort. The Chinese also expressed
great sympathy and extended assistance when South Asia was struck by massive
earthquakes in October 2005.

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Despite gigantic achievements, China still remains the largest developing country in
the world, with a formidable task of development lying ahead. According to the
latest statistics released by the World Bank and statistics recently released by
China, in 2004, China's aggregate economic volume accounted only for 16.6
percent of that of the US, and its per-capita GDP was merely 3.6 percent that of the
US and 4.0 percent of Japan, ranking 129th among 208 countries and regions
around the world. By the end of 2004, 26.1 million rural Chinese still lived under the
poverty line, more than 100 million farmers have to be provided with jobs
elsewhere, and the government is obliged to create jobs for nearly 24 million urban
and rural residents every year. There is still a long way to go for China to reach the
level of the moderately developed countries and achieve common prosperity for the
whole country. China still needs to make persistent efforts to strive for a peaceful
international environment for its own development, and promote world peace and
development with its own growth. This is particularly significant for both China and
the world as a whole.

III. Developing by Relying on Its Own Strength, Reform and Innovation []

IV. Seeking Mutual Benefit and Common Development with Other Countries
China cannot develop independently without the rest of the world. Likewise, the
world needs China if it is to attain prosperity. Following the trend of economic
globalization, China is participating in international economic and technological
cooperation on an ever larger scale, in wider areas and at higher levels in an effort
to push economic globalization towards the direction of common prosperity for all
countries. Today, the mainstream of international trade is to share successes, with
all as winners. China adheres to its opening-up strategy for mutual benefit. For this,
it has made conforming to China's own interests while promoting common
development a basic principle guiding its foreign economic and trade work,
develops its economic and trade relations with other countries on the basis of
equality, mutual benefit and reciprocity, and makes constant contributions to the
sustained growth of global trade.
China has exerted itself to push forward multilateral economic and trade relations
and regional economic cooperation, actively participated in the formulation and
execution of international economic and trade rules, and joined various other
countries in settling disputes and problems emerging in their cooperation, so as to
promote the balanced and orderly development of the world economy.
China has been an active supporter of and participant in multilateral trade system.
Since its accession to the WTO in December 2001, China has strictly kept its
commitments to create more favorable conditions for international economic and
technological cooperation. China has sorted out and revised some 3,000 laws,
regulations and department rules, continually improved its foreign-related economic
legal system, and enhanced the transparency of its trade policies. China has cut its
customs tariffs step by step, as promised, and by 2005 its average tariffs had been
reduced to 9.9 percent, and most non-tariff measures had been cancelled. Banking,
insurance, securities, distribution and other service trade sectors have opened
wider to the outside world. Of the 160-odd service trade sectors listed by the WTO,

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China has opened more than 100, or 62.5 percent, a level close to that of the
developed countries. China has actively pushed ahead with a new round of
multilateral trade negotiations, participated in talks on various topics, especially on
agriculture, market access of non-farm products and the service trades, and played
a constructive role in helping developing and developed members reduce disputes
through talks. China, together with other WTO members, has done a lot of work to
spur substantial progress to reach early agreement among the negotiators.
China has continuously stepped up participation in regional economic cooperation.
The building of the China-ASEAN Free Trade Area is going full steam ahead.
Following the practice of zero tariffs on farm products under the "Early Harvest
Program," the Agreements on Trade in Goods and the Dispute Settlement
Mechanism Agreement were formally signed in November 2004, and in July 2005
the free trade area launched its tariff concession program, clearing the way for
realizing its goals. At present, the building of the Shanghai Cooperation Organization
is proceeding with comprehensive and pragmatic cooperation, and its process to
facilitate trade investment has been launched in an all-round way. China has also
initiated negotiations on such free trade areas as the China-Southern African
Development Community, China-Gulf Cooperation Council, and China-New Zealand,
China-Chile, China-Australia and China-Pakistan, and signed relevant agreements
with its partners. China is also an active and pragmatic participant in the activities
of the Asia-Pacific Economic Cooperation, Forum on China-Africa Cooperation, SinoArab Cooperation Forum, Asia-Europe Meeting and Greater Mekong Subregion
Economic Cooperation Program. China advocates the liberalization and facilitation
of investment in bilateral trade, and has signed bilateral trade agreements or
protocols with more than 150 countries and regions, bilateral investment protection
agreements with more than 110 countries, and agreements with over 80 countries
on the avoidance of double tariffs.
China sticks to the principle of mutual benefit and win-win cooperation, tries to find
proper settlement of trade conflicts and promotes common development with other
countries. Trade conflicts are quite natural in international economic exchanges.
Following international practice and WTO rules, China has tried to resolve such
conflicts through dialogue on an equal footing and through the WTO dispute
settlement mechanism. When promulgating and implementing domestic economic
policies, it tries to take international factors and influences into account as well as
the impacts its own economic growth imposes on the outside world. Based on its
reform and development, China is serious in judging the effects its exchange rate
reform may bring to surrounding countries and regions, and the global economy and
finance. It has thus advanced the reform in a steady way, adopted a managed
floating exchange rate regime based on market supply and demand, and linked and
adjusted it according to a basket of currencies, so that the Renminbi exchange rate
will remain stable at a reasonable and balanced level. China has intensified its
protection of intellectual property rights, improved the relevant legal system, and
tightened up law enforcement to crack down on all kinds of violations.
Growing China is active in international economic and technological cooperation,
and provides good opportunities and a huge market for the rest of the world. All
countries, the developed countries in particular, have reaped lucrative benefits from
investment in and service trade with China.

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China's active involvement in the international division of labor and cooperation is

conducive to the reasonable and effective distribution of global resources. As the
largest developing country in the world, China boasts an abundant labor force, the
quality of which has been constantly improving. It is a natural advantage of China in
developing labor-intensive industries and some technology-intensive ones. Along
with economic and social progress, as well as the improvement of the living
standards of its people, China's demand for capital-, technology- and knowledgeintensive products keeps increasing, offering great opportunities for foreign
products, technologies and services, as the country has now evolved into an
internationally acknowledged big market. China's foreign trade is mutually
supplementary with many countries. About 70 percent of China's exports to the US,
Japan and the Europe Union (EU) are labor-intensive, while 80 percent of its imports
from the three are capital-, technology- and knowledge-intensive. In the new
structure of international labor division, the country has become a key link in the
global industrial chain.
By importing cheap but good-quality products made in China, the importing
countries can reduce their expenditure and pressure caused by inflation while
satisfying the demands and enhancing the welfare of their consumers. China's
labor-intensive products enjoy unique comparative advantages in the global market.
Since 1997, US consumers have saved billions of dollars every year by buying
Chinese commodities - US$600 billion in the past decade and nearly US$100 billion
in 2004 alone.
The expansion of China's reciprocal economic and trade relations with other
countries has benefited both in a tremendous way. China's imports have kept
growing by a yearly 16 percent since 1978, and the country imported commodities
worth US$1,270 billion in the three transitional years following its WTO accession. In
2004, China became the world's third largest importer, next only to the US and
Germany, with US$148.47 billion of increased imports or 9 percent of the world's
total growth of imports. Also in 2004, China's trade volume with the EU, the US and
Japan totaled US$177.3 billion, US$169.6 billion and US$167.8 billion, respectively,
making them China's top three trade partners and main sources of foreign
investment. In the same year, China's trade volume with Asian countries and
regions amounted to US$664.9 billion, 34.2 percent up over that of the previous
year. This figure accounted for 57.6 percent of China's total foreign trade value. In
addition, China has become the fourth largest trading partner of and a fast-growing
market for ASEAN.
The huge market of China offers such great opportunities for international capital
that investors around the world have benefited from China's rapid economic growth.
From 1990 to 2004, foreign investors repatriated US$250.6 billion in profits from
China. In 2004, US-funded enterprises in China generated US$75 billion in sales
revenue in China, and their products earned another US$75 billion elsewhere. A
2005 survey by the American Chamber of Commerce-People's Republic of China
shows that 70 percent of American firms are making profits in China, and about 42
percent report a higher profit rate than their global average.
China's growing investment abroad has also fueled the economies of the destination
countries. At the end of 2004, China's net non-banking direct investment abroad

30

amounted to US$44.8 billion, spreading to 149 countries and regions. Among which,
US$33.4 billion, or 75 percent, went to Asia.
China's foreign economic and trade cooperation has tremendous potential and
boosts bright prospects. In the post-WTO era, China imported US$500 billion worth
of commodities annually during the period from December 2001 to September
2005, which meant 10 million jobs for the countries and regions concerned. In the
next few years, it will import US$600 billion worth of goods annually, and the
amount will exceed US$1,000 billion by 2010. By 2020, the scale and total demand
of the Chinese market will quadruple that in 2000. During the process, the rest of
the world will find development and business opportunities in their reciprocal
cooperation with China, which will greatly accelerate the growth of the global
economy.

V. Building a Harmonious World of Sustained Peace and Common Prosperity

Mankind has only one home - the Earth. Building a harmonious world of sustained
peace and common prosperity is a common wish of the people throughout the world
as well as the lofty goal of China in taking the road of peaceful development.
China holds that the harmonious world should be democratic, harmonious, just, and
tolerant.
- Upholding democracy and equality to achieve coordination and
cooperation. All countries should, on the basis of the UN Charter and the Five
Principles of Peaceful Coexistence, promote democracy in international relations
through dialogue, communication and cooperation. The internal affairs of a country
should be decided by its people, international affairs should be discussed and
solved by all countries on an equal footing, and developing countries ought to enjoy
the equal right to participate in and make decisions on international affairs. All
countries should respect each other and treat each other equally. No country is
entitled to impose its own will upon others, or maintain its security and
development at the price of the interests of others. The international community
should oppose unilateralism, advocate and promote multilateralism, and make the
UN and its Security Council play a more active role in international affairs. When
dealing with international relations, it is necessary to persist in proceeding from the
common interests of all the people throughout the world, make efforts to expand
common interests, enhance understanding through communication, strengthen
cooperation through understanding and create a win-win situation through
cooperation.
- Upholding harmony and mutual trust to realize common security. All
countries should join hands to respond to threats against world security. We should
abandon the Cold War mentality, cultivate a new security concept featuring mutual
trust, mutual benefit, equality and coordination, build a fair and effective collective
security mechanism aimed at jointly preventing conflict and war, and cooperate to
eliminate or reduce as much as possible threats from such non-traditional security
problems as terrorist activities, financial crises and natural disasters, so as to
safeguard world peace, security and stability. We should persist in settling
international disputes and conflicts peacefully through consultations and

30

negotiations on the basis of equality, work together to oppose acts of encroachment

on the sovereignty of other countries, interference in the internal affairs of other
countries, and willful use or threat of use of military force. We should step up
cooperation in a resolute fight against terrorism, stamp out both the symptoms and
root causes of the problem of terrorism, with special emphasis on eliminating the
root cause of the menace. We should achieve effective disarmament and arms
control in a fair, rational, comprehensive and balanced fashion, prevent the
proliferation of weapons of mass destruction, vigorously promote the international
nuclear disarmament process, and maintain global strategic stability.
- Upholding fairness and mutual benefit to achieve common
development. In the process of economic globalization, we should stick to the
principle of fairness, achieve balanced and orderly development, and benefit all
countries, developing countries in particular, instead of further widening of the gap
between South and North. We should propel economic globalization towards the
direction of common prosperity. The developed countries should shoulder greater
responsibility for a universal, coordinated and balanced development of the world,
while the developing countries should make full use of their own advantages to
achieve development. We should actively further trade and investment liberalization
and facilitation, remove all kinds of trade barriers, increase market access, ease
restrictions on technology export, so as to establish an international multilateral
trading system that is public, fair, rational, transparent, open and
nondiscriminatory, and construct a good trading environment conducive to orderly
global economic development. We should further improve the international financial
system to create a stable and highly efficient financial environment conducive to
global economic growth. We should step up worldwide dialogue and cooperation on
energy, and jointly maintain energy security and energy market stability. We should
actively promote and guarantee human rights to ensure that everyone enjoys equal
opportunities and right to pursue overall development. We should make innovations
in the mode of development, promote the harmonious development of man and
Nature, and take the road of sustainable development.
- Upholding tolerance and opening to achieve dialogue among
civilizations. Diversity of civilizations is a basic feature of human society, and an
important driving force for the progress of mankind. All countries should respect
other country's right to independently choose their own social systems and paths of
development, learn from one another and draw on the strong points of others to
make up for their own weak points, thus achieving rejuvenation and development in
line with their own national conditions. Dialogues and exchanges among civilizations
should be encouraged with the aim of doing away with misgivings and
estrangement existing between civilizations, and develop together by seeking
common ground while putting aside differences, so as to make mankind more
harmonious and the world more colorful. We should endeavor to preserve the
diversity of civilizations and development patterns, and jointly build a harmonious
world where all civilizations coexist and accommodate one another.
Over the years, China has persisted in the policies of peace, development and
cooperation, and pursued an independent foreign policy of peace. In the spirit of
democracy, harmony, justice and tolerance, China has been playing a constructive
role, and making efforts to attain the lofty goal of building a harmonious world
together with all other countries.

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China is working hard to bring about a just and rational new international political
and economic order, and stands for greater democracy in international relations.
China adheres to the purpose and principles of the UN Charter, attaches great
importance to the UN's role in international affairs as the core of the international
multilateral mechanism, vigorously promotes multilateral cooperation to settle
regional conflicts and development problems, and actively supports the UN to play a
greater role in international affairs. China backs up UN reform, and firmly helps
safeguard its long-term interests and the common interests of its members. China
has joined more than 130 inter-governmental international organizations, including
the International Atomic Energy Agency (IAEA), is committed to 267 international
multilateral treaties such as the Treaty on the Non-Proliferation of Nuclear Weapons,
and actively participates in international cooperation in such fields as anti-terrorism,
arms control, non-proliferation, peacekeeping, economy and trade, development,
human rights, law-enforcement, and the environment.
China takes practical steps to establish fraternal relations with surrounding regions
and promote cooperation in maintaining regional security. In line with the generally
acknowledged principles of international law and in the spirit of consultation on the
basis of equality, mutual understanding and mutual accommodation, China has
made efforts to properly resolve boundary issues with neighboring countries, settle
disputes and promote stability. So far, thanks to joint efforts with various countries,
China has signed boundary treaties with 12 continental neighbors, settling boundary
issues left over from history. The boundary issues with India and Bhutan are in the
process of being settled. China actively promotes dialogue and cooperation on
regional security, and plays a positive and constructive role in such regional
mechanisms as ASEAN + China, ASEAN + China, Japan and the ROK, Shanghai
Cooperation Organization, Asia Pacific Economic Cooperation, ASEAN Regional
Forum, and Asian Cooperation Dialogue. China has joined the Treaty of Amity and
Cooperation in Southeast Asia, lending new vitality to the peaceful and friendly
relationship between China and ASEAN members.
China plays a constructive role in resolving weighty international and regional issues
for common security. With respect to the nuclear issue on the Korean Peninsula,
China has worked tirelessly with the other relevant parties, and succeeded in
convening and hosting first the Three-Party Talks (China, North Korea and the United
States) and then the Six-Party Talks (China, North Korea, the United States, the
Republic of Korea, Russia and Japan). China was instrumental in getting the
participants to issue a joint statement, thus mitigating tension on the peninsula, and
contributing constructively to peace and stability in Northeast Asia. Regarding the
Middle East issue, China encourages the parties involved to resume talks and start a
new peace process based on relevant UN resolutions and the principle of "Land for
Peace." As for the Iraq issue, China advocates seeking a political solution within the
UN framework, and is making great efforts in this regard. On the Iran nuclear issue,
China has tried several approaches to persuade the parties involved to engage in
dialogue and find a proper and peaceful settlement within the IAEA framework.
Moreover, China is expanding its participation in UN peacekeeping efforts, having
sent military personnel, police and civil officers on 14 UN peacekeeping missions, to
the number of 3,000.
For many years, China has provided assistance within its capacity to other
developing countries to help them build the capacity for self-development as well as

30

engage in common development. So far, China has provided assistance to more

than 110 countries and regional organizations for over 2,000 projects. China has
reduced or canceled 198 debts totaling 16.6 billion yuan owed to it by 44
developing countries. In May 2005, the International Poverty-Reduction Center in
China was formally set up in Beijing. In September 2005, at the High-Level Meeting
on Financing for Development, on the occasion of the 60th Anniversary of the
United Nations, President Hu Jintao announced the new measures China would
adopt to increase assistance to other developing countries: China will give zero tariff
treatment for certain products to all the 39 Least-Developed Countries (LDCs)
having diplomatic relations with China, covering most commodities exported by
these countries to China; further expand aid to Heavily Indebted Poor Countries
(HIPCs) and LDCs; through bilateral channels, exempt or cancel in other ways within
the next two years of all the outstanding interest-free and low-interest government
loans due as of the end of 2004 owed by all the HIPCs having diplomatic relations
with China; within the next three years, provide US$10 billion in preferential loans
and preferential export buyer's credit to developing countries to help them
strengthen the construction of infrastructure, promote enterprises of both sides to
carry out joint venture cooperation; within the next three years, increase aid to
developing countries, particularly aid to African countries in related areas, provide
to them medicines including effective drugs to prevent malaria, help them build and
improve medical facilities and train medical personnel; and train 30,000 persons of
various professions from the developing countries within the next three years, and
help relevant countries expedite the training of talented people.
China continuously enhances exchanges and dialogues with other civilizations to
promote mutual tolerance. Opening, tolerance and all-embracing are important
features of Chinese civilization. As the trend of economic globalization develops in
depth, China, all the more aware of the significance of exchanges and dialogues
among different civilizations, is working harder to get the rest of the world to
understand China, while absorbing and drawing on the useful fruits of other
civilizations. In recent years, China has cooperated with numerous countries in
holding Culture Weeks, Culture Tours, Culture Festivals and Culture Years, thus
helping promote exchanges and understanding between the Chinese people and
other peoples, and creating new forms for equal dialogue between civilizations.

Conclusion
China is the largest developing country in the world. The 1.3 billion Chinese people,
taking the road of peaceful development, undoubtedly play a critical and positive
role in the lofty pursuit of the peace and development of mankind.
The Chinese government and people are well aware that China is still a developing
country facing a lot of difficulties and problems on its road of development, and
therefore it still has a long way to go before modernization is achieved. The road of
peaceful development accords with the fundamental interests of the Chinese
people; it also conforms to the objective requirements of social development and
progress of mankind. China is now taking the road of peaceful development, and will
continue to do so when it gets stronger in the future. The resolve of the Chinese

30

government and the Chinese people to stick to the road of peaceful development is
unshakable.
The Chinese government and people also see clearly that peace and development,
the two overriding issues facing the world, have not yet been fundamentally
achieved. Local wars and conflicts arising from various causes keep erupting.
Problems and conflicts in some regions remain complicated and thorny. Traditional
and non-traditional factors threatening security are intertwined. The wealth gap
between North and South continues to widen. People in some countries are still
being denied the basic right to subsistence, and even survival. All this has made the
road leading to a harmonious world characterized by sustained peace and common
prosperity a bumpy and challenging one, and reaching the goal demands long and
unremitting efforts by the people throughout the world.
The 21st century has opened up bright prospects, and human society is developing
at an unprecedented rate. China has identified its goal for the first 20 years of this
century. That is, to build a moderately well-off society in an all-round way that
benefits over one billion people, further develop China's economy, improve
democracy, advance science and education, enrich culture, foster greater social
harmony and upgrade the quality of life of the Chinese people. China is certain to
make more contributions to the lofty cause of peace and development of mankind.

Kaplinsky, Raphael, McCormick, Dorothy and Morris, Mike (2007), The

Impact of China on Sub-Saharan Africa, IDS Working Paper 291, Brighton:
Institute of Development Studies.
The Challenge: Maximizing Opportunities and Minimizing Threats
Although SSAs trade with China is relatively small in comparison to its trade with
the industrialised countries, it has grown very rapidly, especially since 2001. There
is a danger of overestimating the historic and present impact, and underestimating
the potential future impact of China on SSA.
1. At a general level, Chinas impact on SSA:

Involves three primary types of links trade, production/FDI and aid;

Is in some cases complementary to growth and poverty alleviation, in other

cases it is competitive;

Is both direct (in bilateral links between individual countries and China) and
indirect (with the impact being felt in third-country markets);

Reflects a mix of strategic, political and economic factors, and involves a

range of stakeholders, both within China and in SSA.

Since these varied impacts are unevenly felt within and between countries, it is
important to maintain a comprehensive perspective if the opportunities are to be

30

maximised and the threats minimised in such a way as to sustain poverty alleviation
and to enhance income distribution.
2. More specifically, with regard to the trade channel:

China has predominantly imported a limited number of products mostly oil

and hard commodities from a limited number of SSA economies. In return, it
predominantly exports manufactures, mostly final consumption goods.

Most is known about the direct trade links, in which China now has a growing
trade surplus with SSA. These direct trade links combine complementary
impacts (notably enhancing consumer welfare through cheap goods), and
competitive impacts where there is evidence that domestic manufacturers
are in some countries being squeezed by China-sourced imports.

The indirect trade links, arising through Chinese participation in global

markets, are more difficult to assess. In general, it would appear that SSA
economies gain from these indirect links, since the price of many of SSAs
imports are falling due to growing Chinese competitiveness, and Chinas
imports of commodities are pushing up the prices of SSA exports. However, in
some sectors, notably clothing and furniture, there is persuasive evidence
that Chinas growing competitiveness in global markets is having a very
harmful impact on poor SSA exporting economies. Lesotho, Swaziland,
Madagascar and Kenya have all been badly hit, and there have been
particularly damaging impacts on South Africa. Employment loss has been
high, with very severe distributional and poverty impacts.

3. With regard to the FDI, production and aid vectors:

The Chinese presence in SSA appears to be driven primarily by the strategic
search for raw materials rather than for final markets or for low-cost
production platforms.

Chinese firms work to longer time horizons than Western and Japanese firms,
in part because many are state-owned and do not appear to be subject to the
same short-term profit-maximising imperatives, and in part because of their
access to low-cost capital.

There is increasing Chinese participation in the energy and resource sectors,

particularly in fragile states such as the Sudan, Angola and the DRC. This is
linked to attempts by some fragile states to evade pressures by western
donors and NGOs to promote more transparent and better governance.

Other realms of activity are in infrastructure development (Chinese firms

appear to have costs which are one-quarter to one-half less than Western and
South African firms); in small enterprises in some countries (for example
Sierra Leone); in trading (for example, Namibia); and in farming (for example,
as is emerging in Mozambique).

30

Chinese aid is growing throughout the region, particularly in recent years, and
appears to be carefully targeted to complement its commercial activities,
including in fragile states.

What We Dont Know

Whilst these major policy challenges are clear, important key knowledge gaps exist
which need to be filled if policy responses are to be appropriately nuanced for
individual country circumstances. The major knowledge gaps are with regard to:

The need for baseline studies to assess the changing future impact of China
on SSA;

Analyses of the determinants of SSA competitiveness and the steps required

to enhance productivity (for example, in clothing, textiles, footwear and
furniture, as well as in export-oriented food crops);

A more thorough assessment of indirect impacts of Chinas trade on SSA,

facilitating the development of appropriate policies for providing special and
differential treatment to low income SSA economies in global markets;

Determining the impact of China on consumer welfare, income distribution

and absolute poverty levels in SSA, through an analysis of the consumer
benefits derived from cheaper imports, and the distributional implications of a
switch in specialisation away from labour-intensive manufactures to capital
intensive commodities;

Distinguishing generic from sub-regional and country-specific impacts, aiding

the classification of different types of SSA economies;

Identifying likely future areas of threat and opportunity;

Determining the drivers of Chinas strategic engagement with SSA and their
impact on transparent and better governance on the continent.

Conclusion
This growing Chinese presence raises six major policy challenges for SSA if the
manifold opportunities are to be grasped and the threats minimised:
1. It poses particular threats to the manufacturing sector. Here the outlook is not
entirely bleak, but SSA countries need to take explicit steps to counter act the
dangers posed to existing and future capabilities in industry.
2. Although the commodity boom favours some SSA economies, it poses very
severe problems of economic management. Poorly-handled, a resourceboom
can easily become a resource-curse. Much can be learned from the
experience of other countries (including in SSA) in handling these
resourcebooms.
3. Notwithstanding the welfare gains to the poor from lower import prices, the
expansion of capital-intensive mineral production and the decline of labour-

30

intensive manufactures pose severe challenges for poverty-alleviation and

income distribution. There is, moreover, the additional problem that resourceproduction is closely associated with violence, corruption and fragile states.
Policies to ameliorate these potential adverse poverty-related impacts need
to be addressed.
4. Linked to this, China has actively forged closer links with fragile states and
this has undermined attempts by the global community to enhance
transparency and better governance. There is also emerging evidence that
attempts to foster better corporate and environmental governance are also
being undermined by Chinas presence in some SSA countries.
5. African economies are being pulled in different directions with regard to their
linkages with other economies. One pressure is to sustain historical links with
the EU and North America, cemented by various preferential trading
agreements. Another pressure is to strengthen links with other SSA
economies, particularly in southern Africa. A third pressure is to enhance links
with Asia in general, and China in particular. Scarce administrative and
strategic capabilities may require SSA economies to choose how they respond
to these various pulls. There are strong arguments for a concerted look East
policy.
6. The key capability which SSA economies require is the development of
dynamic capabilities to scan changing environments, to develop appropriate
strategic responses and to implement these strategies effectively. Unless
these capabilities are built in government, in the corporate and farming
sectors, and in civil society the opportunities offered by Chinese growth
may be overwhelmed by the threats which are raised. This applies
particularly to emerging sectors of Chinese demand (for example, imports of
food products).
All of this poses severe challenges for a variety of stakeholders:

for governments, firms, farms and civil society within SSA;

for Chinese stakeholders who may be insufficiently aware of their impact on

SSA;

for DFID and other bi- and multi-lateral agencies who have much to offer in
helping to build appropriate (dynamic) capabilities, and to mediate between
different governments and stakeholders.

Kaplinsky, Raphael, McCormick, Dorothy and Morris, Mike (2008), China

and Sub Saharan Africa: Impacts and Challenges of a Growing
Relationship, School of Advanced International Studies Working Papers in
African Studies 05-08, Washington, DC: The John Hopkins University.
The detailed analysis presented in this paper has supported the growing realization
that Chinas present and potential impact on SSA is both far-reaching and complex.

30

The synthetic framework proposed in Section 2 has been helpful in disentangling

the impact channels and their various effects, but even this systematic approach
has produced only a partial picture of Chinas impact on SSA. This is at least partly
because of gaps in our knowledge. Some of these gaps result from lack of data, but
others arise because the organization of Chinese society means that the channels
are intertwined in ways not immediately obvious to outsiders. This appears to be
especially true of the production and aid channels, but may also apply to trade. The
result is that some potentially important areas of impact may be misunderstood or
missed altogether.
Chinas public pronouncements convey a desire for a relationship of South-South
cooperation, of one developing country helping another (King 2006). Such a twoway relationship can only be fruitful if both parties respect one another and are
ready to listen and learn from each others experience. The relationship also needs
to be underpinned by an understanding of how the actions of one are likely to affect
the life of the other. Only then will genuine partnerships be possible.

King, Kenneth (2006) Aid Within the Wider China-Africa Partnership: A

View from the Beijing Summit, Mimeo.
Concluding Comments on Aid in the Wider Partnership
It is important to locate the specifically aid dimension of the Summit within the
wider Partnership perspective. By the time the final Declaration of the Beijing
Summit had been read out, not by China alone, but in sections by Chinas president,
the Ethiopian premier who is Co-Chair of FOCAC, and by the Egyptian president who
will become Co-Chair through to the next summit in Cairo, references to aid or
development assistance were much less in evidence. Interestingly, development
assistance was only used once in the Beijing Summit Declaration, and was reserved
for the attention of the developed economies, along with a single mention of the
MDGs and poverty reduction:
We call on the international community to encourage and support Africas
efforts to pursue peace and development. In particular, we urge developed
countries to increase official development assistance and honour their
commitment to opening markets and debt relief to enhance Africas capacity in
poverty and disaster reduction and prevention and control of desertification,
and help Africa realise the UN Millennium Development Goals. (FOCAC
Declaration in China Daily, 6.11. 2006)
What had appeared as specific assistance commitments in President Hus eight
points had been reworked within FOCACs preferred language of political equality
and mutual trust, economic win-win cooperation and cultural exchanges. The
commitments now appeared in a much more comprehensive statement of two-way
cooperation:
Deepen and broaden mutually beneficial cooperation and give top priority to
cooperation in agriculture, infrastructure, industry, fishing, IT, public health
and personnel training to draw on each others strengths. (FOCAC, ibid.)

30

The greater detail of the Action Plan from the Beijing Summit, 46 of course, still
contains the specific pledges of President Hu, on hospitals, anti-malaria centres and
rural schools, and goes beyond his speech to mention Confucius Institutes to help
meet local needs in Africa for Chinese language. But as is traditional in these
cooperative FOCAC agreements, the priority is first given to political relations, then
to economic cooperation, then international affairs, and only then to social
development. And within social development, the agreements typically cut across
what we have called the aid/non-aid boundary. Thus, two-way cultural and media
exchanges, twinning, and people-to-people agreements all fall within this category,
as does the granting of Approved Destination Status for tourism. 47 So do the more
one-way agreements on scholarships, schools and hospitals (FOCAC Action Plan in
China Daily, 6.11.2006).
As far as coverage in the immediate aftermath of the Summit is concerned, the
African presidents who stayed on for a time, such as Mbeki of South Africa, and
Bouteflika of Algeria have continued a strong emphasis on their bilateral ties and on
bilateral agreements with China, across a wide range of cooperative endeavours.
Meanwhile, the opening of the African Commodities Exposition in Beijings
International Conference Centre on the day after the Summit strongly reinforced the
two-way trade focus of the larger Forum. No less than 170 firms from 23 African
countries have taken advantage to display at the Exposition.
We shall look, finally, at what may prove influential from this Summit.

It would seem successfully to have married intensive bilateral cooperation in

a wide and inclusive, collective framework, apparently without a prescriptive
tone;

Two-way trade and business opportunities have been very visibly associated
with the Summit and new business instruments set up to maintain the
momentum;

A series of new development assistance initiatives have been promised in

education, health, preferential loans, market access and debt cancellation;

Possibly, as influential as anything over the period of almost a week

surrounding the Summit has been the positive engagement with Africa in
innumerable articles, interviews, pictures, films, hoardings and posters. With
presidents and premiers, with students and researchers, with business people
and traders, with ambassadors and with school-children. Not to mention
Africa in dance, song, music, cuisine, dress and art. The theme of Amazing
Africa has been a welcome change from the skeletal Africa of starving,
staring children, HIV AIDS and refugee camps.

Will the images last? The Summit has offered no Beijing Model, or Beijing
Consensus48 Rather. [sic] it has confirmed a strategic partnership that does not
depend on a donor to deliver but on African countries efforts independently to
resolve African problems. It has disseminated the Chinese notion of win-win for
both China and Africa; and has preferred to propose the goal of prosperity for all to
the goal of making poverty history.

30

Konings, Piet (2007), China and Africa: Building a Strategic Partnership,

in Journal of Developing Societies, Vol. 23, No. 3, pp. 341-367.
China has had a long involvement with Africa marked by ups and downs, and
continuities and shifts in policy. While China and Africa have often had mutual
interests in various forms of cooperation, their relations have not always been
without friction and tensions. Chinas initial interest in Africa was primarily
motivated by Cold War ideological and strategic considerations. Its main objectives
during the Cold War era were to compete with western and Soviet influences on the
continent and to shore up votes for the eventual rejection of Taiwans credentials at
the UN. Chinas anti-western, anti-Soviet and anti-Taiwan thrust, combined with its
self-identification with Third World struggles, has shaped its foreign aid activities in
Africa. China initially lacked the resources of the Cold War superpowers, but still
invested significant energy in the realization of its objectives. It dispatched
technicians to Africa to provide modest social and economic assistance, as well as
military training and to build infrastructural monuments to China-Africa solidarity,
including the first railway to link Tanzania and landlocked Zambia during the period
of opposition to South Africas regional hegemony during apartheid. Its financial and
military support to revolutionary dissident groups and liberation movements
resulted in frequent conflicts with African rulers. The era of liberation wars in the
1970s saw China choose sides and patronize its favoured forces an activity aimed
at thwarting the Soviet Unions influence on the continent even though it was not
always in the best interests of Africa. Chinese interest in Africa receded in the 1980s
as development efforts were diverted inwards and Chinese leaders were forced to
seek assistance from the West for the necessary modernization of its economy.
With its emergence as a significant world player in the era of neoliberal
globalization, China has returned to Africa on a larger scale than ever before and
with the ideological and financial resources to compete for political and economic
influence. Some of the factors for Chinas renewed interest in Africa were similar to
those prevailing during the Cold War era. China continued to present itself as the
leader of the Third World in its efforts to forge an alliance with African states, an
alliance that would enable it to better contest the perceived western hegemony in
multilateral organizations. China also still needed African political support for its
attempt to minimize, and preferably eliminate, Taiwans presence on the continent.
Nevertheless, renewed Chinese interest in Africa was primarily economically
motivated. With the enormous expansion of its domestic economy, China was in
search of natural resources, new markets, and investment opportunities. Chinas
trade with Africa has subsequently risen sharply.
In its endeavours for economic and political influence, China has a competitive
advantage over the West in some areas. China provides a discourse that effectively
legitimizes human rights abuses and undemocratic practices in the guise of state
sovereignty and attempts to combat western hegemony, which strongly appeals to
many African leaders. This stance is then coupled with an opportunistic policy
regarding arms sales to all and sundry in Africa, including widely reviled dictators
(Alden, 2005; Taylor, 2005). Chinese arms sales to Africa have actually increased
since the 2000 Beijing Declaration of the Forum on China-Africa Cooperation, in

30

which China promised to cooperate in attempts to stop the illegal production and
trafficking in small arms and light weapons in Africa (Committee on International
Relations, 2005; Pan, 2006).
Unlike their political leaders, who appreciate the establishment of strategic
partnerships between Africa and China in economic and political affairs, several
African scholars and civil-society organizations have displayed a more ambivalent
attitude towards Chinas growing presence in Africa. Moeletsi Mbeki, deputy
chairman of the South African Institute of International Affairs, for instance, declared
recently that China is both a tantalizing opportunity and a terrifying threat to South
Africa. On the one hand, he said that China was just the tonic that mineral-rich but
economically ailing South Africa needed. But he added that exports from China and
Hong Kong to his country are double those from Africa, and almost double what
South Africa exports to China. He called the trade relations between South Africa
and China a replay of the old story of South Africas trade with Europe as
evidenced by the fact that we sell them raw materials and they sell us
manufactured goods with a predictable result an unfavourable trade balance
against South Africa. He went on to accuse Chinese companies of flooding the
South African market with cheap products, underbidding local firms, and not hiring
African labour. As a result, the largest South African trade union federation, the
Congress of South African Trade Unions (COSATU), has called for a restriction on
Chinese imports and demanded that at least 75 per cent of retailers stock be
locally made goods (Mooney, 2005).
And finally, there are growing internal and external pressures on African leaders to
introduce good governance and democracy. The long-standing Chinese principle of
non-interference in state sovereignty is being increasingly contested in Africa. The
AUs constitution allows the organization to intervene in a member state should it
find that there are gross violations of human rights, or for other humanitarian
reasons.
The peer review mechanism of NEPAD is structured around an
independent review process of an African countrys adherence to good governance
criteria. This represents another step towards the institutionalization of norms
derived from contemporary neoliberal concerns.
As a result of these developments, Chinas diplomacy towards Africa, which is aimed
at cementing a strategic partnership and maintaining sovereign protection against
the corrosive influence of the West, will have to find new ways to engage the
continent approaches that are not predicated on securing the compliance of the
African political elite alone. Otherwise, it will run the danger of being portrayed as
has been the case in Sudan as a friend of a military regime set on committing
violations against African people in the name of the crudest form of self-interest
(Alden, 2005).

Kurlantzick, Joshua (2006), Beijings Safari: Chinas Move into Africa and
Its Implications for Aid, Development, and Governance, in Policy Outlook,
November 2006, Washington, DC: Carnegie Endowment for International
Peace.
Success and Failure

30

Many African nations have welcomed Chinas new safari. In 2005, China-Africa trade
reached $40 billion, up 35 percent year-on-year from 2004. China offers a vast new
market for Africa; the volume of African exports to Asia rose by 20 percent in the
past five years, and Chinas trade deficit with Central Africa, the most strife-torn
part of the continent, grew to nearly 80 percent of China-Central Africa trade. Unlike
nations in Southeast Asia, African states, except for textile exporters like South
Africa and Lesotho, have little export overlap with China: Ugandas overlap is 8
percent, Ethiopias 4 percent, and Nigerias 1.7 percent. China plans to further triple
trade with the continent by 2010, putting it in the league of the United States and
Europe as a trading partner. China also has become the second-largest consumer of
African resources, signing massive new oil and gas deals in Nigeria, Angola, and
other countries.
African elites and publics often have welcomed Chinas presence: Program on
International Policy Attitudes polls show, for example, that 62 percent of South
Africans believe China is having a positive influence on the world. Some African
elites perceive China as different from Western donors and investors; Beijing is not
linked to the neoliberal economic model and its past structural adjustment
programs. Even the head of the African Development Bank has announced that,
We can learn from [the Chinese] how to move from low to middle income
status.
But in some respects, Chinas engagement with Africa is qualitatively different from
the engagement of other powers and financial institutions. Western powers are
hardly blameless in relations with Africathey have backed dictators from Mobutu
Sese Seko to Yoweri Museveni. Yet today, most traditional donors have agreed that
governance is vital to development, and the United States has created the
Millennium Challenge Corporation, which rewards well-governed poor nations. The
MCC thus far has a mixed track record, but it at least creates a model that other
donors can build upon.
At the same moment, for the first time in decades Africa has entered the radar
screen of international corporations and Western governments. In a world facing a
potential peak in production from major Middle Eastern oil fields, Africas oil and gas
prove even more attractive. Much of Africa is posting its strongest growth rates
since independence. The continent seems ready to settle long-running civil conflicts
in countries like Congo, and has begun to climb the rankings of the World Banks
index of environments for doing business.
Chinas involvement could threaten this African renaissance. Growing Chinese loans
to Africa, especially at high commercial rates, could threaten billions in recent
forgiveness by the World Bank and IMFs Heavily Indebted Poor Countries Initiative,
since China also loans to these nations. If China uses aid tied to investment to win
major oil and gas deals, it could convince other emerging powers in Africa, like
India, to follow suit, potentially undermining governance and sparking conflict for
resources. Chinese arms sales continue to fuel conflict in Africa; China publishes no
information about its arms transfers overseas, and a recent Amnesty International
report found 17 percent of small arms collected by peacekeepers in the Congo were
of Chinese design.

30

Chinese investment could contribute to unchecked environmental destruction and

poor labor standards, since Chinese firms have little experience with green policies
and unions at home, and some African nations have powerful union movements. In
Gabon, illegal timber exports to China comprise roughly 70 percent of all timber
exports. In Zambia, workers in a Chinese-run mine have erupted in violent protest
against safety standards and low wages, which they believe led to an accident last
year in which 49 miners died. In the recent Zambian election, opposition candidate
Michael Sata played on this anger, accusing Chinese companies of exploiting local
workers. Though Sata lost, his supporters then rioted in the Zambian capital,
targeting Chinese businesses.
More generally, the state-led business model China offers could prove problematic.
Chinese firms with state links often have poor standards of corporate governance
within China. Still, in China, the rule of law is weak but does exist; the Chinese
government has managed to prosecute the most corrupt officials. In Africas
weakest states, where the rule of law often simply does not exist and economic
policy makers do not enjoy the same kind of independence from politicians as in
China, this state-led business model could simply be a disasteran invitation for
rapacious governments.
Worse, if China offers aid without any conditions, it will allow itself to serve as a
wedge between it and other donors. This has already begun to occur, and not only
in Angola. In recent weeks, Chad has announced that it may evict two oil
companies, Chevron Corp and Malaysias Petronas, from a project backed by the
World Bank, which had insisted that some oil profits in Chad be spent on improving
social welfare. Eventually, Chad may replace the oil firms with Chinese companies,
since while it was considering kicking out Chevron and Petronas it was breaking
relations with Taiwan and establishing relations with China, which already had
explored oil investments in Chad. Similarly, in Kenya Chinese aid has helped the
government avoid IMF and World Bank criticism of its failure to implement a
comprehensive anti-corruption strategy. In Zimbabwe and Sudan, Chinese backing
has allowed governments to resist pressure from democratic African states to open
a dialogue with the Zimbabwean opposition and to halt the genocide in Darfur.
Some leading Chinese officials understand that, despite Beijings positive image
today, it faces significant downside risks in Africa. Like the Western powers before it,
Beijing could make potentially useless investments in the continent to woo strategic
African nations. By relying on state-linked companies for investment in Africa, China
will be forced to boost its financial support for these firms, which tend to be worse
managed than truly private Chinese companies. Just as important, China will face a
choice in its future relations with Africa and other developing regionsa choice that
will help determine how the world views a more active China. It can consolidate ties
to the leadership of a few regimes, like Angola and Sudan, potentially alienating
large segments of the public and leading to instability that threatens Chinese
interests. Already, besides the attacks in Zambia, militants in the Niger Delta have
warned Chinese companies from operating there. In the longer run, if nations like
Sudan or Zimbabwe ever transitioned to freer governments, average people might
take revenge on Chinese businesses and citizens.
Facing these potential pitfalls, China could alter its African strategy: It could build a
broader type of influence based on Beijings popularity among average Africans,

30

rather than solely relying on links to authoritarian regimes. Building this popularity
will mean working with established initiatives designed to promote African stability
and development. It may surprise many Western policy makers that China now has
more peacekeepers operating under the UN flag than any other permanent member
of the Security Council. China has begun working with African nations on malaria
interventions; Beijing also rhetorically supports the New Partnership for African
Development, an African-led program to promote better governance.
Most importantly, China has begun considering how it can modernize its aid
programs. On the ground, China has begun to participate in donor coordination
groups; though it does not always follow coordination groups strategies, just
participating is a major step forward. Beijing has begun establishing mechanisms to
review how its aid is used by recipient nations. Though China does not yet have a
permanent aid bureaucracy like USAID, there are signs it wants to create one: It has
quietly developed a partnership with Britains Department for International
Development and sent officials to the United States to study how the United States
structured USAID and the new Millennium Challenge Corporation.
If the United States, Europe, and the international financial institutions want China
to change its behavior, they must offer Beijing another optionand do it now, while
Chinese officials are still creating a global foreign policy. Starting with former Deputy
Secretary of State Robert Zoellicks speech last September, the United States has
called for China to become a responsible stakeholder in the world, including
presumably in Africa. But besides asking China to become a stakeholder, traditional
powers must offer China a stake. If Beijing fails to respond to this opportunity, then
Western nations can justly criticize Chinas presence in Africa.
Offering a stake would give China a chance to conceive its interests in the
developing world broadlymediating conflict, promoting development, tackling
non-traditional security threatsrather than focusing on its own narrowest interests.
To incorporate China into existing frameworks of overseas development assistance,
other nations should aggressively solicit participation from Chinese officials in donor
coordination groups within individual African countries. Other donors can work with
Chinese embassy staff on the ground to ensure Chinese participation in donor
groups, help improve Beijings capacity for managing its aid, and prevent China
from destroying donor coherence.
Offering a stake also would involve providing China a larger say in the international
financial institutions. This could entail making China a larger shareholder in the
Bank and the International Monetary Fund. It would also involve major donor
countries throwing their aid programs open to China and allowing Chinese officials
to study them if Beijing opens its aid programs in return.
Other donors also could allow China to play a larger role in setting the health policy
agenda on Africa. One initial possibility is to allow China to take the lead on one
important disease issue, such as malaria. There is a precedent. China seems
interested in playing a leading role on avian influenzaBeijing hosted a January
donor conference on avian influenza, which forced the Chinese government to pay
closer attention to flu issues and raised nearly $2 billion in pledges.

30

Outside aid, developed nations could engage China around resources in Africa.
China, the United States, and Japan could create a kind of consumers cartel to
combat the major oil producers and prevent African producers like Angola or Nigeria
from playing consumers off of each other. As Senator Richard Lugar has suggested,
this would entail more formal cooperation between Washington, Tokyo, and Beijing
on energy security, and even, in the future, joint exploration efforts in an attempt to
boost oil supplies.
The United States and international financial institutions also could help China
reform Beijings own tools of influence, and could help prevent China from offering
commercial loans to nations facing high debt burdens. Working with China to create
a permanent Chinese aid organization could reduce the influence of the Ministry of
Commerce, which is more likely to tie aid to investment. It also could empower
Chinese officials who want to make Chinas aid more transparent, just as having a
permanent Chinese environmental administration at least provides a permanent
place at the policy table for Chinas environmental regulators.
Unfortunately, the United States and other powers seem to be taking the opposite
approach. Rather than accepting China into the G8 group of industrial nations,
where it clearly belongs, the group has allowed complaints by Japan and Russia to
keep China out. Instead of offering Beijing a bigger seat at the aid table, many
major donor organizations do not even know which Chinese officials are responsible
for aid disbursement. Rather than working with China while continuing to uphold
promises for better governance, the United States and Japan have wooed the
continents biggest oil producers, and most autocratic states, like Equatorial Guinea.
In the longer term, these policies are not sustainable, and one day Chinas policies
will be so well established that it will be impossible for other actors to influence
them. Today, if the United States wants China to take responsibility on the
continent, it must become more responsible as well.

Lancaster, Carol (2007b), The Chinese Aid System, Washington, DC: Center
for
Global
Development,
(http://www.cgdev.org/content/publications/detail/13953/).
Changes Afoot in Chinese Aid
Chinese officials involved in aid give the impression that they are overwhelmed with
the increasing engagement of their government in aid-giving and the rapidly
expanding workload. (I was told there are only 70 professionals in MOFCOM dealing
with Chinese aid at this point.) I can understand why.
In my conversations over the past several years, Chinese officials have also given
the impression that they were trying to decide how to shape their aid program and
to what extent they wanted to engage with Western aid donors. They clearly do not
want to be identified as just one more member of the rich countries aid clubs. For
political reasons they want to project their own distinctive image in Asia, Africa and
Latin Americaone of South-South cooperation, of a special understanding and
sympathy that comes from sharing problems of poverty; one of having emerged
rapidly (but not yet completely) from those problems; and one that will provide

30

them with a separate and privileged relationship with the governments they are
helping and cultivating.
And, as noted above, there are the tensions within the Chinese government that are
evident in Washington, Paris and Tokyo as well about who controls the aid program
and for what purposes.
Not surprisingly then, the Chinese government has begun a process of
reconsidering how it should organize and manage its aid. I understand that creating
a separate, dedicated aid agency is one of the options under study. I understand
also that the Institute for European Studies of the Chinese Academy of Social
Science (and perhaps other elements of the government, as well as think tanks and
universities) have been asked to do a report on how the Chinese should reform their
aid in time for the 17th Communist Party Congress in the fall of 2007 or for the new
government to be installed in 2008. It may be that reforms in the organization of
Chinese aid will be announced at that time or that this stirring may be only the
beginning of a longer process of rethinking on the part of the government about
how it runs its aid programs. In Beijing, as elsewhere, many vested interests are
involved in the existing aid system which is one reason why such systems
throughout the world have usually proven hard to change in fundamental ways.
The Chinese government has also begun to engage directly with foreign aid
agencies to learn from their arrangements and processes and tentatively, to
collaborate with them. They have sent teams to visit London and Stockholm to learn
how these governments manage their aid. The have developed a considerable
dialogue with the British Department for International Development on international
aid and development issues. They have begun to collaborate with the Canadian
government on technical assistance activities in developing countries. They have
signed a memorandum of understanding with the International Finance Corporation
about collaboration on environmentally sustainable projects in emerging markets.
And they have joined or expressed interest in joining donor coordination groups in a
number of African countries. (I understand, however, that there has been little
substantive contact between Chinese aid officials and U.S. aid officials. If true, that
may reflect the sensitivities in Beijing, as well as in Washington, of Chinas engaging
with the U.S. government; it may also reflect the fact that the United States has not
been an aid donor to China and so, does not have an aid presence in Beijing, and
so, may lack the understanding of the Chinese governments aid system and the
relationships with key government officials that a presence over time can bringall
of which are essential in the Chinese context for real communication and
cooperation.)
China is the most dynamic country in the world with growth and change occurring at
an absolutely dizzying pace. The excitement and stresses of rapid change are
palpable in Beijing, in Shanghai, in small cities like Kunming (population: only 5
million). They are also increasingly evident in Chinas aid program, the structure and
management of which we are just beginning to get a picture. The challenge for the
aid-giving governments of Europe, North American and Japan is to expand lines of
communication and, to the extent possible, collaboration with the Chinese who are
clearly set to play a major role in aid-giving worldwide.

30

Li, Anshan (2007), China and Africa: Policy and Challenges, in China
Security, Vol. 3. No. 3, pp. 69-93.

Manning, Richard (2006), Will Emerging Donors Change the Face of

International Co-Operation?, in Development Policy Review, Vol. 24, No.
4, pp. 371-385.
So let us finally return to the question at the outset of this article: will the
emergence of new donors change the landscape of the international development
effort and will it undercut some of the important approaches put in place over the
years to improve the quality of aid? I hope I have shown that the term new or
emerging donors may be convenient shorthand, but that (as with that other
shorthand term fragile states) shorthand is of limited use. We should recognise
that most donors outside the DAC have a history as donors and many of them have
a good deal of experience. We should pay attention not just to their aid policies in
the narrow sense but to the overall impact that they have on poor countries. I hope
that I have shown that the view that we are approaching a radical decline in the
DAC share of aid is likely to be mistaken, while at the same time recognising that, in
a world of rising aid, developing countries will have the benefit of more choices. And
I hope that I have also shown that there are in practice standards of donor
behaviour among DAC members and the multilaterals which can and should be
maintained. At the same time, I have recognised that in at least three respects
there are grounds for concern about the otherwise welcome prospect of
additional aid flows from beyond the DAC, and emphasised the importance of better
dialogue among all providers of international co-operation.
The increases in aid from both the DAC and other donors will make it all the more
important for developing countries to manage their total use of donor resources
effectively. They will find this easier to achieve the more all donors accept
sustainable development and reduction of poverty, as measured by the Millennium
Development Goals, as central objectives not only of development aid, but also of
their wider policies that impact on poor developing countries. In that way, we could
see a new development community that is not just more multipolar but also a real
multiplier.

McCormick, Dorothy (2008), China & India as Africas New Donors: The
Impact of Aid on Development, in Review of African Political Economy,
Vol. 35, No. 115, pp. 73-92.
This papers analysis shows clearly that the potential impact of Chinese and Indian
aid on Africa is significant. Both China and India have stated Africa policies, which
they are now beginning to actualise. Both countries stand to benefit from increasing
involvement with Africa, not only economically, but also politically in terms of their
aspirations to be regional and eventually global leaders. Both are able to become
donors, though China will probably achieve this more quickly than India. China has
the economic strength to provide grants as well as concessional loans, trade

30

preferences, and technical assistance. India is economically weaker, but in certain

areas such as ICT is in a position to offer increased technical assistance that Africa
sorely needs.
The actual impact of these emerging donors will, however, depend on a variety of
internal and external factors that we tried to capture in our model. The example
used in this paper the impact of aid on the manufacturing sector shows how
complex the interactions among these factors can be. Aid can affect manufacturing
both directly and indirectly, and through manufacturing it can influence growth,
distribution, governance, and the environment. Aid in the form of direct investment
in plant and equipment is more likely to come from China than from India, because
of the nature of the industrial sector in the two countries. In the case of China, aid
and FDI are intertwined, making it difficult to disentangle the two. Possible indirect
impacts of aid on manufacturing are many. In fact, the most important is probably
the support that China gives for infrastructure development. Of the other indirect
forms of assistance to manufacturing, the most common are the academic and
technical training offered by both China and India, and the tariff exemptions that
China is now experimenting with. Neither the benefits nor the negative impacts are
automatic, however, as we have seen from some of the specific examples. They
depend on the size, structure, and location of the manufacturing sector in each
country, as well as on the policy environment within which the sector operates.
These complexities underscore the need for detailed empirical research. Empirical
research on the impact of aid is much less advanced than research on the impacts
of Chinese and Indian trade and FDI. There is need for studies in different places
using different methodologies that will capture the variables and relationships
identified here as well as others that may have been missed. A starting point is a
set of broad research questions that can be further refined for specific countries and
sectors. At least seven such questions can be identified.
1. To what extent does aid from China or India that flows directly into
manufacturing plant and equipment in sub-Saharan Africa allow it to produce
more and/or higher quality goods?
2. To what extent does aid from China or India aimed at improving physical
infrastructure result in better manufacturing performance?
3. To what extent does aid in the form of access to Chinese or Indian technical
or academic training programmes result in better manufacturing
performance?
4. To what extent do tariff exemptions by China and India promote investment in
manufacturing?
5. To what extent does Chinese or Indian aid to other sectors of the economy
result in increased demand for locally manufactured products?
6. To what extent has debt relief by China or India resulted in investments that
have had positive spill-over effects on manufacturing?
7. To what extent has Chinese or Indian aid enabled African governments to
pursue their own industrial development policies and programmes?

30

Each of these broad questions gives rise to a number of subsidiary questions aimed
at establishing the basic facts around the question, examining direct and indirect
relationships and their effects on growth, distribution, governance, and/or the
environment, as well as establishing the links to policy outcomes. Ideally studies
would involve collection of data in China and India as well as Africa, and would be
designed as collaborative efforts between African and Asian researchers or research
institutions. Finally, it goes without saying that China and India are changing rapidly.
This means that studies must be designed to capture the dynamics of change as
well as the situation at any one point in time.

Ministry of Foreign Affairs of the Peoples Republic of China (2006),

Chinas African Policy, Beijing: Ministry of Foreign Affairs of the Peoples
Republic
of
China,
retrieved
on
23rd
August
2010
from
www.fmprc.gov.cn/eng/zxxx/t230615.htm#.
Foreword
The first few years of the new century witness a continuation of complex and
profound changes in the international situation and further advance of globalization.
Peace and development remain the main themes of our times. Safeguarding peace,
promoting development and enhancing cooperation, which is the common desire of
all peoples, represents the irresistible historical trend. On the other hand,
destabilizing factors and uncertainties in the international situation are on the rise.
Security issues of various kinds are interwoven. Peace remains evasive and
development more pressing.
China, the largest developing country in the world, follows the path of peaceful
development and pursues an independent foreign policy of peace. China stands
ready to develop friendly relations and cooperation with all countries on the basis of
the Five Principles of Peaceful Coexistence so as to contribute to peace, stability and
common prosperity around the world.
The African continent, which encompasses the largest number of developing
countries, is an important force for world peace and development. China-Africa
traditional friendly relations face fresh opportunities under the new circumstances.
By this African Policy Paper, the Chinese Government wishes to present to the world
the objectives of China's policy towards Africa and the measures to achieve them,
and its proposals for cooperation in various fields in the coming years, with a view
to promoting the steady growth of China-Africa relations in the long term and
bringing the mutually-beneficial cooperation to a new stage. []
Chinas Relations with Africa
China-Africa friendship is embedded in the long history of interchange. Sharing
similar historical experience, China and Africa have all along sympathized with and
supported each other in the struggle for national liberation and forged a profound
friendship.

30

The founding of the People's Republic of China and the independence of African
countries ushered in a new era in China-Africa relations. For over half a century, the
two sides have enjoyed close political ties and frequent exchange of high-level visits
and people-to-people contacts. Our bilateral trade and economic cooperation have
grown rapidly; cooperation in other fields has yielded good results; and consultation
and coordination in international affairs have been intensified. China has provided
assistance to the best of its ability to African countries, while African countries have
also rendered strong support to China on many occasions.
Sincerity, equality and mutual benefit, solidarity and common development-these
are the principles guiding China-Africa exchange and cooperation and the driving
force to lasting China-Africa relations. []
Chinas African Policy
Enhancing solidarity and cooperation with African countries has always been an
important component of China's independent foreign policy of peace. China will
unswervingly carry forward the tradition of China-Africa friendship, and, proceeding
from the fundamental interests of both the Chinese and African peoples, establish
and develop a new type of strategic partnership with Africa, featuring political
equality and mutual trust, economic win-win cooperation and cultural exchange.
The general principles and objectives of China's African policy are as follows:
- Sincerity, friendship and equality. China adheres to the Five Principles of Peaceful
Coexistence, respects African countries independent choice of the road of
development and supports African countries' efforts to grow stronger through unity.
- Mutual benefit, reciprocity and common prosperity. China supports African
countries endeavor for economic development and nation building, carries out
cooperation in various forms in the economic and social development, and
promotes common prosperity of China and Africa.
- Mutual support and close coordination. China will strengthen cooperation with
Africa in the UN and other multilateral systems by supporting each others just
demand and reasonable propositions and continue to appeal to the international
community to give more attention to questions concerning peace and development
in Africa.
- Learning from each other and seeking common development. China and Africa will
learn from and draw upon each other's experience in governance and development,
strengthen exchange and cooperation in education, science, culture and health.
Supporting African countries' efforts to enhance capacity building, China will work
together with Africa in the exploration of the road of sustainable development.
The one China principle is the political foundation for the establishment and
development of Chinas relations with African countries and regional organizations.
The Chinese Government appreciates the fact that the overwhelming majority of
African countries abide by the one China principle, refuse to have official relations
and contacts with Taiwan and support Chinas great cause of reunification. China
stands ready to establish and develop state-to-state relations with countries that
have not yet established diplomatic ties with China on the basis of the one China
principle.

30

Enhancing All-Round Cooperation Between China and Africa

1. The Political Field
a. High-level visits []
b. Exchanges between legislative bodies []
c. Exchanges between political parties []
d. Consultation mechanisms []
e. Cooperation in international affairs []
f. Exchanges between local governments []
2. The Economic Field
a. Trade []
b. Investment []
c. Financial cooperation []
d. Agricultural cooperation []
e. Infrastructure []
f. Resources cooperation []
g. Tourism cooperation []
h. Debt reduction and relief []
i. Economic assistance []
j. Multilateral cooperation []
3. Education, science, culture, health and social aspects
a. Cooperation in human resources development and education []
b. Science and technology cooperation []
c. Cultural exchanges []
d. Medical and health cooperation []
e. Media cooperation []
f. Administrative cooperation []
g. Consular cooperation []
h. People-to-people exchange []
i. Environmental cooperation []
j. Disaster reduction, relief and humanitarian assistance []
4. Peace and Security
a. Military cooperation []
b. Conflict settlement and peacekeeping operations []
c. Judicial and police cooperation []
d. Non-traditional security areas []
Forum on China-Africa Cooperation and Its Follow-up Actions
Launched in 2000, the Forum on China-Africa Cooperation has become an effective
mechanism for the collective dialogue and multilateral cooperation between China
and Africa and put in place an important framework and platform for a new type of
China-Africa partnership featuring long-term stability, equality and mutual benefit.
China attaches importance to the positive role of the Forum on China-Africa
Cooperation in strengthening political consultation and pragmatic cooperation
between China and Africa, and stands ready to work with African countries to
conscientiously implement the Beijing Declaration of the Forum on China-Africa
Cooperation, the Program for China-Africa Cooperation in Economic and Social
Development and the Forum on China-Africa Cooperation-Addis Ababa Action Plan
(2004-2006) and its follow-up action plans. China will work with African countries

30

within the framework of the Forum to explore new ways to enhance mutual political
trust, promote the comprehensive development of pragmatic cooperation, further
improve the mechanism of the forum, and try to find the best way for furthering
cooperation between the Forum and the NEPAD.
Chinas Relations with African Regional Organizations
China appreciates the significant role of the AU in safeguarding peace and stability
in the region and promoting African solidarity and development. China values its
friendly cooperation with the AU in all fields, supports its positive role in regional
and international affairs and stands ready to provide the AU assistance to the best
of its capacity.
China appreciates and supports the positive role of Africa's sub-regional
organizations in promoting political stability, economic development and integration
in their own regions and stands ready to enhance its amicable cooperation with
those organizations.

Mohan, Giles and Power, Marcus (2008), New African Choice? The Politics
of Chinese Engagement, in Review of African Political Economy, Vol. 35,
No. 115, pp. 23-42.
To conclude we want to open up a series of broader issues around the longer term
implications of whether Chinas involvement will enhance development prospects
and political accountability in Africa or undermine them. We do this through a series
of research questions for the future and a skeletal methodology. All agree that China
is in Africa to stay and so monitoring the unfolding of these relationships is an
obvious conclusion from this review. One medium to long term issue which
conditions any foreign policy initiatives by China is its domestic inequality. Given
huge and growing urban-rural inequality, debate is emerging around whether China
can continue to fund aid and investment at current levels, when pressures are
coming for domestic redistribution rather than international aid (Naidu, 2007).
We suggested that Chinas involvement will not fundamentally alter Africas place in
the global division of labour. It simply adds a new and significant market without
challenging the continents extraversion. History suggests that in some states this
will entrench rentier states, concentrate ownership in a few hands, and deliver
limited multipliers to marginalised Africans. The more upbeat take amongst
policymakers (Wild and Mepham, 2006, Tjonneland et al. 2006) is that if Africans
can control the benefits of Chinese involvement then Africa will benefit. This
requires strengthening civil society (Obiorah, 2007) and opening up development to
democratic debate to see how redistribution might work. International donors, then,
will not do things much differently and encourage the types of governance reforms
already in place while ensuring dialogues with the Chinese. However, civil society
strengthening has been limited thus far and so it remains to be seen whether more
of the same actually works.
A related debate, with historical parallels, is whether China will be forced to get
more involved in multilateral governance as well as building governance capacity at

30

the national level. So far China has, as we have seen, taken the view publicly that
internal political matters are not its concern. This echoes earlier merchants and
imperialists, who insisted their interests were largely commercial, but who ended up
becoming more and more mired in internal institutional building and policing. Thus,
as Chinas Africa strategy comes to rely on a growing number of bureaucratic
principles and corporate agents, contradictions will increase. Beijing is relying on an
increasingly complex set of government oversight agencies to accomplish its Africa
policy which are ever harder to manage, because these agencies do not enjoy direct
lines of authority over Chinese corporations overseas:
As it deepens, the Chinese government will more likely find itself hamstrung
by an increasing set of tensions and contradictions between the interests
and aims of government principals the bureaucracies based in Beijing tasked
with advancing Chinas overall national interests and the aims and interests
of ostensible agents the companies and businesspersons operating on the
ground in Africa (Gill and Reilly, 2007:38).
And as these relationships grow and the institutional tendrils become more
enmeshed we see possible problems of African people, in western fears, being
locked into China for many years to come but equally the Chinese are locked into
Africa, which brings its own risks.
Leading on from this is that China seeks, as do all investors, a stable and secure
investment environment. In line with other superpowers China supplies arms and
military training in an attempt to secure resource access. So a possible scenario
involves greater superpower conflict in which as a result of arms sales, rent seeking,
and growing inequality African states are destabilised even more and pull farther
apart. The result in terms of securing access to resources may be that China, and
others, end up dealing with a myriad of non-state institutional players such as
warlords, guerillas, and secessionist movements, not unlike the situation in the
contemporary Niger Delta.
In all these areas, though, there is a need for rigorous research and we finish with
some key research questions and a methodology. On issues of economic change
and class composition we feel there are questions around ownership, wealth
distribution, race and organised politics:
In what ways do the patterns of Chinese trade, aid and investment reinforce
existing macro-economic reforms or does it work against them?

How has Chinese aid and investment transformed the ownership of

businesses in African countries?

How does Chinese involvement affect the well being and security of different
class groups in Africa? How do different classes of Africans perceive Chinas
growing role in trade and investment?

What is the racial composition of these changing class groupings?

Does the changing class and gender composition have implications for
organised civil society based politics (e.g. Trade unions, business lobbies)?

30

Leading from the last question is formal political society and the ways in which
political parties and incumbent regimes use Chinas presence:

How do African politicians and political parties play the China card?

To what extent does Chinas involvement strengthen the hold of regimes in

power? How do African regimes use Chinese aid and Chinas development
path as a means to push through different kinds of political change?

Finally, Chinese aid, in all its complexity, and the relations between donors is likely
to have long-term repercussions across Africa:

In what ways does China deliver aid and how it is different and distanced
from western aid? How are different discourses of sovereignty, cooperation
and development mobilised in these practices?

How are Chinese aid and investment projects decided upon and allocated?

What forms of conditionality exist in Chinese aid? What effects does this have
on policy autonomy in Africa?

What tensions exist on the ground over donor coordination? Are western
donors at the country level seeking to include China more and in other ways?

These questions urge a detailed empirical response. There are already too many
generalised analyses of China and Africa as if there were relationships between
two countries instead of between one and fifty-three (Chan, 2007:2). Instead what
are needed are detailed case studies of China-Africa relations, which establish
baseline conditions and that are capable of differentiating generic impacts from
country specific ones. In the past year we have seen more case studies emerging
including Angola, Sudan, Namibia, Tanzania, Zimbabwe and Benin (in le Pere, 2007
and Manji and Marks, 2007), but these are mostly descriptive and use poor quality
public data and newspaper accounts. It is vital for critically engaged scholars,
activists and policy makers to properly analyse these unfolding relationships in
order to guide action rather than continually rely on half truths and impressions.

Muekalia, Domingos Jardo (2004), Africa and

Partnership, African Security Review 13, 1 : 511.

Chinas

Strategic

While the practical implementation of this programme is an open question, there is

no doubt that it represents a forward-looking, bold and comprehensive initiative
inspired by a long-term strategic vision. The events following 9/11 have certainly
affected the momentum of this initiative. However, the trade volume has increased
and the foundation for this co-operation has solidified. The second China-Africa
Forum conference took place in Addis Ababa from 1517 December 2003. The
conference reviewed the implementation of the two documents adopted at the first
meeting and explored new initiatives and measures to move forward. Premier Wen
delivered a speech at the opening ceremony making a positive assessment of the
past three years. He pointed out that two-way trade had increased by 20%, 117 new

30

China-invested enterprises were up and running in Africa, 7,000 African personnel

were trained in a wide variety of professions, and that bilateral cooperation in
energy development and high-tech was getting off the ground. Premier Wen went
on to say that the people of the world share aspirations for peace, stability and
development, but hegemonism is raising its ugly head. 12
Chinas geopolitical benefits from this cooperation include the affirmation of the One
China Policy, increased support for its world vision of multi-polarity and the ability to
compete for markets, alternative energy sources and strategic space against
equally increasing US engagement. By positioning itself at the helm of a coalition of
African developing countries China will leverage its position on the UN Security
Council and improve its bargaining power in other international institutions. The
constant references to the need to create a new, equitable political and economic
order reflect Chinas competitive instinct against the US in the international arena.
As far as energy is concerned China, according to the CSIS report, is expected to
depend on imports for 45% of its oil consumption in 2010. To cope with this growing
demand it needs to secure such sources, and the volatility of the Middle East
security situation increases Africas importance in this regard. In addition, China is
poor in natural resources and raw materials are well-abundant in Africa. 13
Chinas Vice-Minister of Foreign Affairs, Li Zhaoxing, announced on 28 September
2002 that China will make agricultural co-operation with Africa a key area of cooperation in the coming years. 14 There is no doubt that Chinese technologies in this
field will help increase productivity in Africa, reduce hunger and create jobs.
However, for China this is not a mere commercial venture. According to China
Development Gateway, many Chinese officials and farmers thought of investing in
Africa when they consider ways to cope with the challenges brought by the WTO
entry.15 Government sponsored seminars have been held in different provinces of
China to brief farmers about conditions in Africa and related government incentive
policies for investment. In addition, factories, roads, warehouses and the
modernization of transportation take up land.
Rapid industrialisation is already taking a toll, as grain area has dropped from 90.8
million hectares in 1990 to an estimated 85.7 million hectares in 1994. This annual
drop of 1.4% is likely to endure as long as rapid economic growth continues. 16
This loss of cropland against the unavoidable population growth means that China
will have to rely heavily on grain imports in the future. Chinas current grain yield
per hectare is already considered quite high by international standards, ruling out
its increase.
As China pursues its global strategy, Chinese military leaders are likely to increase
relations with their counterparts on the continent. As reported by China Information
Centre in late 2000:
To express the common aspirations of the China and African peoples for peace, the
marine fleet of the Chinese Peoples Liberation Army (PLA) paid a friendly visit to
Tanzania on 2829 July 2000, the first of its kind since 1949. 17

30

In other words, since the founding of the Peoples Republic of China this was the
first time that a PLA fleet called on an African port. A global military vision would be
flawed if China overlooks Africa as a strategic space.
China has some advantages over the US including its identity as a developing
country, its centralised political systemwhich makes decisions easier to take
without regard to social or political considerationsthe growing economy, low-cost
technology and the willingness of its people to work in inhospitable places. It
certainly also has disadvantages, but we will not go into those here. On their part,
African leaders seem to welcome economic aid not attached to political conditions
or transparency requirements.
China-Africa co-operation will surely go through highs and lows, but it would not be
far-fetched to conclude that China is engaging Africa in a long-term strategic
partnership for international leadership, markets, energy and space.

OECD (2008), China: Encouraging Responsible Business Conduct, OECD

Investment Policy Reviews, France: OECD Publishing.
Chinas regulatory framework for investment has been developed further since
2006
The OECD reviews the five landmark laws and sets of regulations promulgated since
the publication of the 2006 OECD Investment Policy Review of China. It finds that
these changes improve the tax and competition elements of the regulatory
environment within which businesses, including foreign-owned enterprises (FIEs),
operate in China, but tighten restrictions on inward direct investment, including
cross-border mergers and acquisitions. The review also takes stock of developments
in Chinas inward and outward FDI statistics methodology.
Chinas increasing outward investment is prompting calls for responsible behavior
China has been rapidly becoming an important source of outward foreign direct
investment (OFDI) in recent years. Government policy was initially the main
determinant of OFDI, but it is now increasingly driven by commercial motivations. In
the context of Chinas growing role as an investor in Africa in particular, concerns
over Chinas investment behaviour are being raised and Chinese enterprises are
under increasing pressure to be more responsible global players.
China is adopting policies to encourage responsible business conduct (RBC)
The OECD supports the Chinese governments efforts to promote high standards of
corporate behaviour and develop further the framework conditions that enable
responsible business conduct (RBC). The Chinese authorities are striving to ensure
corporate compliance with laws relating to RBC and are also promoting RBC in
overseas operations of Chinese enterprises. China has signed and ratified
international agreements relevant to promoting RBC. Chinese companies are
seeking to learn about RBC standards.
More can be done to encourage RBC

30

While the Chinese government has made efforts to encourage responsible business
conduct, many Chinese enterprises are still largely unaware of what RBC entails and
have not organised themselves to promote it. The lack of coordination of
government agencies approaches hinders communication of the governments
expectations to Chinese companies. The OECD offers policy options to help
implement at local level legislation and regulations establishing framework
conditions for responsible business conduct.
China has made progress, but still faces challenges, in encouraging environmental
RBC
Chinas rapid economic growth has been accompanied by negative environmental
impacts. The Chinese government has accelerated its efforts to develop the legal
framework and standards for environmental protection. The OECD offers policy
options to meet the formidable challenges faced by the Chinese authorities in
enforcing and implementing these.

Perret, Christophe and Bosshard, Laurent (2006), Africa and China, in

Atlas on Regional Integration, ECOWAS-SWAC/OECD.
Oil and cotton will remain key issues at the core of Sino-African relations in the
coming decades. However, they will not be the only issues at play. It is already
possible to discern tension on the world steel and aluminium (bauxite) market.
More generally, the African continent will undoubtedly remain an attractive market
showing constant growth (if only in demographic terms) for Chinese manufactured
products. The risk of a growing invasion of competing imports or imports
preventing the development of local industry should therefore be taken into
account. To balance this, two factors could encourage Chinese investors to finance
West African industry: firstly, the increase in sea transportation costs should
progressively favour the creation of primary processing units in particular (iron,
bauxite). Secondly, the prospect of the Economic Partnership Agreements (EPAs)
between African regions and the European Union should encourage Chinese
industrialists (but also Indian, Brazilian, etc.) to produce within these regions in
order to gain access to the European market. The ECOWAS zone is, from this
perspective, particularly well-positioned as it offers three advantages: geographic
proximity to Europe, availability of raw materials (cotton, iron, bauxite, etc.) and a
more available, abundant and low-cost workforce than in North Africa, for example.
If this hypothesis is proven, it is probable that countries with non-convertible
currency (Ghana, Nigeria, etc.) will be more attractive than countries in the
franc/euro zone where production costs are higher. Political and geo-strategic
considerations will undoubtedly continue to have an impact and will probably partly
compensate for this bias. Whatever happens, many African leaders see the Chinese
irruption on their continent as an economic opportunity what if development
came from the East?-, doubled by a political opportunity What if Africa became a
strategic issue, it could leave the era of submission to go forward into the era of
negotiation.

30

Ravallion, Martin (2008), Are There Lessons for Africa from Chinas
Success Against Poverty? Policy Research Working Paper 4463,
Washington DC: Development Research Group, World Bank.
Policy Lesson from Chinas Success
While successful reforms need not conform closely to orthodox neo-liberal
recommendations, Chinas success against poverty illustrates well the generic point
that freer markets can serve the interests of poor people. Chinas farmers
responded dramatically to market incentives when the institutional reforms gave
them the chance to do so. African farmers are not likely to be any different in this
respect.32
But Chinas success was not just a matter of letting markets do their work. That
success would not have been possible without strong state institutions
implementing supportive policies and public investments. China has had a tradition
of building and maintaining the administrative capacities of government at all
levels, including in countless villages that were the front line for implementing the
crucial rural reforms that started in the late 1970s. (Indeed, the tradition of a strong
public administration goes back so far that China should probably get credit for
invented the idea.) The leadership of a township or administrative village in rural
China is typically accountable to higher levels of government and its own citizens
for economic development within its borders. By contrast, political scientists have
pointed to the persistent incapacities of Africas state institutions (Herbst, 2000;
Clapham, 2001; van de Walle, 2001). Granted, some normal states (as Clapham,
2001, calls them) have emerged. 33 However, judged by almost any standards, but
certainly when assessed against Chinas tradition of strong state institutions, Africa
is clearly lagging in this repect [sic]. The capacity to implement policies is necessary
for success, but that capacity must be developed.
Of course, state capacity must be used to implement good policies, and to avoid or
drop bad ones. An obvious, though nonetheless important, lesson that is well
illustrated by Chinas experience is the need for governments to avoid doing harm
to poor people. One way is to reduce the (explicit and implicit) taxes they face. In
Chinas case, the government operated (for many years) an extensive foodgrainprocurement system that effectively taxed farmers by setting quotas and fixing
procurement prices below market levels (to assure cheap food for far less poor
urban consumers). This gave the government a powerful anti-poverty lever in the
short-term, by raising the procurement price as happened in the mid-1990s, helping
to bring both poverty and inequality down. Again, this reform is rather specific to
China. But it would be a safe bet that every country in SSA can find its own
examples of taxes and regulations that are biased against the poor. Research on
Africa has pointed to ways in which past policies have placed a heavy burden on the
poor, notably through urban biases in exchange rate and spending/taxing policies. 34
Another robust lesson concerns macroeconomic stabilization policy. Chinas
experience suggests that avoiding inflationary shocks has been good for poverty
reduction. Higher inflation meant higher poverty. 35 (The reversals for Chinas poor
during the late 1980s evident in Figure 1 reflect in part the macroeconomic
instability of that time. Low rural economic growth was another factor.) The

30

importance of macroeconomic stability to sustained poverty reduction in China

echoes findings in other developing countries. 36
Greater internal market integration has played a role in Chinas success, although
this is not a policy area in which China made particularly rapid progress. The
impediments to migration within China have been noted already. There have also
been frictions to internal trade, though declining in importance over time. However,
there is nothing comparable in China today, or even 20 years ago I suspect, to the
impediments to internal market integration faced in SSA. For example, you still can't
drive a vehicle between some important commercial cities of Africa large cities in
relatively close proximity but in different countries (such as Douala, the commercial
capital and largest city of Cameroon, and Lagos, the commercial capital of
neighboring Nigeria, and most populous city in SSA). Poor internal integration
means that the typical African country faces a tiny domestic market compared to
the typical Chinese province.
An important lesson from Chinas experience is that growth-promoting economic
reforms are not sufficient for rapid and sustained poverty reduction. Persistent
inequalities in key assets and access to essential infrastructure impede the
prospects for poor people to share in the economic gains spurred by reforms. On
breaking up the collective farms it was possible to assure that land within
communes was fairly equally allocated. (Although marked inter-commune inequality
remained, given that mobility was restricted.) With a relatively equal allocation of
land holdingsland-use rights rather than ownershipthe agricultural growth
unleashed by the rural economic reforms of the early 1980s could bring the rapid
poverty reduction seen in Figure 1. Similarly, a positive legacy of socialism and the
Confucion ethic was the relatively low inequality in health and schooling at the
outset of the reform period. The low inequality in education attainments is likely to
have helped in assuring that farm and non-farm growth was poverty reducing.
The importance of the pattern of growth to Chinas progress against poverty carries
a lesson for Africa. When so much of a countrys poverty is found in its rural areas it
is not surprising that agricultural growth plays an important role in poverty
reduction. Granted, the past efficacy of agricultural growth in reducing poverty in
China reflects (at least in part) an unusual historical circumstance, namely the
relatively equitable land allocation that could be achieved at the time of breaking up
the collectives. However, Chinas experience is consistent with the view that
promoting agricultural and rural development is crucial to pro-poor growth,
particularly at the early stages, given the potential for small-holder farming to
rapidly absorb unskilled labor.
The need to give higher priority to agricultural growth rather than industrialization
at the early stages of economic development echoes longstanding arguments (and
debates) in the literature. 37 By this view, only when agricultural output has risen
sufficiently will it be possible to release labor from agriculture for the infant nonfarm sectors. In a relatively closed economy (or one in which the foodstaples are
largely non-tradable) higher domestic food output will also entail lower food prices
and hence allow new manufacturing enterprises to pay low wages, further
stimulating growth in the non-farm economy. Chinas success in labor-intensive
manufacturing clearly rested in part at least on the availability of cheap wage
goods.

30

There is also evidence for China that the agricultural sector is an important
generator of positive externalities favoring non-farm development. Using farmhousehold level panel data from four provinces of post-reform rural China, Ravallion
(2005) finds evidence of strong geographic externalities, stemming from spillover
effects of the level and composition of local economic activity and private returns to
local human and physical infrastructure endowments. This suggests an explanation
for rural underdevelopment arising from under-investment in certain externalitygenerating activities, of which agricultural development emerges as the most
important.
Developing countries keen to industrialize have tried often to accelerate the
process. Indeed, even China may well have switched its sectoral attention out of
agriculture too quickly. It seems that after attaining a degree of food security, and
higher incomes for the peasant class, the political economy demanded higher living
standards for the relatively better off middle- and upper-income groups. The
associated shift in the sectoral and geographic pattern of Chinas growth fuelled
rising inequality and dulled the impact of subsequent growth on aggregate poverty
incidence. (In this respect, Africa might actually learn more from Vietnam, which
appears to have maintained its sectoral emphasis on agriculture and rural
development for a longer period than China did at a comparable point in time.)
This lesson appears to be highly relevant to SSA today. Christianson and Demery
(2007) have argued convincingly that development strategy for Africa that is firmly
grounded in agricultural and rural development can bring a larger and more
sustained impact on poverty.38 Just as has happened in China, there will be a time
when the emphasis in Africa will naturally shift to secondary and tertiary sectors.
But with the levels of poverty prevailing in SSA today, and the sub-continents (still)
relatively abundant supply of (not too unequally distributed) land, an agriculturebased strategy must for now be at the center of any effective route out of poverty,
just as it was in China during the early 1980s.
Achieving that growth will not be easy. 39 It will require investments in agricultural
research and development (R & D), tailored to African (often rain-fed) conditions,
and efforts to bring research results to African farmers. China would seem to be in a
good position to help African countries build up their agricultural research and
extension systems. (SSAs total public spending on agricultural R & D increased by
barely 20% in real terms over 1981-2000; over the same period it increased three
fold in China; See World Bank, 2007, Table 7.1.) Higher agricultural growth will also
require investments in rural infrastructure, which is worse now in many African
countries than it was around 1980 in China, when the rural reforms began. 40
Provided that Africa makes the right investments in supporting agricultural growth
there should be no difficulty finding the market for its produce, including in China,
which is now more open to agricultural imports (after its entry into the WTO).
African observers of Chinas success might be tempted to conclude that rising
inequality is the inevitable price of lower absolute poverty. Looking forward, that
would be worrying in Africa, where inequality is already rather high, with many
countries having levels of inequality reaching (and in a few cases exceeding) the
levels found in Latin American, where inequality measures tend to be the highest of
any region of the world.41

30

However, it should not be presumed that poor countries necessarily face an

aggregate growth-equity trade off. Upward pressures on inequality can certainly be
generated by the growth process, such as stemming from skill shortages and higher
returns to schooling in the labor market. On the other hand, to the extent that the
growth comes from relaxing the constraints facing poor people in access to key
markets, it may help put downward pressure on inequality. The net outcome is an
empirical issue, and will vary from country to country, as is indeed found to be the
case in cross-country comparisons of growth rates and changes in inequality
(Ravallion, 2007).
So Africa should be wary of drawing the lesson from China that rising inequality is
the inevitable price of higher growth and less poverty. Indeed, as noted above,
Chinas experience actually provides counterexamples (in some time periods and
some provinces) to the view that rising inequality is the unavoidable by-product of
sustained economic growth in a poor country.
What are the Key Messages for Africa?
Africa has seen a significant political change in recent times with the rise in more
democratic forms of central government. This has ushered in a period of greater
stability and peace, and started to create the sorts of institutional constraints on the
abuse of power by leaders that one takes for granted elsewhere. However, it is
unlikely that the implied shift in the empowerment of Africas poor that can be
achieved through such political changes will be sufficient to reach the pro-poor
high equilibrium of the political economy without two additional ingredients:
significant changes in economic policies and greater efficacy of state institutions for
implementing those policies.
A number of policy messages worth thinking about in an African context emerge
from the literature on how China was so successful in the fight against poverty. A
partial list would include widespread access to sound basic education and health
care, lower dependency rates through lower fertility, greater internal market
integration, and greater external openness to foreign investment and trade,
consistent with a countrys comparative advantage. There are some tentative signs
of progress in Africa on most of these areas, though there is still much do be done.
An important, but all too often neglected, issue concerns the sectoral priorities for
development when one is starting in a situation in which the vast bulk of the poor
remain in rural areas. Faced with this reality, Chinas growth-promoting reforms
starting in the late 1970s sensibly started in the rural economy, where the extent of
poverty was as high as one would have found almost anywhere in the world at that
time. The initial economic agents of change were countless smallholders increasing
their output in response to newly unleashed market incentives. In due course, the
policy emphasis naturally switched to the non-farm and urban economy, and the
subsequent rural labor absorption was clearly important to continuing progress
against poverty. Granted, one can question whether even China got the timing of
this switch in sectoral priorities right. However, the key lesson for Sub-Saharan
Africa is that to replicate Chinas success against poverty in the longer term a much
high priority must be given to agriculture and rural development in the near term.

30

The problem is that many low-income, primarily rural, developing countries

(including in Africa) think they can essentially ignore their agricultural sectors and
leave the whole task of poverty reduction to labor absorption from non-agricultural
sectors. Worse still, they sometimes try to jump-start their economies by rapidly
developing a modern, relatively capital-intensive, manufacturing sector. The
problems with this development path are magnified in countries with high initial
inequality in human resource development, such that there are relatively few rural
workersand very few amongst the poorwho can get these jobs, or even get the
relatively less skilled jobs required by a more labor-intensive manufacturing sector.
This sort of approach will do little to reduce rural poverty directly and may even
harm the rural poor through the financing methods (notable the heavy taxation of
agriculture) and price distortions that are needed. Poor, primarily rural, economies
cannot reasonably hope to by-pass the key steps in promoting agricultural and rural
development that China took from the early stages of its reform process. That is an
important message for much of Africa today.
Of course, Africa does not have the same failed collective-farming systems to
dismantle as did China. But the generic point on sectoral priorities is still relevant.
African countries will have to find their own, tailor-made, versions of the rural
reforms and public investments that will be needed to raise the productivity of
smallholdersto find Africas home-grown version of Chinas rural policies early
1980s. Drawing on the literature on Africa, one can point to the importance of
physical and human infrastructure development in rural areas and the pressing
need for an effective support system for the rapid adoption of known and improved
farming technologies; this will require a combination of research, advisory services
and financial support for inputs.
While raising agricultural productivity in Africa is hardly going to be sufficient for
eliminating poverty in the longer term, it is arguably the most important problem to
address at the outset, and may even prove to be necessary for sustained progress
in other areas of economic and social policy. Alas, the problem of low farm
productivity remains. And research has been scant on the underlying (social and
political, as well as economic) reasons for Africas (large and widening) gap in
agricultural productivity relative to China and most of Asia.
Another likely pre-condition for long-term progress in Africa is more effective state
institutions. As this paper has emphasized, Chinas experience points to the
importance of combining pragmatic, evidence-based, policy making with capable
public institutions and a strong leadership that is committed to poverty reduction.
Without these conditions, and the right policies, it is difficult to see how any country
can make the significant changes that are needed to get out of an equilibrium in
which large numbers of poor and powerless people suffer under policies that
perpetuate their poverty. Relative to Africa, history and geography have made for
stronger state institutions in China, and it has no doubt helped that China did not
make the mistake of believing that freer markets called for weakening those
institutions. Public administrative and decision-making processes were also crucial
to assuring that the state was an effective tool for fighting poverty. Evidence-based
policy making has played an important role since the late 1970s. China learnt much
from the successes and failures of diverse local initiatives; in effect, the center
transmitted the policy lessons from one place to another, backed up by credible
research on what was happening on the ground.

30

It is plain that the combination of sound policy making practices with strong state
institutions was a key factor in Chinas success against poverty. And it is also clear
that the two ingredients are complements, not substitutes. Less ideology helps little
if state institutions are weak. Chinas lesson for Africa on the importance of
searching for truth from facts in policy making will bear little fruit if Africas state
institutions remain weak.
But it must not be forgotten that Africa is 48 countries not one. There is no African
central government to transmit policy lessons from one place to another. Here the
international community, including China, can play an important role.

Sautman, Barry and Yan, Hairong (2007), Friends and Interests: Chinas
Distinctive Links with Africa, in African Studies Review, Vol. 50, No. 3, pp.
75-114.
In 2005 a PRC official working on WTO affairs, Wu Jiahuang, made a presentation to
the United Nations Industrial Development Organization on industrialization, trade,
and poverty alleviation through SouthSouth cooperation (Wu 2005). He argued that
Chinas high growth rate was fueled by Chinese savings (on average 44 percent of
their income) and encouragement of foreign direct investment (half from Hong Kong
and Taiwan), which contributed 28 percent of value added to industry in 2004. He
said that PRC industrial and trade growth are related, with over half of industrial
exports produced by foreign investors. Wu noted that the PRC does not overprotect
domestic industry: average PRC tariffs dropped from 43 percent in 1992 to 10
percent in 2005, lower than those of its trading partners. 39 Primary agricultural
products and textile tariffs averaged 15.5 percent and 12.9 percent, respectively,
while those of Chinas trading partners averaged 24.5 percent and 17.7 percent.
China provides world-class resources and the cheapest domestic labor, so its
businesses can market the worlds most competitive products, leading to greater
incomes, state revenue, and social welfare. Wu called on the WTO to remove tradedistorting subsidies to farmers in the North to enable farmers in the South to sell
their products at a higher price. He explained that Chinese farms are very small,
averaging .7 hectares of land, compared to Europeans 20 ha and U.S. farmers 200
ha. Wu noted that PRC agricultural tariffs averaged 15.8 percent, compared to 23
percent in the U.S. and 73 percent in Europe. Meanwhile, state support for Chinas
farmers was only 1.5 percent of their income, while in the U.S. it was 18 percent and
in the E.U. it was 33 percent. China and other developing states were thus in the
same boat in terms of needing cuts in developed world agricultural subsidies.
Wus presentation summed up a commonly held perception of PRC practices that
relates to distinct ChinaAfrica links: China provides a model for developing states
based on rapid industrialization fueled by a high level of investment and
concentration on exports and, unlike the West, its low-tariff, low-subsidy regime
allows other developing countries to export freely to China and compete with China
in world markets. The official thus essentially argued that PRC policymakers are
more consistent economic liberals than those of the West and that this greater
openness fulfills the common needs of Chinese and citizens of other developing
countries. Wu did not explain how Chinas extraordinary savings rate and its FDI

30

inflow mainly from co-ethnics on its periphery can be duplicated by most developing
states. Nor did he recognize that these states are scarcely in a position to take
advantage of Chinas economic liberal policies by competing with PRC producers,
either in their domestic market or the world. Still, one point was doubtless
convincing: that China, unlike Western states, is not obstructing development in the
worlds poorer countries. That point, whether it relates to the Beijing Consensus or
aid and migration, epitomizes the distinctiveness of the ChinaAfrica link for many
Africans.
The practices of Western states associated with past colonialism or present
imperialism make PRC practices appear particularly distinctive to Africans. Most
prominent among these Western practices are (1) impositions of neoliberal SAPs
that have resulted in diminished growth, huge debt, declining incomes, and
curtailed social welfare; (2) the use of aid to compel compliance with SAPs and the
foreign policies of Western powers; (3) protectionism (despite free-trade rhetoric) in
developed states that inhibits African exports; and (4) support for authoritarian
leaders (despite talk of democracy and human rights) to secure resources and
combat radicals. In addition, Western disparagement of Africa, through an
unremitting negative discourse overlaid with strong implications of African
incompetence, remains prevalent (Araya 2007). 40 The ideas that on balance
colonialism benefited the natives, and that Africas troubles have all been
postcolonial, are popular among elites of the former colonial powers (Sautman &
Yan 2007; Nyang 2005).
A positive image of China exists despite the prevalence among the Chinese of racist
attitudes, which have been experienced both by Africans in China and Africans
working alongside Chinese residents in Africa (Segal 2006). 41 The PRC government,
with its ideology of Social Darwinism (i.e., the richer, the fitter) and characteristic
representations of Africa as uniformly poor bears some responsibility for these
attitudes. Still, the PRC is careful to identify Africas problems as the legacy of
colonialism (Business Day 2004b; Li Xing 2003). PRC leaders have never termed
Africa a hopeless continent (Economist 2000). They would never state, as a U.S.
House Sub-committee on Africa member did to a Rwandan human rights activist
during the 1994 genocide, that America has no friends in Africa, only interests, and
it has no interests in Rwanda (Ghosts of Rwanda 2005).
PRC leaders, officially at least, celebrate Africas culture and achievements, and
Chinas sixty-five cultural agreements with forty-six African states have led to
hundreds of exchanges (Peoples Daily 2004; Daily Trust 2006b). As one scholar has
observed, while Africa, to the West, is a haven for terrorists, the cradle of
HIV/AIDS, and a source of instability, for China it is a strategically significant
region and place of opportunity (Gu 2006). China, moreover, acknowledges its
political indebtedness to Africa for her support of Chinas entry into the U.N. and
continued backing in international forums. That contrasts with Western states
failure to acknowledge their indebtedness to Africa for its contributions to the
Wests industrialization and cultural development (see Inikori 2002).
Unlike during the Mao era, China today suggests no radical solutions to Africas
predicament. The PRC avails itself of the historically determined disadvantages of
Africa in trade (Holslag 2006), but much of what it sells to Africa is useful to
developing manufacturing and providing affordable consumer goods (Soderbom &

30

Teal 2004). Some of Chinas investment in Africa, though apparently directed to

non-oil sectors, is nevertheless imbricated with the continents harsh labor
regimens in places like Zambias Copperbelt (Lungu & Mulenga 2005; Times of
Zambia 2006). But China is still perceived as different in that it provides some
investments of direct benefit beyond elite circles, does not insist that Africas
political economy steer a required course, and contributes to Africas talent pool
rather than draining it.
It is not clear whether the differences outlined here will persist over the long term.
Among major powers at any given time, there are always differences in approach to
subaltern states. The very process of differentiating superordinate and subordinate
states and dominant and subaltern peoples tends over time, however, to make the
conduct of great powers and their elites more similar than different. In a decade or
two we should be able to determine whether that will be the case as well with China
in Africa.

Sautman, Barry and Yan, Hairong (2008), The Forest for the Trees: Trade,
Investment and the China-in-Africa Discourse, in Pacific Affairs, Vol. 81,
No. 1, pp. 9-29.
The modalities of trade examined for development implications commonly involve
the import and export of goods. However, there is also trade in money and people.
Western, but not PRC, banks have traded secrecy and interest to the exporters of 40
percent of Africas private wealth.112 Western states trade citizenship for the skills of
professionals, especially doctors and nurses, trained in, but now largely lost to
Africa.113 These forms of trade likely impinge as much as commodity exchange on
Africans right to development.
The main problem with the China-in-Africa discourse is not empirical inaccuracies
about Chinese activities in Africa, 114 but rather the decontextualization of criticisms
for ideological reasons. Some analyses positively cast Western actions in Africa
compared to Chinas activities; others lack comparative perspective in discussing
negative aspects of Chinas presence, so that discourse consumers see a few trees,
but are not given a view of the whole forest. Such analysis reflects Western elite
perception of national interests or moral superiority as these impinge on strategic
competition with China.115 Many analysts scarcely question Western rhetoric of
aiding African development and promoting African democracy, yet are quick to
seize on examples of exploitation or oppression by Chinese interests. 116
To comprehensively interrogate Chinese and Western activities in Africa is to
question a global system that has in many respects de-developed Africa and into
which China is increasingly integrated. Failing that, one is left with little more than a
binary between a Western-promoted new civilizing mission on behalf of Africans,
and the activities of the amoral Chinese, who refuse to fully endorse that mission
by not adopting trade and investment practices wholly compliant with neoliberalism. China, after all, can and does throw this binary back in the face of its
proponents by portraying the West as seeking a new tutelage for Africans and China
as eschewing the role of intermeddler, while promoting win-win trade and
investment. So too do many Africans. 117 The popularity of features of Chinas

30

presence in Africa, compared with that of the main Western states, goes well
beyond elites.118 The 2007 Pew Global Attitudes Survey asked Africans in ten
countries to compare the influences of China and the US in their own countries. In
nine of the ten countries, by margins of 61 to 91 percent, African respondents said
the Chinese influence was good. These percentages substantially exceeded those
for the US.119 One important implication of the Chinese presence in Africa then is
that Western states and firms may need to engage in greater self-reflection about
their own presence in the continent.
The China-in-Africa discourse can be expected to become increasingly heated,
especially with regard to the effects of PRC trade and investment on development,
as its audiences weigh competing claims. Those who follow the discourse as it is
played out in Africa itself can already detect that many Africans are wary of
attempts to cast it in Manichean terms. Many Africans moreover are now rejecting
any effort to use the discourse to distract from the reality of Africas continued
subordination within a world system that builds in exploitation and other systematic
violations of rights.

Sautman, Barry and Yan, Hairong (2009), African Perspectives on ChinaAfrica Linkages, in The China Quarterly, Vol. 199, pp. 728-759.
In early 2007, when few surveys of how Africans see ChinaAfrica links were
available, a US newspaper carried an article on Africans negative views of those
links. It quoted Michael Sata, who said Zambia is becoming a province no, a
district of China, and an Africa specialist, who stated among ordinary [Africans],
a very strong resentment, bordering on racism, is emerging against the Chinese. Its
because the Chinese are seen as backing [African] governments in oppressing their
own people.111 Satas statement was part of his mobilization strategy and probably
taken as such by non-partisans. The articles author, however, was not necessarily
non-partisan: he chose Sata from among legions of African politicians. The scholars
statement was likely to have been a synecdoche, taking a part for the whole,
reflecting what he observed among part of the populace in one or two African
states.
Survey research does not bear out claims of strong African resentment. Even in
states where politicians play the China card, there is more appreciation than not of
Chinas role in Africa and China fares well compared to the West. It is also not clear
that most Africans distinguish oppressive pro-China ruling elites and China-critical
peoples paladins, as do Western media. Surveys thus also tell us something of how
the media interpret and seek to mould African perspectives: the media hesitate to
acknowledge that Africans may see Chinese practices as more advantageous than
those of the West, and imply that if Africans do see it that way, it is due to collusion
and obfuscation by the Chinese and their African clients.
There are reasons why most Africans may be positive about ChinaAfrica links. As a
2008 World Bank report details, China cheaply and efficiently builds much of Africas
infrastructure.112 Chinese retailers also sell the Africans goods that many could not
previously afford. A scholar has noted: African consumers benefit from cheap
products offered by Chinese firms. For instance, Chinese plastic sandals conquered

30

the whole African continent in the last years. That changed the daily life of African
women and children enormously in that way that going shoeless is [in] the past in
poor African countries.113
Additional reasons why Africans may favour links with China exist and can be
adumbrated from responses to our open survey questions. There is a boom in
primary product exports to China from some African states, while earlier evident
harm from Chinese competition with African exports to third countries has largely
dissipated.114 China presents for some Africans an example of development fostered
by encouraging domestic savings, the factor most likely to sustain growth. 115 In
contrast to Western aid, Chinas is not politically conditioned and, contrary to the
prevailing discourse, its non-intervention policy may make China more, rather than
less, popular among common Africans, as it obviates political obstacles to the
speedy delivery of infrastructure. 116 China has no history of colonialism and has not
recently invaded other states. It has supported developing country attempts to
redress grievances such as subsidies that impair their exports. 117 Whether such
understandings of Chinese practices are accurate is less significant than their being
plausible enough to be found among many Africans we interviewed during seven
research trips to nine African countries between 2005 and 2008.
It remains to be seen whether positive African perceptions of ChinaAfrica links
persist. Playing the China card has not proved sufficient to smooth a road to power
for oppositions, as the Zambia case illustrates. In the future, playing it may not even
be feasible, as the fruits of Chinese infrastructure building are realized, fewer
Chinese and more Africans retail made-in-China goods, Chinese foster industrial
enterprises, and Chinas leaders accept that arms sales are a reputational risk.
Western media influences in Africa may also decline as other sources gain
acceptance.
Research on African perspectives on ChinaAfrica links should take in a wider range
of countries and ask more about grassroots concerns, such as contributions to
development. Because ChinaAfrica interactions are rapidly evolving, it would be
useful to have panel data, with multiple dimensions over time. Klaus Schwab, the
World Economic Forum founder, has said the world needs Africa as much as Africa
needs the world, but a Chinese scholar observed that while Africa needs China,
China needs Africa more.118 Knowing African perspectives on ChinaAfrica links has
thus become essential to understanding Chinas place in the world.

Taylor, Ian (1998), Chinas Foreign Policy Towards Africa in the 1990s, in
Journal of Modern African Studies, Vol. 36, No. 3, pp. 44360.
Whilst Beijing has recognised that Western investment and technology is vital for
China to maintain and develop its modernization programme, the PRC has been
determined to strengthen its position vis--vis the West. With the Soviet Union now
no longer extant, China has felt vulnerable to the perceived threat of the one
remaining superpower, the USA, and so has assiduously courted linkages with Africa
to counter-balance the discerned menace from a dominating West. Though China's
primary focus is naturally on the East Asia region, by vigorously supporting the
theme of non-interference in domestic affairs and promoting a cultural relativist

30

notion of human rights, China has been able to secure its own position and, at the
same time, appeal to African leaders mindful of the West's pressure on their own
governments. This helps explain the fourteen African votes (out of twenty-six)
against the proposed condemnation of China's human rights record in Geneva in
April 1996. Such motions by the United Nations are seen by many African leaders as
unwarranted interference in the internal affairs of developing countries. Naturally,
China puts a lot of effort into encouraging this attitude.
In addition, China's emphasis on economic linkages with Africa is appealing and has
enabled Beijing to further project itself on the continent. As a result, China
maintains its commercial and political links with Africa as a tool by which Beijing
hopes to foster economic interaction and by which China may maintain a reserve
pool of friends and sympathisers from which it can draw moral and political support
from within the international system in times of conflict with the West. A Chinese
magazine article made this theory quite explicit when it revealingly stated: [The]
vast number of Third World countries [will] surely unite with and stand behind
China like numerous ants keeping the elephant from harms way. 68 In this
conceptualisation, the elephant of China a dominant and central figure is
protected by the little countries against outside threat and coercion. As a nation
attempting to regain its rightful place in the international system, Beijing has been
acutely aware of the perceived dangers of only one superpower and the threat that
this presents to China. Viewing the global situation as increasingly complex, and
with fierce economic competition and growing nationalisms dominating state-tostate interaction, China has asserted a doggedly realist posture that `a hierarchy of
powerexists within which the more powerful nations dominate the weak. 69 Thus,
in an attempt to offset the West's position vis--vis China in the international
system, Beijing has and will continue to seek improved relations with non-Western
powers. Africa has been no exception to this policy and this is likely to continue.
Determined to be free of the overt influence of any one power, mindful of past
domination by outsiders, and aiming to regain its position of eminence in the
international system, Beijing since the end of the Cold War has continuously courted
Africa and the developing world as a means by which China may project its prestige
and influence outside the narrow confines of East Asia and thus further its claims to
the status of a great power. As a result, Chinas post-Tiananmen foreign policy has
further established the developing worlds importance in the overall framework of
the PRC's foreign policy and Africa has played an important role in this construction.
The competition with Taiwan for recognition has also been a feature of this policy,
though with South Africa now recognising Beijing, Taipei is left with a rump of small
and impoverished African nations in its camp. For reasons discussed above, it is
unlikely that the ROC will improve greatly on this situation. Yet, the visit by Prime
Minister Li Peng to seven African nations in September 1997, 70 once again illustrated
and underscored the point that China remains committed to Africa and is likely to
retain a political and economic presence on the continent for the foreseeable future.

Tjnneland, Elling. N., Brandtzg, Bjrn, Kols, schild & le Pere, Garth
(2006), China in Africa Implications for Norwegian Foreign and
Development Policies, Bergen: Chr. Michelsen Institute.

30

Purpose
The new Chinese Africa policy has major implications for development on the
continent. The purpose of this report commissioned by the Norwegian Ministry of
Foreign Affairs and NORAD is to present and review the new Chinese engagement in
Africa and to identify and discuss implications for Norwegian foreign and
development policies.
Chapter 1 provides an introduction to Chinese foreign policy, the motives and
interests behind the policy goals, and how Chinese foreign policy is manifesting
itself in relation to the developing world and in the multilateral arena. Chapter 2
offers an overview of Chinese engagement in Africa while Chapter 3 gives an
assessment of the implications for Africa, the dynamics of China-Africa interaction
and the challenges ahead. Chapter 4 offers a more detailed presentation and
analysis of the Chinese engagement in the petroleum sector in Africa and its
implications. The concluding Chapter 5 outlines Norwegian objectives and provides
a number of suggestions for Norwegian Africa policy, bilateral co-operation with
China, and multilateral engagement.
Annex 1 and 2 provides additional data and background information on Chinese
foreign policy and the dynamics of China-Africa relations.
Chinese Foreign Policy
Chinas advance from economic periphery into the core group of the worlds leading
industrial powers has already begun to leave its traces on the geopolitical map. In
view of its economic dynamism, Chinas foreign policy has no choice but to assume
a greater role in shaping the course of current world events. We are witnessing a
shift to a much more flexible, differentiated and proactive foreign policy. It is evident
in Chinas more diverse spectrum of interests and in Chinas more marked
engagement in regional and global arrangements as well as in its generally broader
geographic focus. China is increasingly being forced to assert its interest in regions
in which it has traditionally had little strategic interest. This applies above all to
Latin America, the Middle East and Africa.
One crucial foreign policy goal is to service the needs of Chinas economic
modernisation and the economys growing hunger for natural resources and access
to export markets. Energy security, in particular, has emerged as a basic parameter
of Chinese foreign policy. China has launched an active diplomatic programme on
oil. It is increasingly sceptical about the prospects of satisfying its soaring energy
demands in the international energy market. Instead, it has set its sights on
establishing stable bilateral relations with the worlds most important oil-producing
countries. Based on strategic oil partnerships, China seeks to secure long-term
supply agreements with the worlds leading oil producers, and acquisitions of
concessions and capital stakes in relevant energy corporations.
US hegemony and how to manage it has remained an over-riding concern for the
Chinese. China is resigned to the fact that US domination is a cold reality that it has
to live and contend with. China has come to see globalisation as a way of
transforming great power politics and to establish more co-operative forms of
interstate competition that can increase the prospects for Chinas peaceful rise. This
has led to a situation where China, while recognising the dominance of the US,

30

seeks to limit US dominance through the UN and other international organisations,

and by using its resources to forge stable relations with other countries and regions.
China seeks to portray itself as an attractive partner for the developing countries
and emphasizes strongly the need for South-South co-operation. China builds on its
traditional third world ideology and long-standing political relationships but now
seeks to become attractive as a trade partner, an investor, a technology supplier, a
provider of credit and development assistance, and as a political friend based on
the Chinese principle of non-interference in internal affairs.
In financial terms, by far the most significant dimension of Chinese engagement in
developing countries is the multi-billion dollar agreements it has concluded in the
energy sector, especially in Africa. Other economic activities and assistance pale in
comparison.
The new Chinese engagement with developing countries is also and increasingly
very visible in the multilateral arena. Its leadership is reflected in the Group of 77
plus China (which brings together more than 130 developing countries) where it
has sought to focus on addressing the adverse effects of economic globalisation,
improving South-South partnerships and bridging the North-South divide. Since
joining the WTO in 2001, China has become active in confronting the trade
asymmetries that exist between developing and developed countries.
At the UN and at other multilateral institutions, China has increasingly become a
vocal spokesperson for the South and it has become a strong supporter of the
Millennium Development Goals.
At the multilateral level, Chinese engagement on development issues has been
most intense in the field of trade. China has so far been a more marginal player in
relation to global efforts to increase development assistance and provide debt relief.
China has its own development assistance programme, but it has several distinctive
features. Most Chinese aid is bilateral, it is in most cases delivered as project
assistance, and it is strongly tied to Chinese trade and investment interests. Most
aid is also provided as commodity and technical assistance. Chinese aid is also
often used in conjunction with various export credit schemes linked to the purchase
of Chinese goods and services. Significantly, Chinese aid is also distinguished by a
strong emphasis on providing assistance with no political conditionalities or strings
attached.
China in Africa
Africa occupies an increasingly dominant space in Chinas foreign policy. In January
2006, China released its first major policy document on its relations with the
continent. It lists 30 initiatives in the political field; in the economic field; in
education, science, culture, health and social aspects; and in peace and security.
The document reaffirms overriding Chinese priorities and the need for accessing
African raw materials and commodities, but is also strong in emphasising political
cooperation and in responding to African concerns. There is also a much stronger
emphasis in this document on Chinese support for peace and security on the
continent. The document also emphasises co-operation in the multilateral system,
calls for a strengthening of the UN and appeals to the international community to

30

give more attention to Africa and to peace and development on the continent.
Chinese support to African regional organisations is also highlighted.
China initiated a permanent Forum on China Africa Co-operation (FOCAC) in the
year 2000. It has emerged as the chief instrument and mechanism for dialogue and
co-operation between Africa and China.
Oil, Trade and Investment
In financial terms, Chinese oil diplomacy has been most visible. China and the
Chinese state-owned oil companies have struck a number of multi-billion dollar
deals in African oil exporting countries. In the first half of 2006, 32% of Chinese oil
imports came from Africa, with Angola emerging as Chinas biggest oil supplier
(ahead of Saudi Arabia and Iran). This major trade expansion between China and
Africa is largely accounted for by the African export of oil and other raw materials
(mining products and timber in particular). Chinese exports to Africa are also
growing rapidly, mainly linked to the export of cheaper manufactured products and
consumer goods.
Chinese investments outside the oil sector and other extractive industries are
limited, but growing. There are, however, a much larger number of Chinese
companies present, many linked to the delivery of Chinese goods and services
facilitated by Chinese export credits. This is most visible in the construction
industry.
The Chinese state has been very active in promoting trade and investment and has
also used the FOCAC mechanism very actively for this purpose. This has included
the use of export credits and tied aid. It has trade agreements and export credit
arrangements with most African countries. China has also taken on board a number
of African concerns. This has included zero-rating tariffs on a number of products
from African countries as well as voluntary export restraints.
Development Assistance
China is also emerging as a significant donor to Africa. The aid programme is closely
linked with Chinese trade and investment policies. There also appears to be a
considerable element of tied aid through the provision of Chinese commodity and
technical assistance, with the focus firmly on project assistance.
The Chinese development assistance has evolved relatively independent of the
traditional donor community. Evolving and changing Chinese aid policies have
reflected changing domestic needs in China, but they are also reflecting changes in
African recipient countries.
Chinese assistance is often used in conjunction with various investment promotion
projects and the provision of export credits. It can also be closely linked to securing
access to major resources (linked to Chinese oil interests, for example). Chinese aid
is also distinguished by its near complete absence of political conditionalities;
Chinas aid policy is firmly anchored in the principle of noninterference in internal
affairs.

30

Chinese assistance is channelled to a variety of sectors and areas. There is an

emphasis on various projects to promote trade and investment with a strong focus
on the provision of physical infrastructure, but also on agriculture. A second
significant area is capacity building and the social sector, especially as related to
science, health and education. This is mainly focused on training of individuals but
there is growing focus also on providing assistance to strengthen management and
institutional capacities.
The section covering social issues in the Chinese Africa policy paper also lists cooperation related to the environment (climate changes, water, biodiversity, and so
on), disaster and humanitarian assistance (emphasising the role of NGOs), and
media co-cooperation. Activities and projects funded in this area appear, so far, to
be limited.
A third and very visible feature is Chinese funding for the construction of high profile
buildings stadiums, state houses and buildings housing parliaments, Foreign
Affairs ministries, and so on. Such projects have a long tradition in Chinese support
to Africa, but have expanded significantly in recent years.
China has cancelled a significant portion of African debt to China. In 2003, it
announced that it would cancel nearly USD 1.3 billion owed by 31 African countries.
Migration
Migration has become a very visible manifestation of Chinese engagement. The
number of Chinese migrants has expanded significantly in the past decade. The
determinants of emigration from China and the move to Africa appear to be largely
independent from the Chinese state, but there are many linkages between the
migrants and Chinese companies in Africa and their Chinese workers. The Chinese
migration is also highly entrepreneurial. Retail trade has been a dominant sector for
most of these migrants. In many towns and cities throughout the continent they
have quickly become the dominant traders, based on their supply of cheaper
Chinese products. There is also a growing number of Chinese active in restaurants
and in certain professional occupations.
The number of Chinese migrants is not known. The majority are located in South
Africa (an estimated 100 000) and in Indian Ocean Islands (Mauritius and
Madagascar), but they are visible in virtually every African country - from the 5000
in Lesotho and the 4000 in Zambia to the small community of 400 in Cape Verde.
Notably, there is also a strong presence of Chinese migrants in countries emerging
from violence and civil war from Sudan to DR Congo and Angola.
Peace and Security
Peace and security has emerged as an increasingly important dimension of SinoAfrican relations. Under the FOCAC initiative the Chinese have made a number of
commitments to support African efforts to promote peace and development and to
assist the UN in its peacekeeping operations. The strongest manifestation of this
has been Chinese participation in UN peacekeeping operations in Africa. Currently,
they provide 1310 peacekeepers to six UN operations in Africa.

30

Chinas direct financial contribution to the AU in this area remains limited. Through
its Africa policy paper, China has, however, made strong commitments to engage
more with Africa and the AU on these issues. This also includes a range of areas
beyond peacekeeping from small arms to drug trafficking and organised crime.
China is a small, but significant arms exporter to Africa. It is estimated to amount to
about 6-7% of total arms deliveries to the continent. Many of these deliveries,
however, are going to conflict zones. It is reported that several of these supplies
have been in exchange for lucrative contracts (such as mining concessions in DR
Congo and timber in Liberia).
China has been passive in multilateral institutions discussing disarmament issues
affecting Africa. Nor has it signed the Ottawa declaration on landmines.
Implications for Africa
The implications for Africa of this new Chinese Africa policy are expected to be
significant, but we do not yet know how and in what way. There is no conclusive
evidence, many challenges and opportunities and many imponderables. Trade
statistics tell us that the traditional trade pattern between Africa and the world will
be reinforced by the Chinese. Africas role as an exporter of raw materials will be
reinforced and it will be more challenging to diversify away from traditional exports.
There is also decreasing scope for Africa to compete with China in labour-intensive
manufacturing in Africa and in third markets.
All of this reinforces familiar challenges: the need to ensure a sustainable
exploitation of natural resources and to have a strong regulatory framework and
management mechanisms in place. How do we ensure that billions poured into the
continent for the exploration and production of petroleum and other resources are
benefiting also Africa and its peoples?
Economic Development
The impact of the Chinese companies is also mixed. In some cases they have
definitely contributed to a lowering of costs (particularly in construction), although
there are also examples where Africa has been forced to pay more for Chinese
goods and services. Critical questions are also being raised at the procurement
policies of Chinese companies. There is limited local outsourcing with most goods
being imported from China. Employment of local labour is also limited and efforts to
provide a transfer of skills and human resource development through their business
operations are limited. Likewise, Chinese companies have paid limited attention to
corporate social responsibility or environmental implications. There are also
disturbing examples of the illegal exploitation of natural resources. There are
examples from, for example, the fishing industry, but the strongest evidence
appears to relate to the Chinese importing of African timber.
There are, however, wide variations between countries and between sectors in
relation to the use of both local inputs and local labour. It appears as if Chinese
companies adapt to local conditions and regulatory frameworks. Chinese companies
have major investments and a strong presence in a country such as South Africa,
which has strong regulatory frameworks related to, for example, labour conditions

30

(although the type of business they engage in there may be different from, say, DR
Congo or Zambia).
Aid and Governance
China is emerging as a significant aid donor to Africa. We know very little about the
quality and impact of Chinese projects and assistance activities in Africa. Nor do we
know how Chinese authorities themselves assess such issues. The Chinese debt
cancellations and zero-rating of tariffs on products from least developed African
countries are significant initiatives. Beyond this, a number of observations can be
made. The strong Chinese focus on physical infrastructure has been welcomed by
many, but the heavy use of tied aid, procurement prescriptions and a lack of
coordination with other actors has been criticised for reducing the effectiveness of
the assistance.
Strong criticism and questions have been levelled at the Chinese policy of noninterference and its implications for governance issues and democratisation. Many
fear that the Chinese will be the spoiler in emerging efforts to increase aid
effectiveness and improve good governance. The Chinese explore business
opportunities and provide aid irrespective of political conditions and the repressive
nature of the regime in power. This contrasts sharply with the role of some of the
traditional donor countries.
The Chinese non-interference policy is under pressure and may be increasingly
difficult to uphold. Four pointers may be of some help in understanding the
dynamics at play here. One is that China also strongly emphasises the need for
political stability. It wants to protect its investments and commercial interests. This
will be difficult to reconcile with non-interference.
Secondly, China often emphasises human resource development and capacity
building in its aid programmes. This may lead to a situation where it ends up
targeting capacity building in state institutions in an effort to improve management.
Thirdly, and significantly, China is also committed to work with AU/NEPAD and
African regional organisations. We may see a further alignment and development of
modalities for co-operation and dialogue between African regional organisations and
FOCAC. Chinese priorities have been strongly focused on NEPADs economic
development programme (especially infrastructure) and to some extent some of
NEPADs social programmes (training in particular). However, NEPAD also has a
strong focus on governance issues through the African Peer Review Mechanism as
well as through its evolving approach to post-conflict reconstruction. This will
increasingly require a Chinese response and provide entry points for possible future
Chinese activities in this area.
Finally, China is also a signatory to the Paris Declaration on aid effectiveness and
seeks to portray itself as an international development partner. This will create
additional and growing pressure on the Chinese to engage with other donor
countries in discussing the delivery of aid.
Responses

30

Africas political response to the new Chinese offensive has generally been positive.
African leaders have emphasised the importance of China for growth in their
economies, as a supplier of development finance and technical assistance, and as a
political ally and friend. Chinas emphasis on non-interference is also welcomed.
There are, however, tensions and frictions below the surface. This has mainly been
over trade (complaints about cheap imports and dumping), limited local outsourcing
by Chinese companies and poor employment conditions and low wages.
Does the arrival of the Chinese imply that Africas position will be strengthened? Are
they provided with different alternatives? Does this create opportunities for
increasing African ownership of their own development?
In reflecting upon new opportunities, challenges and imponderables, two critical
issues are highlighted.
One is that China may not yet have succeeded in presenting Africa with a new
alternative. The Chinese have in their actions so far primarily focused on trade and
investment opportunities for Chinese companies. This remains the Achilles heal [sic]
in Chinas relations with Africa. China needs to be more active - in Africa, in dialogue
with Africa, and in the multilateral system - in presenting how it wants to contribute
to Africas development and in the reduction of poverty on the continent. China
may have to focus more on how its vision for increased South-South co-operation
will translate into better opportunities for Africa and a reduction in poverty.
The second critical issue is Africas response. Can Africa take advantage of new
opportunities and respond to new challenges? The FOCAC initiative the main
mechanism for joint African engagement with the Chinese has so far largely been
driven by the Chinese. Within Africa, it has mainly been left to South Africa to push
for changes in Chinas Africa policy and for China to broaden its engagement. Will
there be an alignment between FOCAC and the African Union/NEPAD priorities?
Recommendations
The rapidly expanding Chinese engagement in Africa will have strong implications
for the development of the continent. The report argues that it therefore also should
have implications for Norwegian foreign and development policy. Norway is in a
position to make a small difference through its development policy in Africa and
through its engagement in the energy sector. Norway possesses skills, resources
and influences to potentially make a small, but important contribution.
The team recommends that, in selected areas in its foreign and development policy,
Norway formulates strategies with the following objectives in mind:

Strengthen the capacity of partner countries and African

organisations to negotiate and co-operate effectively with China;

Support initiatives that stimulate

institutions and donor fora;

Develop bilateral co-operation with China in areas of mutual benefit

participation

in

multilateral

30

Chinas

regional

In devising strategies and outlining alternatives for Norwegian responses it is helpful

to distinguish between three areas: Norwegian Africa policy, Norwegian bilateral
relations with China, and engagement in the multilateral arena.
Africa Policy
Norwegian Africa policy will be the most important area for addressing the
challenges posed by Chinas engagement.
A first recommendation is that Norway should support efforts to strengthen
regulatory frameworks and the management of natural resources. Country
programmes in selected countries should be revisited with a view to offering
support for strengthening local management capacity. The areas selected will
depend on the country concerned and the focus of the Norwegian country
programme. Important sectors include fisheries and forestry, but especially the
management and governance of the energy sector. This includes hydro energy, but
also, importantly, petroleum. The Norwegian oil for development initiative will
assume an added importance and relevance.
Secondly, it is important to monitor what the Chinese are doing in individual African
countries, to build local competence for doing so and to stimulate public debate.
Norway should support such efforts through assistance to, for example, local
research communities, NGOs and media groups.
Thirdly, relations with African regional organisations assume a particular
importance. These organisations are important vehicles for advancing African
positions and for engaging with the Chinese on critical issues. Norway should
support such efforts through its regional support activities.
Fourthly, and at the country level, it will be important to help facilitate dialogue and
where possible co-operation between traditional donor countries and the Chinese.
Fifthly, China should be invited to meetings and institutions established to facilitate
communication between donors and African regional organisations. This includes
meetings related to AU/NEPAD initiatives. At the sub-regional level, current efforts in
Southern Africa to establish a theme-group in energy, bringing together donors and
SADC, may offer a potentially very important arena for engaging with the Chinese
(the planned theme group is expected to be co-ordinated by Norway).
The possibility of establishing relations between China and the Africa Partnership
Forum (in which Norway is currently one of the co-chairs) should also be explored.
Multilateral
This arena is crucial in providing external influences on evolving Chinese
development and Africa policies. Norway should stimulate and support efforts to
strengthen Chinese participation and commitment to international co-operation.
First, Norway should actively seek to engage with the Chinese at the UN and in the
international finance institutions. Critical issues central to the African agenda should
be emphasised here. Several issues may be available for joint consultation and
possible co-operation.

30

Secondly, Norway should support efforts ensure that the African Development Bank
can become effective an effective mechanism for facilitation of co-operation
between donor countries and China in support to African infrastructure
development.
Thirdly, Norway should help encourage Chinese participation in multilateral
institutions where the Chinese are currently passive or are not members. This
includes supporting efforts to invite China to join the International Energy Agency.
Norway should also support efforts to facilitate Chinese participation in the
Extractive Industries Transparency Initiative.
Finally, Norway should support efforts to ensure that the OECD-DAC structures
engage with China by inviting the Chinese to share their experiences in various
working groups, by inviting the Chinese to observe DAC review missions, and so on.
Bilateral Co-Operation
Norway should also engage bilaterally with China. This will be demanding, it will be
challenging, and any successes will belong to a distant future. In particular, it will be
difficult to establish a meaningful political dialogue with Beijing on African
development issues. However, building upon the experiences and direct interaction
in African countries a number of steps can be taken which may evolve into a
bilateral dialogue even at the political level.
Firstly, Norway should monitor Chinas Africa policy, what it is doing in Africa and its
relations with Africa.
Secondly, Norway needs to learn more about Chinese experience and thinking in
providing development assistance and assisting poverty reduction outside their own
borders. What are they doing? How do they do it? How efficient and effective do
they consider this to be?
Thirdly, Norway should explore the possibility of engaging directly with the Chinese
on experience from the petroleum sector. The focus for such a dialogue could be
joint lessons in African countries where Chinese oil companies are active, and where
Norway has an oil for development programme.
A final area to be mentioned is Chinese companies. Corporate social responsibility
and compliance with international environmental and social rules and regulations
are emerging as important issues.

Wissenbach, U. (2009), The EUs Response to Chinas Africa Safari: Can

Triangulation Match Needs? draft to be published in European Journal of
Development Research Special Issue, Vol. 24, No. 1. 86.
Conclusion: The EUs and Chinas Dilemmas and Africas Choice
The complex picture of the EU's and China's relations with Africa reveals dilemmas
on all sides and weaknesses in their respective policies. The EU carries substantial
baggage from colonial and Cold War history and still needs adjustments to the

30

realities of globalisation and in Africa itself. The EU has struggled more to adapt its
policy in the context of its normative and ethical concepts. It has found it difficult to
re-define its interests in a credible way and to move away from a charity approach
to Africa, long a key feature of public pressure xiii. This is also because its economic
interest in Africa is quite limited. Chinese competition provides Europes policy
makers with an opportunity also to address interests which were more difficult to
articulate as long as poverty was the sole reference in the discourse about Africa.
With the renewed interest for African oil and minerals, some African countries tend
to play off external competitors against each other and often load this game with
political overtones (Wade, 2008). Simultaneously, the debate about the resource
curse has been fuelled by Chinas African safari (Yates, 2006).
Chinese Africa policy has taken an almost exclusively economic twist, despite its
political rhetoric, and with unexpected negative impacts on some social groups in
Africa. This raises questions about the benefits for Africas industrialisation and the
durability of Chinas engagement beyond the commodity boom. The current
economic crisis and cooperation in the G-20 will be a litmus test and the Chinese
leadership has realised this: during his 2009 visit to Africa President Hu has sought
to re-assure African hosts about Chinas resolve to fulfil its commitments while
Prime Minister Wen has sought to fend off expectations of new pledges xiv.
In order to overcome these dilemmas the EU has concluded that effective
cooperation between the EU and China in taking up common responsibilities is
central to the shaping of international affairs and global governance in the future.
Hence, the proposed trilateral dialogue and cooperation (European Commission,
2007) can be regarded as a test-case for the Africa-EU Partnership, the EU-China
strategic partnership and more generally for the EUs strategy to promote global
security and governance through effective multilateralism instead of prescriptive
moral crusades, for Chinas ambition to be a responsible (great) power, and for
Africas development and position in the world.
In such a dynamic constellation Africans are working on a strategic consensus in the
AU framework and of course nationally in order to be in the driving seat of the
debate. The African Union Commission (AUC) has laid the groundwork by creating a
task force on this topic (AUC, 2006)xv.
The challenge ahead is to build on the positive effects of the EUs and Chinas
engagement and use their willingness to cooperate on the basis of similar
objectives for growth and development in Africa in order to ultimately construct a
common set of rules of engagement in Africa. These rules would promote
sustainable peace based on an emerging African security community and the
African Union / the New Partnership for Africas Development (AU/NEPAD) principles
for governance and development in Africa. These African rules for engagement
applied to all external partners would gradually supersede both the Washington
Consensus/DAC rules and China's rigid templates. However, changes in attitudes,
path-dependent policies or conditionality will not happen overnight. They may be
facilitated by the currently envisaged overhaul of the international financial
institutions or a possible regionalisation of these.

30

This is an opportunity for Africa to collectively assume responsibility internationally

for its development. This is what Africans have long claimed, but such an approach
is also associated with risk for Africa's leaders: they have to find consensus on how
to engage with external partners despite internal divisions and diverse impacts
(economic gains and losses are unevenly distributed); they have to exercise these
responsibilities and obtain the outcomes, in terms of development, which the people
of Africa and the international community support. Otherwise African responsibility
may just become a convenient excuse for disengagement and further
marginalisation of Africa (Wissenbach, 2007b). Africa needs to decide whether it
wants its partners to cooperate on this agenda or to have them compete for
influence, thus perpetuating the post-colonial pattern of African policy-making being
driven by outside actors and resulting divisions among and within African countries
and races to the bottom xvi. Ultimately, Africa may succeed to ensure a real
convergence of values and priorities of the Western donors and China around those
of the AU Constitutional Act.

Wu, Friedrich W. Y. (1981), From Self-Reliance to Interdependence?:

Development Strategy and Foreign Economic Policy in Post-Mao China, in
Modern China, Vol. 7, No. 4, pp. 445-482.
On the basis of the preceding analysis, this essay advances the argument that the
new Chinese leadership in the post-Mao era has made a decisive break, in both
rhetoric and practice, with the Maoist strategy of self-reliant development. Due
mainly to the economic imperatives generated by the Four Modernizations program,
China is now opting for a development strategy that resembles closely what is being
described in Western literature as interdependence. By noting this shift, we by no
means suggest that the post-Mao Chinese leadership has relinquished the longstanding national goal of making China a self-reliant and totally independent
country. Quite the contrary. What this shift does imply is that to attain this goal, the
new leadership is willing to make some radical modifications modifications that
the late Mao most probably would not have endorsed in its internal developmental
policy and its external relations with the world economy. Thus, while it may be
argued that self-reliance as a national goal has remained essentially intact in postMao China, self-reliance as an operational strategy of development in the Maoist
sense has been pushed to the background in Chinas latest modernization drive. It is
still far too early to draw any conclusions from this shift in developmental strategy
in China, considering the short span of time during which this change has been
evolving. Domestically, however, the logical corollary of an interdependent
developmental strategy is bound to be an increasingly complex economy
augmented by an expanding division of labor and a growing structural-functional
differentiation in management and production. Although it could be presumed that
an economy based on internal-external interdependence is in a better position to
accrue the benefits stemming from regional comparative advantage and division of
labor, such an economy could also create a pattern of uneven development that
would exacerbate the urban-rural gap, income inequality, social stratification, and
elitism in short, the host of problems that socialism professes to combat and
eliminate. It remains to be seen whether the post-Mao leadership can, in the future,

30

devise measures to keep these undesirable repercussions within tolerable limits,

while at the same time retaining the benefits of the interdependence strategy.
Externally, the ramifications of pursuing a strategy of interdependent development
could mean a certain reduction in autonomy to Chinas national economy. An
unpleasant dilemma inherent in interdependence strategy that policymakers must
confront is how much global involvement should a state foster and how much
vulnerability and loss of autonomy is a state willing to suffer? (Caporaso, 1978:
17). In the immediate future, Chinas increasing demand for advanced technology
from developed countries and its dependence on foreign markets for its exports will
undoubtedly exacerbate the sensitivity and vulnerability of Chinas economy vis-vis the world economy. So far, officials of the PRC have said very little about Chinas
response to this problem other than to make such typically vague statements as
that China pursues its global economic involvements on the basis of persevering in
maintaining independence and keeping the initiative in our own hands (Peking
Review, July 8, 1977). Sooner or later, however, Chinas leaders will have to move
beyond rhetoric and come to terms with this issue squarely by defining the critical
areas where China must maintain its initiative and those others where China may
accept less control. Chinas expanding interdependent relationships with capitalist
countries also raise the question of the countrys commitment to the realization of a
socialist world system. Socialism, as Wallerstein has pointed out, involves the
creation of a new kind of world-system (Wallerstein, 1974b: 415), since,
the nationalization or socialization of all productive enterprises within the
bounds of a nation-state is not and theoretically cannot be a sufficient defining
condition of a socialist system, even if the whole nation thinks of socialism as
its objective. As long as these nations remain part of a capitalist world
economy, they continue to produce for this world market on the basis of the
same principles as any other producer [Wallerstein, 1974a: 7].
This is a position that assuredly would be endorsed by Mao, who during his lifetime
had insisted that the capitalist world economy would be replaced by a socialist one
through not only competition but also fierce, broad-ranging struggle (Mao, 1977:
105). But the irony is that, since the decade of the 1960s, socialist countries have,
one after another, chosen to drop out from this struggle and to become an
increasingly integral part of the capitalist world-economy (Frank, 1977: 94). As
sociologist Christopher Chase-Dunn has argued, these socialist countries have
reentered the capitalist world-economy as producers of commodities which they sell
for profit on the world market and as importers of world market commodities
(Chase-Dunn, 1980: 516). With its current emphasis on interdependence and tilt
toward the capitalist world market, China, too, seems to be following a path similar
to that of other socialist countries. Whether her present posture represents a
permanent withdrawal or a temporary retreat from that struggle is a question that
will only be answered with the passage of time.

Zafar, Ali (2007), The Growing Relationship Between China Sub-Saharan

Africa: Macroeconomic, Trade, Investment, and Aid Links, in The World
Bank Research Observer, Vol. 22, No. 1, pp. 103-130.

30

Chinas economic ascendance represents a shift in the international economy and a

change in some of the parameters that have been guiding the world trading system.
The implications of Chinas rise will be felt increasingly over the next decades, and
the Sino-African relationship will only intensify in coming decades in line with
Chinas resource requirements. Chinese aid and investment in Africa will grow
exponentially in parallel with the trade surge and will remain unaffected by any
slowdown in economic growth in China.
For Sub-Saharan Africa, Chinas economic boom has been a mixed blessing. On the
positive side, China has helped accelerate economic growth in Africa by contributing
to a strong commodity boom due to the upward swing in the prices of oil and metals
exported by many African economies. Second, it has deepened trade and
investment on a continent that has been marginalized from flows of international
trade and global capital, and China is investing significantly in Africas transport and
education infrastructure. Third, it has given many Africans access to low-cost
consumer goods. Fourth, Chinas low-transactionscost way of doing business and
its noninterference in countries internal affairseschewing political conditionalities
on loans provided that countries adhere to its one-China policyhas won it some
support in the developing world. Fifth, Chinas ascent has created more competition
in the aid market and increased countries bargaining power with donors. China may
contribute to the continents economic development and act as a force for change
in Africa.
On the minus side are several important challenges and risks. First, there is some
concern that Chinese investment in Africa will be based on capital-intensive natural
resource extraction and will not contribute to local employment generation and the
continents long-term economic development. Second, Chinas influence on global
energy demand and on oil markets will lead to increased energy prices for net oil
importers in Africa and a worsening of their terms of trade. Third, the supply shock
to world manufacturing, particularly in textiles, and the growing imports of cheap
Chinese goods in Africa, coupled with increasing competition between Chinese and
African textiles in third-country markets, threaten to hinder economic diversification
in Africa and contribute to deindustrialization. In this context, a growing backlash
against Chinese investment in the continent, amid allegations of improper labor and
human rights standards, may gather momentum. Fourth, important issues like
corruption and governance, which had moved to the forefront of the development
agenda, may slide back down again. There may be some slippage in the progress
that has been made in the development agenda with regard to transparency and
civil society participation.
The ascent of China will influence the dynamics of Western aid to the continent and
alter the landscape of development assistance. New working mechanisms between
the lenders will have to be crafted. Moreover, the traditional donors and
international financial institutions will have to work creatively to bring the Chinese
into the broader development platform. Overall, China represents a great
opportunity and challenge for Africa, and only history will give its verdict a halfcentury from now.

30

Table 2.

Third
World

Motivatio
ns

Realist
Internationa
lism

Humane
Internationalism

Reform
Internationalism

Liberal
Internationalism

Recognizes
obligation of rich
countries
to
alleviate
global
poverty
and
to
promote social and
economic
development in the
Third World.

Acknowledges
obligation of rich
countries
to
alleviate
global
poverty
and
to
promote social and
economic
development in the
Third World.

Recognizes
An acceptance of
responsibility for the the obligation to
development of the show solidarity with
South.
the
poor
and
oppressed in other
countries, even at
the
sacrifice
of
narrower interests in
ones own country.

Compassion

Similar to humane
internationalism,
though
the
international
ethic
goes further, stating
that the existing
global distribution of
resources
and
incomes
is
considered
indefensible and the
international
economic system is
considered unfair to
the poor.

Combines
main
concept of humane
internationalism
with
a
strong
commitment to an
open,
multilateral
trading system. It is
motivated
by
humanitarian
tradition and adds
to it an enlightened
self-interest coming
out of the increased
interdependence
between North and
South, and the new
opportunities
that

Radical
Internationalism

Based in ideologies
which advocate the
equity of man and
solidarity
across
national
borders.
Confronts
the
exploitive
and
oppressive
economic
and
political structures
current within and
among states.

have come about as

a result of the
integration of the
Third World into the
Western
Market
economy.

Other
Beliefs

Maintains an
anarchic view
of
international
relations.

Similar to humane
internationalism.
Promotion of human
rights,
improved
equity and social
and
economic
justice within and
between nations.

Economic growth in
South through the
pursuit of genuine
common
interests
between rich and
poor countries.

Full
economic,
political and social
equity.
Ecological
concerns are also
becoming
increasingly
important.

A more equitable
world is in the longterm best interests
of
developed
nations.

Supports transfers
of
resources
to
promote
development in the
Third World, like
humane
internationalism,
but goes further by
asking for reforms
both in Third World
countries for the
benefit
of
poor
social groups, and
reform
of
the
international,
political
and
economic
system

Favors
use
of
private sector in
development
efforts,
including
industrial
and
business enterprises
in the North, and
believes
that
Overseas
Development
Assistance
funds
should be used for
its mobilization.

Sceptical of both
civilian and military
bourgeois elites in
control
of
most
Third
World
countries,
and
reluctant,
if
not
against
the
provision of stateto-state
aid
to
countries ruled by
these groups.

30

Objective
s

Promote economic,
social and political
rights in the Third
World,
alleviate
human
suffering,
and promote social
and
economic
development.

for the benefit of

the South.
However, it does
not believe that the
market is the most
efficient mechanism
to settle income
distribution
and
determine
production
priorities.
Only
own
national
interests are
and should be
pursued.

Includes
the
concept of mutual
benefit
across
borders,
and,
among other things,
interests
of
increasing
employment
and
expansion of trade
and
investment
opportunities.

Like
humane
internationalism
believes that a more
equitable and just
world is in the best
interest
of
rich
countries.

States
should
pursue
short-term
and
long-term
economic
and
political
selfinterest,
similar
concept to realist
internationalism.

30

SelfInterest

The dire needs of

the
Third
World
should
be
given
predominance over
narrower
selfinterests at home in
light
of
the
differences in terms
of economic and
social
economic
levels, as long as
aid
is
directed
towards the creation
of and support for
structures of selfreliant, sustainable
social and economic
growth. This pursuit
is
also
a
vital
consideration in the
selection
of
recipients
of
aid
(both governments
and NGO), which

must
also
hold
similar beliefs in
order to be eligible.
Aid
Channels

Works
through
existing multilateral
and bilateral aid
agencies considered
to
be
useful
instruments for the
correction of global
inequalities,
however, it believes
these
agencies
need
to
be
improved to achieve
these
objectives.
Also favors NGOs.

Attitudes
towards
aid agencies vary
depending on the
degrees
of
interference
and
discrimination
of
these
agencies.
Suspicious
of
extensive
procurement tying.
Preferring
international
development
finance
agencies
and UN agencies
which practice open
bidding.
Also
skeptical
of
agencies which give
priority to welfare
strategies at the
cost of economic
growth strategies.

30

Prefers to channel
aid through nongovernmental
solidarity
groups.
Skeptical
about
bilateral
and
multilateral
aid
agencies, however,
differentiates them
according to their
performance
in
relation
to
the
objectives
mentioned
above
and the policy of the
chosen
recipient.
Against
providing
aid to international
development
finance institutions,
especially
the
Bretton
Woods
institutions,
as
these
are
considered
instruments of the
donor
interests
rather
than
instruments used to
secure
genuine
advantages for the
Third World. Favors

UN aid agencies as
there are thought to
ensure a greater
influence for Third
World governments.

State/int
er-state
intervent
ion

Favors use of state

and
inter-state
intervention to the
objectives
mentioned
above.
Gradualist
approach.
-

Although
it
is
against state and
inter-state
intervention,
it
supports
the
institutionalization
of
rules
which
create
equal
opportunities,
and
reduce
discriminatory
practices
and
protectionism.

Strongly favors use

of state and interstate intervention if
these are directed
towards
the
objectives
mentioned
above.
Strongly
against
interventions
by
exploiting
or
repressive
structures, be they
Third
World
governments
or
international
institutions
(including IFIs).

Table 2. Forms of internationalism as described by Stokke (1989). Note: Descriptions are based on those given by
Stokke (1989), where information in the matrix is lacking this is because it was not provided by Stokke. ( Click here to
return to introduction)

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