Development Aid: Why do states give? Explaining development aid.

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US foreign aid, explained

During the cold war, countless millions of dollars in aid wound up in the pockets of pro-American dictators from Latin America to Africa instead of going to help their long-suffering people. Generators given to power slum neighborhoods break down because no one provides spare parts to maintain them. Laptops gather dust in rural schools because well-intentioned donors didn't realize the locals have no electricity.

Warm coats collected as emergency aid for disaster victims turn out to be useless in the tropics.

Development aid

Sometimes, despite the best of intentions, aid even backfires. Giving away boatloads of food can wipe out the market for local farmers' crops, bankrupting them. Worse, aid can fuel conflict. Rival militias battle each other to snatch donated food. Aid to refugees fleeing Rwanda in the mids ended up subsidizing rebel Hutu fighters.

On the other hand, there are plenty of examples of aid making things better. The Green Revolution spearheaded by Norman Borlaug, an agricultural scientist backed by the Rockefeller and Ford foundations, brought new strains of high-yielding wheat and rice, pesticides, synthetic fertilizers, and other modern agricultural techniques to many poor countries in the s and s, enormously boosting their food production.

The Global Alliance for Vaccinations and Immunizations, launched in by several governments, international organizations, and foundations, including the Bill and Melinda Gates Foundation which supports TakePart World , has immunized more than million children in 77 countries against a range of diseases. Although developed countries have repeatedly mentioned this target in agreements and at summits since then, very few countries have reached that goal.

In , only six countries met the 0.

What is foreign aid?

The OECD average is just 0. You may think that foreign aid consists of government-to-government transfers of money. But governments channel most aid through nonprofits, public-private partnerships, private companies like Chemonics International and John Snow Incorporated, and multilateral organizations such as the United Nations and the World Bank. ODA went directly to governments in — and that includes other countries distributing the assistance rather than receiving it. The rest of that funding bypassed governments altogether: NGOs received 26 percent of the money, multilateral organizations 20 percent, and other organizations, such as universities and research institutes, 18 percent.

When Simone Dietrich at the University of Essex researched this question, she found that the United States chooses to outsource foreign aid to NGOs especially in countries like Sudan and Sri Lanka with bad governance and more corrupt leaders who are likely to squander or swipe those funds. But it is important to understand that most aid never enters the coffers of those corrupt governments in the first place.

Slashing foreign aid would damage U.

Pets in Victorian paintings — Egham, Surrey. The history of pets and family life — Egham, Surrey. Available editions United Kingdom. Corrupt governments squander U. What is foreign aid? Rich countries provide assistance to poor countries to better the human condition. States are subject to the norms of behavior established by the international community. The allocation of foreign aid has become an accepted and expected standard of behavior among developed states, a standard that is now being recognized among a greater number of middle-income states.

Most developed states have established foreign aid agencies, instituted foreign aid mandates, processes and procedures, and joined the DAC. Donor states provide foreign aid to alleviate poverty and foster development in the neediest underdeveloped countries. Lancaster admits, however, that given the number of potential recipients and the ever-expanding need due to disasters, poverty, or economic crises , donors can also use their aid as incentives or as payments for approved behaviors, or to signal a desire to expand political relationships between donors and recipients.

Consequently, researchers have determined that foreign aid is often provided for interests other than developmental or humanitarian reasons. However, the EU countries do not wish to optimize their foreign aid because they have economic and political purposes other than poverty reduction when they allocate aid. Foreign aid is used predominantly to promote geostrategic interests, for the right to build and maintain foreign bases, to strengthen alliances, or to keep allied regimes in power. Foreign aid is also used to maintain friendly relations with foreign governments.

Foreign aid facilitates cooperation, and it builds strong alliances. First, foreign aid can be used to maintain nations as allies. Second, foreign assistance may be granted in an attempt to gain foreign allies.

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And third, foreign aid can be used to win the hearts and minds of a population. For example, foreign assistance is viewed as an important instrument in the prevention of terrorist attacks by reducing the appeal of terrorist ideology. There is a general belief that foreign aid could reduce the likelihood of terrorist attacks by averting the causes of terrorism—namely, hopelessness and resentment as the result of extreme poverty, illiteracy, and hunger.

Foreign aid would also be used to reduce poverty and inequality in the recipient state, thought to be a source of terrorist activity Bush, Helping the poor increase their standard of living would also ensure that they would not fall prey to the ideological underpinnings of fundamentalists. Del Biondo concludes that the EU has moved closer to the United States in that its foreign assistance is more explicitly focused on security matters.

Providing aid for antiterrorist programs, along with economic growth and development, as well as poverty reduction schemes in developing countries, safeguards European security. Getting rid of poverty will make for a better world for everybody. Thus, foreign aid is always in the service of foreign policy. Geopolitical motives for foreign aid allocation have evolved over time and, in turn, affected the levels and direction of aid flows. During the Cold War, foreign aid was a tool Western states used to contain the spread of communism and to keep the power of the Soviet Union in check. Security concerns have, and will continue to have, a significant influence on the allocation of aid.

Giving aid for geopolitically motivations aid is not an efficient use of aid, however, if purpose of the aid is poverty alleviation in the recipient country. But foreign aid can be successfully used to buy strategic concessions, such as the building of military bases or consolidating military alliances from the recipient government.

Foreign aid can be a large component of foreign capital flows for many low-income countries, thus increasing their dependence on donor governments. Foreign aid can also be used to further the economic interests of the donor state. Recipient countries that provide a favorable climate for foreign investment and trade receive more assistance. Also, the giving of aid can secure access to vital raw materials oil, minerals, etc. The commercial motive of foreign aid can be seen in the practice of tying aid.

Foreign Aid as Foreign Policy Tool

Tied aid is when a country binds its aid to the procurement of goods and services from the donor country. Tying aid is a common practice among donor nations.

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In contrast, Norway, Ireland, and the United Kingdom do not tie their aid. Tying aid can reduce the value of the aid because it prevents the recipient country from buying the best-quality commodities at the lowest prices. France, Portugal, Spain, and the United Kingdom are substantial donors of foreign assistance to their former colonies. Aid by ex-colonial powers can help continue or regenerate colonial spheres of influence and reinforce political alliances. The aid provided by France is often cited as an example of a former colonial power wishing to maintain the special relationship with its ex-colonies.

Aid provided by the French is used to fund educational training in the French language and culture. Aid can be given to prevent or offset the effects of global negative externalities that can potentially affect the developed countries such as infectious diseases, environmental contamination, or debt default. And providing aid to countries neighboring a conflict or disaster can stem the flow of refugees seeking asylum in the West. States adopt an identity and role in the international community, and some states choose to be viewed as generous global citizens.

If aid were solely motivated by foreign policy objectives and donor self-interest, then how the recipient uses the aid and the importance of the quality of governance in the recipient country should not matter. However, Kilby and Dreher show that in practice, states use foreign aid to achieve many overlapping foreign policy goals, including fighting terrorist threats, supporting strategically important countries, fostering relations with countries that maintain large bilateral trade or capital flows, and the championing humanitarian goals of reducing poverty, encouraging democracy, enhancing gender status, and improving human welfare.

When pursuing foreign policy, including foreign aid policy, states can choose between bilateral or multilateral actions. Bilateral aid is resources that flow directly from one country to another. Bilateral aid can be delivered through the public sector, NGOs, or public-private partnerships with the recipient country.

Those who advocate the use of foreign aid as a geopolitical foreign policy tool prefer bilateral foreign aid because of the strategic objectives to be gained. With bilateral aid, the donor retains control over the funds and determines who will be favored with aid and under what conditions. Most foreign aid is overseen, and frequently managed, by the donor Riddell, Donors do not like to give up control of their aid 4 by channeling it through a multilateral agency, unless, of course, they have significant influence over the decision-making operations of the agency.

The receipt of bilateral foreign assistance leaves the recipient obligated to the donor. Multilateral aid can only be delivered through the multilateral organization. Headey suggests that donors tend to channel their anti-poverty, development motivated assistance through multilateral institutions and use their bilateral aid to pursue geopolitical objectives. Earmarking allows the donor and likeminded countries greater influence in the allocation of multilateral aid decisions by targeting priority issues or economically and politically important countries.

The ability to use the multilateral institutions while maintaining control of their foreign aid is a widespread donor strategy. The Afghanistan Reconstruction Trust Fund is one of the largest country-specific trust funds. Why would states give up control over aid allocation policy by funding multilateral aid programs? Research has established that there are several advantages to using multilateral organizations to manage foreign aid.

Multilateralism is, in the opinion of Thompson and Verdier , the solution to transaction costs, that is, the costs of negotiating and renegotiating , monitoring and enforcing an agreement. This means that the costs and responsibilities for resolving global issues of poverty or disease eradication are not the burden of one country but based on the ability to pay.

Small donations can be combined with donations from other countries, amplifying their significance and providing help to recipient countries. Using a multilateral aid agency allows the donor a certain degree of plausible deniability for the resultant outcomes thereby reducing the risk of criticism if the lending fails. Foreign aid does not have strong public support in most countries. But donor governments realize that aid is an important tool of foreign policy.

Donors can fund but still distance themselves from politically controversial programs that may upset their domestic constituencies. Providing bilateral aid might not be politically astute if either the donor or the recipient citizenry objects to the funding. Funding these countries, no matter the level of need, would be politically controversial in the United States. Donors may direct their aid through multilateral venues when conditions in the recipient country are politically sensitive or fragile, dangerous for staff members, or if the donor simply wants to diffuse accountability.

Multilateral aid is politically neutral and more needs-driven. There is also a perception that multilateralism guarantees uniform treatment and, consequently, is more legitimate and more fair based on need and not politics. Multilateral agencies do hold a degree of autonomy with respect to state control. Thus, it is believed that multilateral aid is less politicized and based more on need and institutional capacity. However, there is some evidence that multilaterals are not impartial either and can also be easily captured for political and economic gain.

Favoritism rather than poverty reduction controlled IBRD lending. World War II had completely destroyed the European economy and infrastructure, and a summer drought and exceptionally frigid winter in —47 killed livestock and ruined crop production. The combination of the man-made disaster of war and the natural disasters of drought and blizzards, resulted in widespread starvation, wretched poverty, unemployment, and housing shortages in Europe. Although the Marshall Plan was motivated by humanitarian concern for the suffering of the European population, the plan also satisfied the strategic self-interests of U.

United States leadership feared that with the destruction of the European economy and the growing misery of the European people, communism would gain a stronghold. Over the years, foreign aid has become an indispensable tool of U.

Foreign aid flows to countries where EU donors have historically strong trade relations, investment interests, and colonial ties. Aid was also seen as a means to prevent a massive return of settlers and emigrants. Maintaining secure export markets in former colonies is also an important motivation for European foreign assistance. Japan also used foreign assistance to increase its international reputation and status. Under Article 9 of the Japanese Constitution, Japan was prohibited from maintaining a military other than for self-defense and was unable, until recently, to participate in international humanitarian operations.

Thus, Japan relied on providing foreign aid to project its power and influence onto the international arena. During the Cold War, Soviet foreign aid was given to build influence in nonaligned countries and maintain a sphere of influence with poor communist countries particularly North Korea, North Vietnam, Cuba. In addition, the Soviet Union provided considerable amounts of foreign aid to African states to foster close relations and to secure access to raw materials.

After the fall of communism, the Russian Federation became a recipient of foreign assistance. Russian foreign assistance reflects its historical Soviet roots for foreign aid allocations. The importance of foreign aid as a foreign policy tool is substantiated by the fact that foreign aid recipients are also foreign aid donors. Researchers have only recently recognized the importance of nontraditional aid donors in the study of aid as a tool of foreign policy.

More recently developing countries, oftentimes foreign aid recipients themselves, have become foreign aid donors. The motivations for middle-income country foreign aid provisions largely mirror those of traditional donors. Foreign aid by middle-income countries is used to further foreign policy goals, to increase regional power, to advance national interests, and to strengthen commercial ties. Nontraditional non-DAC donors have learned that foreign aid can be a useful tool to win allies, garner support in international forums, and advance foreign policy objectives.

Nontraditional donors, it is claimed, have a better understanding of recipient needs and of programs that work Dreher et al. Accordingly, based on this experience, non-DAC donors are less willing to provide general budget support, aid that allows discretionary use, or outright grants rather than subsidized loans Davies, As with the DAC donors, much of non-DAC aid is tied recipients are obligated to purchase goods and services from the donor country. Contrary to the criticism that DAC donors make recipient needs secondary to political, strategic, or commercial interests, it appears that DAC donors are more needs-oriented than non-DAC donors Dreher et al.

An empirical study by Dreher et al. The belief that non-DAC donors respond to recipient need is belied by a study by Fuchs and Vadlamannati These researchers report that India provides foreign assistance to countries with a higher GDP per capita than India itself, thus underscoring the notion that foreign policy goals rather than human needs motivate the foreign aid allocations of India.

Woods reports that energy security, increased trade, and new economic partnerships are the primary motivations for most non-DAC donors. Thus, foreign aid between southern donors and recipients is provided based on mutual benefit, non-interference and respect for sovereignty so that aid is not contingent on human rights protection, the promotion of democracy, or the reduction of corruption Mawdsley, , highly valued conditionalities 7 that traditional donors place on their foreign aid. Funding by nontraditional donors allows countries to reject the conditionality-laden loans of the IMF, the World Bank, and bilateral Western donors Pehnelt, China has become one of the major foreign aid donors.

Many non-DAC Donors provide aid, not only in an attempt to legitimize themselves as regional leaders, but also to assist trade and investment deals. Mwase suggests that BRICS donors allocate foreign aid to countries with weak institutions and poor governance because the World Bank and IMF deny aid to countries they determine to be too risky to finance. Arab governments have long been major donors of foreign assistance. Although Villanger reports that Arab aid is used to promote Islam, build Arab solidarity, and is focused on predominantly Muslim countries, Rouis acknowledges that Arab aid now extends to a greater number of countries:.

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