Strategic Motivations of Foreign Aid in a Changing World

Gauging developed countries’ motivations for providing development assistance is complex. One theory suggests that governments of developed countries see foreign aid as a tool of realpolitik, using foreign aid to improve relations with recipient countries and prevent political destabilization. In a recent paper, political scientist Sarah Blodgett Bermeo examines the phenomenon of ‘targeted development’, wherein aid is prioritized based on the economic and political implications of underdevelopment as opposed to the extent of underdevelopment itself.

Bermeo argues that aid has never been a function of pure altruism, but rather a function of donors’ interests. This phenomenon has become more pronounced in recent years because donor countries have become less insulated from the socioeconomic effects of underdevelopment. Bermeo notes that aid trends can be classified into three distinctive periods: the Cold War, the 1990-2001 “Interwar” period, and the post-2001 War on Terror.

Aid during the Cold War was used as a tool to extend the influence of donor countries’ economic and political interests in recipient nations. For example, aid sent from OECD nations to the Mobutu regime in the Democratic Republic of the Congo as part of anti-communist efforts in 1988 totaled $1.1 billion. In contrast, by 1992 aid had dropped to only $152 million. Aid during the subsequent Interwar period was largely humanitarian in nature and was more likely to be sent to areas where it would induce economic growth rather than be sent to authoritarian regimes. Finally, aid during the War on Terror has been focused on nations in need of development but not on nations on the frontlines of the War. The George W. Bush administration’s Millennium Challenge Account (MCA) and the President’s Emergency Plan for AIDS Relief (PEPFAR) both excluded front-line states in the fight against terrorism and elevated developmental aid to priority status in U.S. foreign policy.

Bermeo uses a bilateral model of aid allocation in which both donors and recipients simultaneously impact the flow of aid. The model tests whether particular characteristics of donor countries are correlated with certain qualities of recipient countries. These include recipient need, donor-recipient arms transfers, UN Security Council membership, former colony status, trade relations, population, and proximity. For instance, Bermeo tested whether a country would be more likely to receive more aid during its tenure in the UN Security Council. The change in aid reflected by this tenure differs in different periods. She found that donors favored countries with lower income, strategic importance, and higher levels of trade during the Cold War, while they allocated a smaller portion of aid to populous or proximate recipients during the same period.

In contrast, after 2001, donors gave more aid to recipient countries that were poorer and more populous. Additionally, trade flows remained an important factor in aid allocation while former colony status declined in importance but remained positively correlated with aid post-2001. This indicates that former colonial powers still use aid to maintain influence in former colonies but at a smaller magnitude than they did during the Cold War, illustrating that anti-communist motivations may have influenced aid transfers.

Globalization has left donor countries less insulated from the effects of underdevelopment, indicating that donors will continue to target aid toward recipients whose stability is linked to their own economic and security interests. This is best evidenced by a growing propensity to give aid to proximate recipients. Bermeo also predicts that finding ways to best target aid will become more challenging for traditional donor countries as hegemonies shift, raising important questions of whether emerging powers will raise their own aid contributions and what factors will motivate their disbursement.

Article Source: Bermeo, Sarah Blodgett. “Aid Allocation and Targeted Development in an Increasingly Connected World,” International Organization, 71(4), (2017): 735-766.

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