The political economy of foreign aid collection : arguments and applications

Abstract

The essential purpose of foreign aid is to reduce poverty and to help millions of people in the developing world. Yet, already the Marshall Plan demonstrates that donor governments frequently use development assistance as a foreign policy tool in order to promote their interests at the international stage. This ambivalence points to the need for a clear understanding of aid allocation, also as starting point for a better comprehension how aid affects development. Furthermore, the study of foreign aid allocation is not only fundamental for our knowledge on aid effectiveness, but also allows insights into the foreign policy preferences of rich governments toward the developing world. In order to address this, the following thesis highlights the importance of foreign aid as a foreign policy tool and illus- trates in three substantial chapters how developed states use financial assistance to buy policy concessions from developing countries. In this context, the author first contrasts the official aid doctrine with the actual, more hidden agenda over the last six decades, and also emphasizes important av- enues for further research. Second and by building upon existing research, the dissertation shows how donor governments strategically distinguish between con- ditional and unconditional aid to support more democratic developing countries that face political turmoil. Third, the thesis focuses on the public and private good aspects of aid, and explores how foreign aid might be used for access to raw materials - a case with potentially clear negative externalities to other donors. It is argued that donor governments allocate more aid to possible trading partners in mineral ores to secure their companies access to these resources. Against this background, the theoretical and empirical analyses of donors' aid allocation behavior illustrate that donor governments use foreign aid as a policy tool to further their very own interests in developing countries. Yet, this may not necessarily be detrimental to recipient needs. With the increasing international integration and the rise of more, heterogeneous donor countries, recipients become ever more important. Consequently, also the political economy of foreign aid.EThOS - Electronic Theses Online ServiceGBUnited Kingdo