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The Needy Donor: An Empirical Analysis of India’s Aid Motives
Abstract
It is puzzling that India, which has a large domestic constituency of people suffering from underdevelopment, chronic poverty and mal-governance, is emerging as an important aid donor. With the intension of understanding why poor countries provide foreign aid, this article is the first to econometrically analyze India’s aid allocation decisions. First, we utilize cross-sectional data on aid commitments by the Ministry of External Affairs to 125 developing countries, obtained in US dollars from AidData for the 2008-2010 period. Second, we compare India’s aid allocation with that of other donors. Our findings show that India’s aid allocation is partially in line with our expectations of the behavior of a “needy” donor. Commercial and political self-interests dominate India’s aid allocation. We find the importance of political interests to be significantly larger for India than for all donors of the Development Assistance Committee. Moreover, we find that countries which are closer geographically are favored, and that countries at a similar developmental stage are more likely to enter India’s aid program.
... Two decades ago, Alesina and Dollar (2000) published their influential study arguing that foreign aid by Western donors has largely been ineffective in reducing poverty because it is driven primarily by geopolitical considerations. The myth of needs-based aid given out of altruism has been further sapped by subsequent studies that not only confirm that political self-interest is part of Western donor's motives but also show that "new donors," including China, pay neither less nor more attention to politics compared to traditional donors (Neumayer 2003;Berthélemy 2006;Kuziemko and Werker 2006;Dreher, Nunnenkamp, andThiele 2008, 2011;Kilby 2011;Dreher and Fuchs 2015;Semrau and Thiele 2017;Dreher et al. 2018;but Fuchs and Vadlamannati 2013). Moreover, research suggests that like Western donors, China uses highly concessional loans, also known as official development assistance (ODA), to promote its foreign policy goals (Dreher and Fuchs 2015;Dreher et al. 2018; see also Strüver 2016). ...
... The rise of new donors has raised the prospect that the alternative aid sources they provide are a change for the better for recipients, because new donors, as past recipients, are expected to behave altruistically. However, regarding political self-interest, research suggests that aid from new donors is politically motivated and that old and new donors do not differ in that respect (Neumayer 2003;Dreher, Nunnenkamp, and Thiele 2011;Dreher and Fuchs 2015;Semrau and Thiele 2017;Dreher et al. 2018). 1 China has long been excluded from statistical analyses (Neumayer 2003;Dreher, Nunnenkamp, and Thiele 2011;Fuchs and Vadlamannati 2013) because of Beijing's refusal to disclose information on its aid allocation (Bräutigam 2011). This has now changed, thanks to several researchers' efforts to collect data on Chinese foreign aid projects globally (Dreher et al. 2021). ...
... India may be an exception(Fuchs and Vadlamannati 2013).2 (1) Complete projects, (2) goods and materials, (3) technical cooperation, (4) human resource development cooperation, (5) Chinese medical teams working abroad, (6) emergency humanitarian aid, (7) overseas volunteer programs, (8) debt relief. ...
We examine the impact of China's commercially oriented forms of state financing, the dominant type of Chinese aid, on voting alignment between recipient countries and China in the United Nations General Assembly. Previous research has shown these types of aid flows to follow economic interests, suggesting they have no political ramifications. Given the principles, motives and process of China's foreign aid program, and the associated economic and political benefits to capital hungry recipient countries, we believe this to be a premature conclusion. We argue that recipients will respond to Chinese commercially oriented aid flows by aligning more closely their foreign policy with China's. We further argue that regime type will condition this relationship in that democracies will more strongly align with China than autocracies. Leveraging the global coverage of AidData's Global Chinese Official Finance dataset for the period 2000–2014, we find that Chinese commercial aid flows lead to recipients’ foreign policy alignment with China and that democracies strongly align with China in response to such flows while autocracies do not respond so. These results suggest that China's foreign aid yields political influence but in a way that has not yet been uncovered and that differs from other donors, old and new alike.
Examinamos el impacto de las formas de financiación estatal con fines comerciales de China, el tipo dominante de ayuda china, en la alineación de votos entre los países receptores y China en la Asamblea General de las Naciones Unidas. Investigaciones anteriores han demostrado que este tipo de flujos de ayuda obedece a intereses económicos, lo que sugiere que no tiene ramificaciones políticas. Dados los principios, los motivos y el proceso del programa de ayuda exterior de China, y los beneficios económicos y políticos asociados a los países receptores hambrientos de capital, creemos que esta es una conclusión prematura. Sostenemos que los receptores responderán a los flujos de ayuda china orientados al comercio alineando más estrechamente su política exterior con la de China. Además, creemos que el tipo de régimen condicionará esta relación, ya que las democracias se alinearán de modo más sólido con China que las autocracias. Gracias a la cobertura global del conjunto de datos Global Chinese Official Finance de AidData para el periodo 2000–2014, descubrimos que los flujos de ayuda comercial china conducen a la alineación de la política exterior de los receptores con China, y que las democracias se alinean fuertemente con China en respuesta a dichos flujos, mientras que las autocracias no responden así. Estos resultados sugieren que la ayuda exterior de China produce influencia política, pero de una manera que aún no se ha descubierto y que difiere de la de otros donantes, tanto antiguos como nuevos.
Nous examinons l'impact des formes de financement commercialement orientées de l’État chinois, le type dominant de l'aide chinoise, sur l'alignement des votes entre les pays bénéficiaires et la Chine à l'Assemblée générale des Nations Unies. De précédentes recherches ont montré que ces types de flux d'aide suivaient des intérêts économiques, en suggérant qu'ils n'avaient pas de ramifications politiques. Compte tenu des principes, des motivations et du processus du programme d'aide internationale de la Chine, ainsi que des avantages économiques et politiques associés pour les pays bénéficiaires avides de capitaux, nous pensons que cette conclusion est prématurée. Nous soutenons que les pays bénéficiaires réagissent aux flux d'aide commercialement orientés de la Chine en alignant plus étroitement leur politique étrangère sur celle de la Chine. Nous affirmons en outre que le type de régime conditionne cette relation dans la mesure où les démocraties s'alignent plus étroitement sur la Chine que les autocraties. Nous avons tiré profit de la couverture mondiale du jeu de données Global Chinese Official Finance (financement officiel chinois à l'internationale) d'AidData pour la période 2000–2014 et nous avons constaté que les flux d'aide commerciaux chinois amenaient les pays destinataires à aligner leur politique étrangère sur celle de la Chine et que les démocraties s'alignaient étroitement sur la Chine en réponse à ces flux alors que les autocraties ne réagissaient pas de cette manière. Ces résultats suggèrent que l'aide internationale de la Chine exerce une influence politique, mais d'une manière qui n'avait pas encore été découverte et qui diffère de celle des autres donateurs, anciens et nouveaux.
... The corresponding estimate of the total for 1998À1999 was Rs. 9,955 million. Aid through Ministry of External Affairs is estimated to have recorded a significant increase over the years; it increased in 2000 constant prices, from about $112 million in 1966 to about $400 million in 2010 (Fuchs & Vadlamannati, 2012). But for a big allocation in 1972 to Bangladesh (approximately Rs. 18,000 million grants and concessional loans), the growth has been slow until the early 1990s. ...
... A large number of ITEC training slots have been enjoyed by Sub-Saharan Africa. As observed by Fuchs and Vadlamannati (2012), the distribution of ITEC training programmes favours Sub-Saharan Africa. Thirty six per cent of the total slots between 1998 and 2005 were allocated to Sub-Saharan Africa, 20 per cent to South-East Asia, 15 per cent to Middle East and North Africa, 13 per cent to post-Soviet transition countries and only 10 per cent to South Asia. ...
... However, it is interesting to note that in the total technical cooperation budget, of which training is one major component, Sub-Saharan African countries receive only 5.6 per cent and neighbouring Asian countries receive the maximum, as shown in Table 3. Fuchs and Vadlamannati (2012) also noted that a lion's share, nearly 85 per cent, of the aid administered by the Ministry of External Affairs was allotted to South Asian countries such as Bhutan and Nepal during 2008À2010 and a tiny share was accounted by Sub-Saharan Africa. But there are several projects being launched in Africa, as a part of the total external assistance programme, such as the Pan-African e-Network Project that was launched in 2004, which aims at improving schooling and health situation in African countries. ...
India is described as an emerging donor. Actually India has started providing development assistance to developing countries immediately after independence. The amount of aid was relatively small, but grew over the years to a recognisable size. The purpose of this chapter is to review the long experience of India in the framework of development assistance which is laid in the foundational principles of South-South Development Cooperation (SSDC). Based on secondary data, the chapter provides an exhaustive account of India’s programme of development assistance, and a critical discussion of issues involved. The analysis shows that given certain unique features of its aid programme, India has a great potential to emerge as a major donor country, and even to rank among big traditional donor countries. It can also influence the global aid architecture. There are many lessons that others can learn from the “Indian model of aid”. However, there are certain problems and challenges that India has to address for it to become a major international player in the aid business. One of the most important problems refers to the absence of detailed information. The analytical and critical account of India’s aid programme presented here is hoped to provide valuable fresh insights to the whole issue and should be of considerable academic and policy value.
... For this reason, although existing studies on emerging donors have made important contributions, they are limited to a small number of donor countries and years (Dreher and Fuchs 2015;Dreher, Nunnenkamp, and Thiele 2011;Fuchs and Vadlamannati 2013). ...
... Next, we relax the assumption that the OECD DAC is a homogeneous group of donors. Following Fuchs and Vadlamannati (2013), we categorize DAC donors into three groups: major powers (the United States, the United Kingdom, France, and Germany), OECD donors with a reputation for giving generous and high-quality aid (Canada, the Netherlands, Denmark, Sweden, and Norway), and the remaining DAC members. 19 We find that most of our findings regarding what separates Turkey from traditional donors hold for each subset, too. ...
... 18. This approach is consistent with other works comparing emerging and traditional donors (Dreher, Nunnenkamp, and Thiele 2011;Fuchs and Vadlamannati 2013). 19. ...
Why do developing countries give foreign aid? Although emerging donors are gaining importance in development finance, lack of systematic data on their aid allocation limits our understanding of their motives. We address this gap using detailed data on a major new donor, Turkey, since 1992. We show that domestic politics has had a large impact on Turkey’s priorities in giving aid. Turkish aid used to be determined by international alignments and coethnicity, but after the Islamic AKP (Adalet ve Kalkınma Partisi) took power, political ties lost importance. Turkey began to give more economic aid to trade partners and more humanitarian aid to Muslim nations. While this new focus on trade ties makes Turkey more similar to traditional donors, the growing role of cultural ties sets Turkey apart. The broader lesson of this study on Turkey is that government change can significantly influence the way emerging donors give aid and these changes can vary in predictable ways across different types of aid.
... The prioritisation of partner countries and the possible withdrawal from partner countries are accompanied by the risk that actors such as China or Russia will fill the resulting gap and thus also pose major challenges for German development policy. The influence of emerging countries such as China, Russia and India as development policy actors and as donor states has been growing continuously for several years (see, for example, Dreher et al., 2022;Fuchs and Vadlamannati, 2013;Gray, 2015). If, as in the case of some countries in Africa, cooperation with traditional donor states -here France -is terminated because of their colonial past, countries with rival systems are ready to fill this gap. ...
... Dreher et al., 2022), India (e.g. Fuchs and Vadlamannati, 2013) and Russia (e.g. Gray, 2015) in the Global South. ...
The Opinion Monitor for Development Policy 2024 covers two main topic areas. The first part focuses on key attitudes of the German population towards development policy and development cooperation (DC) over the course of time. The stability of attitudes towards DC is also analysed for the first time. The second part addresses current global developments and new policy guiding principles. It sheds light on the attitudes of the German population towards development cooperation in connection with armed conflicts and economic crises as well as general attitudes towards foreign and security policy. It also explores the knowledge and attitudes with regard to feminist development policy. The report concludes with implications for development policy strategy and communication work.
... India menjadi salah satu negara di kawasan Asia yang tergolong ke dalam emerging donors. Pertumbuhan ekonomi yang terus mengalami peningkatan terutama semenjak reformasi ekonomi tahun 1991, membuat pemerintah India semakin gencar menambah bantuan luar negerinya (Fuchs & Vadlamannati, 2013). Hal tersebut berujung pada pergeseran peran India sebagai aktor dalam kerja sama pembangunan Internasional. ...
... Hal tersebut berujung pada pergeseran peran India sebagai aktor dalam kerja sama pembangunan Internasional. Pada pidato anggaran tahun 2003, India ingin dipandang dalam posisi sebagai negara yang memberikan bantuan, bukan negara yang menerima bantuan (Fuchs & Vadlamannati, 2013). Hal ini dibuktikan dengan pemberian bantuan berupa pinjaman luar negeri sebesar USD 387 juta pada tahun 2009-2010. ...
Sri Lanka was hit by the worst economic crisis in its history, especially since gaining independence in 1948. The economic crisis reached the point where Sri Lanka declared itself unable to pay its debts or was in default. India, as a neighboring country and emerging donor, has emerged to help Sri Lanka restore its economy. India is providing foreign assistance totaling USD 5 billion in 2022 to Sri Lanka. This research aims to analyze India's interests in providing foreign assistance to recover from the Sri Lankan economic crisis using the concept of national interest explained by Nuechterlein. Nuechterlein's concept of national interests consists of four interests, namely economic interests, defense interests, ideological interests, and world order interests. This research uses a qualitative approach whose explanation is descriptive with secondary data obtained through library study techniques. Based on the analysis carried out, of the four interests, there are three interests that are the most prominent and behind India's allocation of foreign aid to the Sri Lankan economic crisis, namely economic interests, defense interests and world order interests
... The existing literature has mainly focused on the trade-aid link and most papers applied the gravity model to traditional donors (Wagner 2003;Martínez-Zarzoso et al. 2009; among others) with only a few papers investigating individual new donors (Neumayer 2003;Fuchs and Vadlamannati 2013;Liu and Tang 2018;Turcu and Zhang 2019). Moreover, to our knowledge, no studies have yet investigated whether development aid also contributes to expanding GVC. ...
... Several empirical analyses focus on specific emerging donors and their aid allocation. Fuchs and Vadlamannati (2013) investigate the motivations for India's aid allocation over the period 2008-2010. Their findings are in line with Dreher, Nunnenkamp, and Thiele (2011), indicating that commercial and political self-interests dominate India's aid policy. ...
This paper investigates whether new donors use foreign aid to facilitate their integration in the world economy. With this aim, the effect of foreign aid on gross trade and global value chains (GVC) is estimated for a sample of 12 new donors and 130 recipients over the period from 2000 to 2014. The results from a theoretically justified gravity model show that the aid effects are heterogeneous across donors and, although weak in the short run for GVC, they are however sizable in the long run. Foreign aid has a positive impact on gross trade for all donors, but only for some of them on the length of GVC. In particular, aid provided by Czech Republic, Hungary, Poland, Korea, Thailand and Turkey fosters the two forms of internationalization, whereas aid given by Russia and Israel only affects gross exports. Surprisingly, the magnitude of the aid effects is smaller for China than for other donors.
... Many non-DAC suppliers of development finance do not comply 2 See studies on Arab donors (Neumayer 2003a(Neumayer , 2004, China (Hendrix and Noland 2014, chapter 5;Bader 2015a;Dreher and Fuchs 2015), Turkey (Kavaklı 2013), and a larger set of non-Development Assistance Committee (DAC) donors (Dreher, Nunnenkamp, and Thiele 2011). See also Fuchs and Vadlamannati (2013) on India for an exception. 3 Evidentiary challenges are not the only reason that certain donors are maligned in the public sphere. ...
... China is no outlier in this respect either, as less powerful countries, such as India, also tend to cooperate more frequently with those who vote similarly in the UNGA. Fuchs and Vadlamannati (2013) as it is in these cases that aid may be most useful-and consequential. Third, we follow Flores-Macías and Kreps (2013) and Dreher and Yu (2016) and focus exclusively on human rights voting in the UNGA. ...
Chinese “aid” is a lightning rod for criticism. Policy-makers, journalists, and public intellectuals claim that Beijing uses its largesse to cement alliances with political leaders, secure access to natural resources, and create exclusive commercial opportunities for Chinese firms—all at the expense of citizens living in developing countries. We argue that much of the controversy about Chinese “aid” stems from a failure to distinguish between China's Official Development Assistance (ODA) and more commercially oriented sources and types of state financing. Using a new database on China's official financing commitments to Africa from 2000 to 2013, we find that the allocation of Chinese ODA is driven primarily by foreign policy considerations, while economic interests better explain the distribution of less concessional flows. These results highlight the need for better measures of an increasingly diverse set of non-Western financial activities.
... 4 India, meanwhile, has a longer history of rejecting aid. Since the 2004 Indian Ocean tsunami disaster, India has categorically turned down foreign humanitarian assistance, declaring that it no longer needs it (Fuchs and Vadlamannati, 2013). As Carnegie and Dolan (2021) point out, India's systematic rejection of bilateral disaster assistance was built upon a strategic plan to depict itself as an emerging power and was accompanied by diplomatic efforts to boost its military presence and bid for a permanent seat at the United Nations Security Council (UNSC) (Sengupta, 2005: 504). ...
How do citizens respond to their government’s decision to accept or reject foreign assistance in the face of a natural disaster? While the increased frequency and intensity of natural disasters necessitate international cooperation for effective response, there have been numerous instances where states have declined foreign assistance offers due to reputation concerns. In this article, we focus on the domestic audience dynamics of such behavior. Drawing on experimental survey data from Turkey and India, two middle-income countries with geopolitical ambitions and recent experience in refusing foreign assistance, we find that accepting foreign assistance during natural disasters leads to higher evaluations of government performance, though this positive effect is driven by opposition voters only. Incumbent voters, conversely, solidify their support for the government regardless of its decision toward foreign assistance. The domestic political effects of government decisions in response to aid offers are largely independent of the identity of the country offering assistance.
... A second category (2) of potential instruments broadly refers to awareness of the population in donating countries. This includes the distance of the donor to the recipient country, which will, in every case, be exogenous (Cardwell and Ghazalian, 2020;Fink and Redaelli, 2011;Fuchs and Vadlamannati, 2013). Mary and Mishra (2020) also propose using media coverage as an instrument. ...
Food aid presents a core component of humanitarian support for people incapable of meeting basic human needs
and aims to bolster food security. However, some studies suggest that food aid may cause violent conflicts in
recipient countries, which has initiated a controversy regarding the impact of food aid on conflict in the political
and scientific debate. We decompose the relationship between food aid and conflict into the channels through
which food aid can affect conflict. We address questions of methodological choice and estimation techniques for
empirical studies. Our review of the empirical evidence on the effect of food aid on conflict shows that none of
the previous studies proposes a compelling identification strategy. While existing research shows promising
approaches in terms of econometric methods, i.e., instrumental variables estimation, they have not succeeded in
i) using instruments that pass the necessary tests of instrumental variable estimation and ii) identifying the
channels through which food aid influences conflict. We argue that future work should contain a rigorous
identification strategy with a stricter focus on the impact of food aid on conflict intensity, empirically examine
the conceptual channels through which food aid affects conflict, and that there is the need for data at a more
disaggregated level to achieve both objectives.
... Relatedly, there is a large body of literature on the determinants of China's aid. In summary, it is often argued that China's provision of foreign aid is primarily driven by 1) the policy and economic interests of aid donors [19][20][21][22][23] and 2) the developmental needs of recipients ( [24,25]). Besides, some research also demonstrated these cross-border projects are normally driven by complementary needs, interests, and capabilities between the donor and recipient countries [20,23]. ...
China's domestic construction market is becoming saturated, and with the support of the government, banks, enterprises, and overseas construction is experiencing sustainable development. Over the past 70 years, China's foreign aid has involved a large exchange of funds, manpower, and materials between donor and recipient countries. Under the guidance of policies, China's construction cooperation with third-world countries has become closer, and overseas project contracting and investment and financing business still show a growing trend. Under the background of global construction technology transfer, Chinese architecture is actively going to the world. This paper discusses the current situation of China's construction assistance from three aspects: types, distribution, and primary drivers, based on a dataset of 766 relevant projects since 1949. Through quantitative and descriptive analysis by inductive reasoning, there is three findings. Constructing a comprehensive and systematic picture of China's aided buildings can give designers, researchers, and policymakers fresh insight into the impacts and further tendencies of China’s overseas architecture.
... Because of the role of China and other "new" donors offering international aid to resource-rich African countries (minerals and land), a focus on the relationship between aid and natural resources has grown considerably in recent years (Dreher et al., 2018;Dreher & Fuchs, 2015;Fuchs & Vadlamannati, 2013;Hoeffler & Sterck, 2022). 1 Guillon and Mathonnat (2020) show that Chinese aid allocation decisions tend to favour both resource-rich countries, especially in the economic infrastructure and services sector. But then, according to Dobronogov and Keutiben (2014), the ODA inflow to resourcerich economies is a distant story since many resource-rich low-income countries have received it from standard OECD donors-amounts of foreign aid that sometimes exceed their natural resource revenues. ...
The aid effectiveness is continually debated in development economics; there is no consensus among scholars on the impact of aid in developing countries, even though characterized by good institutions. An emerging issue in this discussion is the role of natural resources in determining the nature of the agricultural ODA (Official Development Assistance) and democracy nexus. Consequently, this study examines the effect of democracy on the agricultural ODA in Africa and how the country's natural resource rents mitigate this relationship using panel data of 50 countries over the 1995-2019 period. A set of econometric tools is used to estimate the time-series cross-sectional models, which include country fixed-effects model and system generalized method of moments (system GMM), both to account for potential endogeneity and confoundedness issues. Regression results show a long-run positive effect of democracy on agricultural ODA. However, this relationship is nonlinear. The interaction between democracy and resources indicates that natural resource wealth mitigates the positive gains from democracy on agricultural ODA. The study concludes that, while democratic reforms enhance the effectiveness of foreign aid directed to the agricultural sector, this positive effect depends on the natural-resource wealth status of the country.
... For the Saudi case, Bokhari and Jinhwan (2022) suggest that aid allocation also considers donors' interests, having found that countries with strong commercial ties with the kingdom tend to receive more aid from Saudi Arabia. On analysing India's aid commitments with 127 countries over the 2008-2010 period, a similar conclusion is drawn by Fuchs and Vadlamannati (2013), who conclude that commercial and political self-interest explain India's aid allocation. ...
Based on analysis of Brazilian‐Spanish cooperation in Latin America, this article aims to contribute to the discussion on whether South–South Cooperation (SSC) represents an alternative model with specific and differentiated objectives, or if it largely reproduces the constraints and interests traditionally associated with the North–South model, but with new institutions and actors. We start by analysing the main criticisms levelled at cooperation in the literature, emphasising the identification, review and comparison of the mechanisms of domination and dependency that derive from the bilateral and multilateral practices of traditional development cooperation. We then construct a synthetic dependency index to measure the ability of Spain and Brazil – as representative cases of North–South Cooperation (NSC) and SSC with Latin America – to influence the foreign trade, investment and foreign policy decisions of aid recipients, and to empirically contrast the lower level of verticality that much of the available literature assumes about SSC schemes. The empirical analysis suggests significant differences between NSC and SSC in terms of their ability to reproduce dependency patterns and validate the discourse that tends to identify the latter as an alternative cooperation model.
... much foreign aid has geopolitical and military aims in furthering donor country interests. There is an ongoing debate and evidence that aid given by the so called "new donors", i.e. the non-Development Assistance Committee (DAC) donors which include China, India, Russia and the Gulf states, is different -less altruistically motivated, more heterogeneous and less understood in terms of it's effects on growth and development than aid given by DAC donors (Hoeffler and Sterck, 2022;Brazys and Vadlamannati, 2021;Dolan and McDade, 2020;Brazys and Dukalskis, 2019;Dreher et al., 2019;Isaksson and Kotsadam, 2018;Dreher et al., 2018;Brazys and Dukalskis, 2017;Fuchs and Vadlamannati, 2013;Dreher et al., 2011). In contrast, DAC -whose members are primarily OECD countries -has overarching development goals -including inclusive and sustained economic growth and poverty eradication, and the effects of DAC donor aid are more homogeneous, much more better researched and understood. ...
This paper presents new evidence that foreign development aid only boosts growth in aid recipient countries with sufficiently low levels of income inequality, with less income inequality associated with better aid effectiveness. This finding holds irrespective of other determinants of aid effectiveness such as institutional quality, trade openness, budget balance, inflation, colonial history, geography and climate. I focus on aid intended to boost growth, by excluding categories of aid with other primary aims and by focusing on aid from OECD countries rather than China, India, Russia and the Gulf states. I use growth regressions using data on 53 countries over the years 1971-2015, controlling for numerous country-level factors previously associated with aid effectiveness. An increase of one standard deviation in the aid-to-GDP ratio is associated with nearly 2 percentage points of higher growth in the least unequal aid recipient countries but has no significant effect on growth in those recipient countries with inequality above the median level. The results are robust to sensitivity analysis using different control variables and specifications, and can be replicated using different estimators to address dynamic panel bias. This new evidence also supports the hypothesis, which I have developed in previous theoretical work, that economic inequality increases the power of rich elites to re-purpose aid expenditure in ways that further their own narrow economic interests.
JEL Classification: F35 – O15 – O47 – O1 – O43
... They find that new donors care less about recipients , need, and provide more aid to countries with corruption than longtime donors do. The findings of Fuchs and Vadlamannati (2013) suggest that when distributing aid, India prioritizes both commercial and political benefits. On the whole, these studies suggest that emerging donors, like traditional donors, consider strategic self-interest when allocating foreign aid to recipient countries. ...
China has expanded its economic footprint in Southeast Asian countries by providing a growing amount of development finance to the region. We examine the allocation of Chinese foreign aid toward Southeast Asian countries exploiting the exogenous variation of rotating leadership within Association of Southeast Asian Nation (ASEAN). As the ASEAN Chair possesses the agenda-setting power and represents the organization, China strategically allocates more development aid to the ASEAN Chair to augment its influence in the region. Our analysis of Chinese aid allocation between 2000 and 2017 finds that taking the leadership position at ASEAN appears to be significantly associated with an increase of official development aid flows from China, while other commercial flows are only weakly associated with the leadership position. Our findings underscore the importance of considering the regional context in examining foreign aid allocation and show that a donor can target a regional organization to exert its political influence in the region.
... Despite these issues, the literature has characterized these countries' aid practices as taking recipients' needs and governance into account in their aid allocation decisions (Semrau and Thiele 2017;Fuchs and Rudyak 2019), containing patriarchal and colonial rationales (Carrasco Miró 2019), and pursuing national security goals (Leal and Moraes 2018). Similar to traditional donors, China's allocation of aid seems to be shaped by political considerations (Dreher and Fuchs 2015) and the objective of promoting trade with developing countries (Fuchs and Vadlamannati 2012;Fuchs and Rudyak 2019). These argu-ments can easily be read through the lenses of theories of foreign aid developed to explain traditional donors' allocation of resources. ...
The literature on aid allocation shows that many factors influence donors’ decision to provide aid. However, our knowledge about foreign aid allocation is based on traditional foreign aid, from developed to developing countries, and many assumptions of these theories do not hold when applied to southern donors. This article argues that south-south development cooperation (SSDC) can be explained by the strength of development cooperation’s domestic allies and foes. Specifically, it identifies civil society organizations as allies of SSDC and nationalist groups as opponents of SSDC. By using for the first time data on SSDC activities in Latin America, this article shows the predictive strength of a liberal domestic politics approach in comparison to the predictive power of alternative explanations. The results speak to scholars of both traditional foreign aid and south-south development cooperation in highlighting the limits of traditional theories of foreign aid motivations.
... For example, regarding the decision to provide emergency aid, Fuchs & Klann (2013) find that nonDAC donor countries attach relatively more importance to political motives and that authoritarian donor countries favor countries rich in natural resources and disfavor democracies. Investigating differences in the extent to which different donors are more or less need-oriented than others would be a valuable addition to the literature on 'non-traditional' donors (Acht et al., 2015;Dreher et al., 2011;Fuchs & Vadlamannati, 2013;Nunnenkamp & Öhler, 2011;Semrau & Thiele, 2017). ...
This dissertation contains four separate chapters. CHAPTER 1 This chapter examines the current, lagged, and indirect effects of tropical cyclones on annual sectoral growth worldwide. The main explanatory variable is a new damage measure for local tropical cyclone intensity based on meteorological data weighted for individual sectoral exposure, which is included in a panel analysis for a maximum of 205 countries over the 1970–2015 period. I find a significantly negative influence of tropical cyclones on two sector aggregates including agriculture, as well as trade and tourism. In subsequent years, tropical cyclones negatively affect the majority of all sectors. However, the Input-Output analysis shows that production processes are sticky and indirect economic effects are limited. CHAPTER 2 People in low-lying coastal areas live under the potentially great threat of damage due to coastal flooding from tropical cyclones. Understanding how coastal population settlements react to such events is of high importance for society in order to consider future potential adaptation strategies and policies. In this study, we generate a new global hydrological data set on storm surge damage for the period 1850–2010. By combining this new data set with spatial data on human populations at a resolution of 10 km, we analyze the influence of storm surge damage on the rural, urban, and total population in low elevation coastal zones. We find that 8% of the global coastal population moved away per decade over the 1950–2010 period as a consequence of storm surges, on average. It is the urban population where we find the largest reductions (-15%). We show that the exposed coastal population has adapted over time and started to reduce its exposure in recent decades. This finding applies to most regions, with the exceptions of North America, Oceania, and Western Asia. CHAPTER 3 Allocation decisions are vulnerable to political influence, but little is known about when politicians can use their discretion to pursue their strategic goals. We show the nonlinearity of political favoritism in an exogenous framework of U.S. disaster relief. Based on a simple theoretical model, we demonstrate that political biases are most pronounced when the need for a disaster declaration is ambiguous. Exploiting the spatiotemporal randomness of all hurricane strikes in the United States from 1965–2018, we find that presidents favor areas governed by their fellow party members when allocating disaster declarations. Our nonlinear estimations reveal that political influence varies immensely with respect to storm intensity. The alignment bias for medium-strength hurricanes exceeds standard linear estimates eightfold. CHAPTER 4 We examine the design and implementation of the United Nations Flash Appeal triggered in response to the highly destructive 2015 Nepal earthquake. We consider how local need and various distortions affect the proposed project number, the proposed financial amount, and the subsequent funding decision by aid donors. Specifically, we investigate the extent to which the allocation of this humanitarian assistance follows municipalities’ affectedness and their physical and socioeconomic vulnerabilities. We then analyze potential ethnic, religious, and political distortions. Our results show that aid allocation is associated with geophysical estimates of the earthquake damage. Controlled for disaster impact, however, aid allocation shows little regard for the specific socioeconomic and physical vulnerabilities. It is also worrisome that the allocation of the flash appeal commitments favors municipalities dominated by higher castes and disadvantages those with a greater distance to the Nepali capital Kathmandu.
... Again, China is not an exception here. Commercial interests have been found to shape the aid allocations of Western donors (Fleck and Kilby, 2006;Hoeffler and Outram, 2011;Dreher, Nunnenkamp and Schmaljohann, 2015) and non-OECD Development Assistance Committee (DAC) donors such as India (Dreher, Nunnenkamp and Thiele, 2011;Fuchs and Vadlamannati, 2013). ...
This chapter discusses the political, economic, and humanitarian motives driving Chinese aid. Concerning the political drivers, the Chinese government uses aid as a foreign policy tool, which should help the country to create a favorable international environment for China’s development, support the country’s rise to global power status, influence global governance, and reward countries that abide by the One China Policy. Moreover, aid has increasingly been used to promote trade with developing countries and loans are extended in exchange for natural resources. Finally, China emphasizes that it gives aid in order to help other developing countries to reduce poverty and improve people’s livelihoods, a claim supported by the data as poorer countries receive more support. While the mixture of political, economic and humanitarian goals does not set China apart from the so-called “traditional” Western donors, China differs in the detailed content of its interests and the explicit emphasis on “mutual benefit” in the pursuance of its goals.
... Although this reaffirmation of the realist interpretation of bilateral aid is not terribly surprising, it underscores an important historical blind spot in much of the literature criticizing emerging donors' aid policies from the humanitarian or needs-based perspective. These studies typically frame emerging donors such as India, South Korea, or China as diverging from global norms of aid-giving (Fuchs and Vadlamannati 2013;Manning 2006;Naím 2007). But this study suggests that continuity rather than discontinuity is the real problem. ...
India is the recipient of substantial aid flows but also a nuclear-armed power and an emerging donor. Why have developed countries provided aid to one of the fastest-growing major economies in the world? Answering this question requires understanding the underlying determinants of these aid flows. Using data from 1960 to 2015, the domestic conditions of India and the external conditions of donors are empirically explored with time-series analysis and panel-data analysis. We find that during the Cold War India received more foreign aid from donors with a larger volume of trade and arms transfers, but from 2000 to 2015 the effect of arms transfers declined while countries with high trade volumes continued to give more aid. Although these findings broadly support the realist interpretation of aid, we conclude that post–Cold War structural shifts in the international aid regime and defense industries need to be considered by future researchers.
... Во втором направлении активно задействованы компании, распространяющие непатентованные лекарства в Восточной Африке. Индия является ведущим поставщиком "дженериков" в африканские страны, поскольку крупные западные компании часто пренебрегают этим рынком из-за его низкой маржинальности [6]. ...
Submitted to Conference Proceedings of Polytechnical University Russia 2020.
We studied comparative analysis of various economic indicators of India and African continent as a retrospective model.We conducted regression analysis.
... Instead, China's aid allocation seems to be widely independent of recipients' endowment with natural resources and institutional characteristics. By contrast,Fuchs and Vadlamannati (2013) found the importance of political interests to be significantly larger for India than for all donors of the Development Assistance Committee. Moreover, coun- ...
... Other scholars have also highlighted problems in the existing aid giving model. Quantitative analysis (using econometric methods) has concluded that strategic and security reasons are driving factors of India's aid investment (Fuchs and Vadlamannati, 2013;Ahmed and Singh, 2014;Chenoy and JosI hi, 2016). In addition, other qualitative studies on specific Indian government aid programmes or sectors have highlighted shortcomings in implementation of India's aid programmes. ...
Global India Policy Paper #1: Enhancing the effectiveness of India’s development partnership practices
Link: https://globalindia.eu/policy-paper/enhancing-the-effectiveness-of-indias-development-partnership-practices/
... These countries were chosen both to maximize comparability with previous work as well as for reasons of data availability. Research on non-DAC donors suggests that like DAC donors, they seem to be primarily driven by strategic motivations in distributing aid (Dreher, Nunnenkamp and Schmaljohann 2015;Dreher, Nunnenkamp and Thiele 2011;Dreher et al. 2018;Fuchs and Vadlamannati 2013;Neumayer 2003). Existing evidence suggests that non-DAC donors do seem more likely to give aid following a natural disaster (Dreher, Nunnenkamp and Thiele 2011), though they still only account for at most 12 per cent of humanitarian aid in any given year (Harmer, Cotterrell and L. O. D. Institute 2005). ...
If foreign aid is provided primarily for strategic reasons, as much of the field finds, how can donor generosity following natural disasters be explained? This article addresses this puzzle by building on the literature in three ways. First, it differentiates between three major types of aid: humanitarian, civil society and development. Second, it demonstrates that natural disasters act as an exogenous shock to the strategic calculus that donor countries undertake when making foreign aid allocation decisions. Specifically, the authors argue that donor countries use natural disasters as opportunities to exert influence on strategic opponents through the allocation of humanitarian and civil society aid. However, donors still reserve development aid for strategic allies irrespective of the incidence of natural disasters. Third, the findings are substantiated using a new measure of strategic interest that accounts for the indirect ties states share and the multiple dimensions upon which they interact.
... Entretanto, observadores próximos notam que a Índia, membro fundador e líder do desenvolvimento e da diplomacia "sulista", se afastou dessas posições de outrora. "A empreitada por recursos, assim como mercados," escrevem dois pesquisadores, "[...] é uma força motriz por trás dos programas de desenvolvimento e cooperação indianos durante a última década" (Samuel;George, 2016, p. 12), uma conclusão compartilhada por outros Vadlamannati, 2013). Estudos de caso no Senegal e em Moçambique apontam para uma mesma direção: ...
Este capítulo se inicia com um olhar retrospectivo sobre o passado de iniciativas de solidariedade Sul-Sul. Depois, sonda cinco estudos de caso sobre países atuantes na Cooperação Sul-Sul, seguindo-se um olhar prospectivo sobre alternativas emergentes. Uma conclusão interina: ainda não é possível detectar evidências robustas e consistentes
de normas emancipatórias na Cooperação Sul-Su atual.
... Assistance from non-Western donors represents a growing share of global development finance (Manning 2006;Woods 2008;Dreher et al. 2011;Walz and Ramachandran 2011;Tierney 2013;Coppard et al. 2013;Fuchs and Vadlamannati 2013). Members of the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD) are, therefore, no longer the only significant actors in the aid business. ...
... Da una prospettiva strettamente geografica, gli aiuti umanitari e allo sviluppo azerbaigiani si sono caratterizzati per un elevato grado di dispersione spaziale, avendo interessato nell'arco temporale compreso tra il 2005 e il 2018 circa 90 paesi, dei quali solo una piccola percentuale sono collocati nello spazio post-sovietico -come si evidenzia nel grafico 3. Inoltre, stando ai dati pubblicati da AIDA e relativi allo stesso arco temporale, tra i primi dieci paesi beneficiari degli aiuti bilaterali azerbaigiani figura solo uno dei primi dieci partner commerciali del Paese, 14 con ciò escludendo sia una correlazione tra DU e cooperazione economica sia l'aspettativa di ritorno economico degli aiuti, che sembrano invece caratterizzare l'azione di una parte significativa dei nuovi donatori -e, in particolar modo, dei needy donor come l'Azerbaigian (Fuchs, Vadlammanati 2013). Lo stessa dinamica, d'altra parte, si registra in relazione ai primi tre paesi che, indipendentemente dal volume di aiuti ricevuti dall'AIDA, hanno beneficiato con più continuità degli stessi nell'arco temporale di riferimento -ovverosia Afghanistan, Pakistan e Palestina (AIDA 2019). ...
The series Eurasiatica. Quaderni di Studi su Balcani, Anatolia, Iran, Caucaso e Asia Centrale was born to deal specifically with a wide area, composite but interrelated that, in addition to the traditional historical and cultural significance, is taking on an increasing political and economic value. The placement of this series within Edizioni Ca’ Foscari originates at the same time from a strong tradition of studies on the Balkans, Caucasus and Central Asia in our University, where the main languages of these regions are taught - Albanian, Bulgarian, modern Greek, Romanian, Serbian-Croatian, Russian, Persian, Turkish, Armenian and Georgian. The studies published in this series are intended to provide a tool for high scientific and multidisciplinary research in different fields (archaeology, art, anthropology, ethnology and ethnomusicology, linguistics, philology, folklore, religion, history, geopolitics).
... Overall, India appears to have operated on the realist assumptions of power politics and interest-orientation in its assistance policies, particularly with its neighbors, and especially energy security as regards Africa, as argued by Six (2009) and Fuchs and Vadlamannati (2013), and in line with the earlier work on developed donor motivations by Alesina and Dollar (2000). However, as we said earlier, the Indian focus is on the long run more than for immediate gains. ...
Historically, India’s assistance to fellow developing countries began in 1949 with scholarships and humanitarian assistance in cases of famine. The Colombo Plan was the main channel for scholarships although India’s own Indian Technical and Economic Cooperation (ITEC) program started in 1964 for training and transfer of expertise. Nepal and Bhutan were the earliest recipients of Indian assistance and from 1959 India has been giving program-based assistance as annual grants to these countries, worked into their and India’s five-year plans.
... To test whether we are likely to miss small projects outside the political 42 While initially introduced into the trade literature, PPML becomes more widely used in the empirical aid literature as well (e.g., Fuchs and Vadlamannati, 2013;Acht et al., 2015;Davies and Klasen, 2019). We use the user-written Stata command "poi2hdfe" to estimate a Poisson regression model with high dimensional fixed effects (Guimaraes and Portugal, 2010;Figueiredo et al., 2015). ...
... For example, regarding the decision to provide emergency aid, Fuchs and Klann (2013) find that non-DAC donor countries attach relatively more importance to political motives and that authoritarian donor countries favor countries rich in natural resources and disfavor democracies. Investigating differences in the extent to which different donors are more or less need-oriented than others would be a valuable addition to the literature on 'non-traditional' donors (Dreher et al., 2011;Nunnenkamp and Öhler, 2011;Fuchs and Vadlamannati, 2013;Acht et al., 2015;Semrau and Thiele, 2017). ...
We examine the design and implementation of the United Nations Flash Appeal triggered in response to the highly destructive 2015 Nepal earthquake. We consider how local need and various distortions affect the proposed project number, the proposed financial amount, and the subsequent funding decision by aid donors. Specifically, we investigate the extent to which the allocation of this humanitarian assistance follows municipalities’ affectedness and their physical and socio-economic vulnerabilities. We then analyze potential ethnic, religious, and political distortions. Our results show that aid allocation is associated with geophysical estimates of the earthquake damage. Controlled for disaster impact, however, aid allocation shows little regard for the specific socio-economic and physical vulnerabilities. It is also worrisome that the allocation of the flash appeal commitments favors municipalities dominated by higher castes and disadvantages those with a greater distance to the Nepali capital Kathmandu.
... Empirically, and Fuchs and Vadlamannati (2013) suggest that the degree to which the Chinese government considers demand-side humanitarian and socioeconomic needs is comparable to Western donors. Even though China puts less emphasis on strict human rights conditions, China's increasing focus on humanitarian issues becomes evident in its growing role in UN peacekeeping missions over time and its official aim to "play a constructive role of settling conflicts and hot issues and maintaining peace and security in Africa." 10 What is more, with its expanding activities and larger presence of Chinese employees in Africa, it also has a rising interest in avoiding conflicts that threaten the value of its investments or the life of its citizens. ...
Using geo-referenced data on development projects by the World Bank and China, we provide a comprehensive analysis of the effect of aid on conflict using fixed effects and instrumental variables strategies. The results show that aid projects seem to reduce rather than fuel conflict, on average. Our analysis suggests that this is driven by projects in the transport and financial sectors, and through less lethal violence by governments against civilians. There are no clear differences based on ethnic fractionalization and government affiliation of a region, but some indications of spill-overs to other regions. We also find no increased likelihood of demonstrations, strikes or riots, but a higher likelihood of non-lethal government repression in areas where China is active.
... As a result, the overwhelming number of studies analyzes donor countries organized in the OECD's Development Assistance Committee (DAC), which is a club of rich and predominantly Western democracies. 7 Studies that extend the scope of their research to non-DAC countries cover only one or a small number of these donors (e.g., Fuchs and Vadlamannati 2013;Gutierrez and Jaimovich 2016;Asmus et al. 2017;Semrau and Thiele 2017). As a result, these existing studies that aim to shed light on aid motives run the risk of sample selection biases. ...
Almost half of the world’s states provide bilateral development assistance. While previous research takes the set of donor countries as exogenous, this article is the first to explore the determinants of aid donorship. We hypothesize that democratic institutions reduce poor countries’ likelihood to initiate aid giving. On the contrary, the leadership of poor authoritarian regimes face fewer constraints that would hinder these governments to reap the benefits of a development aid program despite popular opposition. To test our expectations, we build a new global dataset on aid donorship since 1945 and apply an instrumental-variables strategy that exploits exogenous variation in regional waves of democratization. Our results confirm that the likelihood of a democratic country to start aid giving is more responsive to income than it is the case for authoritarian countries. Overall, democracies are—if anything—less rather than more likely to engage in aid giving.
... Aid as grant or concessional loan payments may be used in different ways i.e. to promote social, economic or technical assistance. Official reasons are many, some altruist countries may want to help poverty reduction, and others may reward merit of countries with good policies or have commercial and political self-interests shaping their aid flows (Fuchs. A et Chaitanya. K, 2013). ...
In the present essay I would like to enlighten deep – yet not so obvious connections – between vertical notions of power of historically (or now emerging) powerful entities and historically poor and deprived nations. Many questions emerge in regards to categorization of powerful or powerless actors, around their geopolitical situation, their belonging to macroeconomic groupings, their development outlooks and the respective ongoing public, political and academic debate in terms of development aid. With a mosaic of concerns I’ll go over several questions that arise around this highly debated topic, like: Who is legitimized to offer help? What defines the geopolitical, economic and historic power of a nation? What are the driving factors of development aid? How is the disadvantage of “countries in disadvantage” defined? Who defines it? And is the aid - after all - a substantial and humane integral way of helping countries in need? Or, is the aid, a monetarily legitimized and self-interest driven form of intervention?
Essay written for the Course "Political Geography of Development and Global Change" by Dr. Festus Boamah, "Global Change Ecology" Master's program, University of Bayreuth, Germany.
... Interest in the relationship between aid and natural resources has grown dramatically in recent years because of the role of China and other 'new' donors offering foreign assistance to mineral-and land-rich African countries (Fuchs and Vadlamannati, 2013;Dreher and Fuchs, 2015;Dreher et al., 2018). 1 However, the flow of foreign aid to resource-rich economies is a long-standing phenomenon and several resource-rich, low-income countries have historically received amounts of foreign aid that are even larger than their revenues from natural resources from standard OECD donors (Dobronogov and Keutiben, 2014). Yet, to date, the research looking at the interplay between these two potential 'curses' and the political economy of recipient countries over the past decades remains scant. ...
In this article we examine whether foreign aid and natural resources can act as a double curse on developing countries with poor governance. We hypothesize that affording external liquidity to dictators based on their resource wealth reduces the political incentives for long term investment and enhances the looting of the country and more frequent irregular exit of leaders from their office. We then examine the empirical evidence for such a link between international aid flows and government irregular turnover in resource-rich countries. We find that the interaction between natural resources and most forms of international aid combines with political instability in the case of non-democratic regimes. In turn, this combination of foreign aid, natural resources and political instability is associated with lower growth performance. Some types of less fungible aid (notably humanitarian) and aid grants that do not build indebtedness do not seem to have this effect.
... Such emerging donors include countries that used to be developing nations and aid dependent. 9 The increasing development assistance from non-DAC counties to Africa has triggered a number of scholarly works, ranging from whether aid from China qualifies as ODA (Brautigam 2011), to studies on the intentions behind the increasing development assistance from such countries (Fuchs and Vadlamannati 2013). Some of the academic works such as Davies (2008) (Kragelund 2008). ...
Adverse events or shocks that trigger a decline in household welfare and consumption remain to be the main causes of household vulnerability among rural households in Ethiopia. The government of Ethiopia has been trying to reduce this vulnerability and improve the resilience of the affected households through a targeted social safety net program. However, the interaction of this program with existing indigenous mutual support system is not clear, as formal efforts are not often considerate of informal arrangements. This study examined the effect of a social safety net program on local level social capital. The key questions guiding this study was: how do mutual support arrangements enhance or constrain the household’s abilities to participate, invest, reciprocate, and cooperate in mutual support networks to cope with shocks in the study communities and with what outcomes? This was mainly studied using ethnographic research design. The study was conducted in two neighborhood areas that are currently receiving formal safety net. Data were collected through qualitative in-depth interviews with 30 households and a household survey interviews with 70 households that are distributed in three major categories: beneficiaries, non-beneficiaries, and graduates of PSNP. In addition, 35 key informant interviews were conducted with mutual support group leaders and local elders. The key findings provide evidence suggesting that household’s willingness to reciprocate and cooperate in informal networks for coping with shocks seem to decline in the research site where safety net program was identified with poor targeting performance. This might be an indication that the mechanisms by which informal arrangements can be crowded out by a public safety net may depend on how well safety net is targeted and by the specific institutional and implementation practices that underpin safety net. The study recommends that better community targeting must take the precedence. While the development and provision of formal safety nets is vital in improving the risk coping and adaptation capacity of the poor, it should not result in crowding out of preexisting informal safety nets. The key question for any further insurance provision should be how it should build on existing social capital system.
Der Meinungsmonitor Entwicklungspolitik 2024 umfasst zwei Themenblöcke. Der erste Teil widmet sich zentralen Einstellungen der Bevölkerung zu Entwicklungspolitik und Entwicklungszusammenarbeit (EZ) im Zeitverlauf. Dabei wird unter anderem die generelle Zustimmung zur staatlichen EZ und zu EZ-Ausgaben sowie zu verschiedenen Akteuren und Motiven der EZ betrachtet. Erstmals wird auch analysiert, wie gefestigt die Einstellungen zur EZ sind. Der zweite Teil thematisiert aktuelle globale Entwicklungen und neue politische Leitbilder. Er beleuchtet die Einstellungen der Bevölkerung zu EZ in Verbindung mit generellen außen- und sicherheitspolitischen Einstellungen sowie mit bewaffneten Konflikten und ökonomischen Krisen, und er analysiert, welche Faktoren auf die Präferenzen für Partnerländer der deutschen EZ wirken. Zudem untersucht er das Wissen und die Einstellungen der Bevölkerung zur feministischen Entwicklungspolitik. Im Fokus steht dabei neben deren Inhalten und dem Label „feministisch“ die Unterstützung des Leitbildes im Kontext globaler Krisen. Der Bericht schließt mit Implikationen für die entwicklungspolitische Strategie- und Kommunikationsarbeit.
Fragility continues to present major challenges to achieving sustainable development goals (SDGs). International aid, particularly the Official Development Assistance (ODA), is a critical source of finance to deliver humanitarian assistance, development projects, and peace operations in fragile contexts. This study analyses if and how donors are motivated by fragility in their aid allocation across the humanitarian-development-peace nexus. Employing the random-effect Tobit method, the role of fragility as a donors’ motive is analysed alongside three conventional categories of motives: self-interest, recipients’ needs, and merit. The empirical analysis demonstrates an association between aid allocation across the nexus and fragility, but also a great degree of heterogeneity depending on the donor and the pillar of the nexus. It also detects a significant difference between how the state of fragility correlates with aid allocation and how the degree of fragility does so.
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In its quest for strategic autonomy and in order to consolidate its position in the competitive global market, India has reached out to countries with which it shares significant political and economic complementarities. Europe, likewise, has begun coming to terms with a rising India. In this context, the Nordic region presents an untapped potential in India’s evolving Indian foreign policy priorities. Relations between India and Sweden have deep roots in history and today, find an opportune context to build a robust partnership at the international stage.
To what extent do national strategic interests influence countries’ distribution of health assistance during a global health crisis? We examine China's global COVID-19 vaccine allocation, focusing on the relationship between its vaccine prioritization and its geopolitical expansion through the Belt and Road Initiative (BRI). We claim China uses its vaccine diplomacy as a comprehensive tool to promote its grand strategy and expand its global leadership and influence. Employing a newly available dataset on Chinese COVID-19 vaccine deliveries for a cross-section of 108 BRI member countries, our study shows that countries with foreign direct investment flows into BRI projects have received more vaccines from China. Our findings confirm that donor strategic concerns affect bilateral foreign assistance. Our results remain robust to several robustness checks, including endogeneity concerns.
China is now the lender of first resort for much of the developing world, but Beijing has fueled speculation among policymakers, scholars, and journalists by shrouding its grant-giving and lending activities in secrecy. Introducing a systematic and transparent method of tracking Chinese development projects around the world, this book explains Beijing's motives and analyzes the intended and unintended effects of its overseas investments. Whereas China almost exclusively provided aid during the twentieth century, its twenty-first century transition from 'benefactor' to 'banker' has had far-reaching impacts in low-income and middle-income countries that are not widely understood. Its use of debt rather than aid to bankroll big-ticket infrastructure projects creates new opportunities for developing countries to achieve rapid socio-economic gains, but it has also introduced major risks, such as corruption, political capture, and conflict. This book will be of interest to policymakers, students and scholars of international political economy, Chinese politics and foreign policy, economic development, and international relations.
Afin d’analyser la posture diplomatique actuelle de l’Inde sur la scène internationale, ce travail de recherche étudie les processus d’institutionnalisation et d’adaptation du ministère des Affaires étrangères indien de 1947 à 2015. Le dispositif théorique de cette thèse conjugue les recherches menées sur l’adaptation des ministères des Affaires étrangères comme acteurs centraux de la diplomatie et la sociologie politique des institutions. En effet, on ne peut comprendre l’évolution de la diplomatie indienne que si on l’analyse à partir d’une démarche micro sociologique, par l’étude de ses lieux de production. Ces lieux désignent dans un sens restreint l’organisation du ministère des Affaires étrangères et le rôle qui y est joué par les diplomates. Dans un sens plus large, ils renvoient à l’interaction de ce ministère avec l’environnement diplomatique national et international. Cette thèse vise à démontrer la façon dont la vulnérabilité du ministère des Affaires étrangères indien, déterminée par son sous-dimensionnement structurel et sa marginalisation croissante dans le processus de décision, conditionne son adaptation graduelle aux évolutions de la mondialisation. Cette adaptation se manifeste par la plus grande importance donnée aux pratiques de « low diplomacy » comme la diplomatie économique, publique et consulaire. Mais elle reste fortement limitée, ce qui explique la posture diplomatique prudente de l’Inde sur la scène internationale, contrainte par la priorité donnée au développement économique du pays.
The aftermath of the Financial Crisis has seen an increase in China Official Development Assistance (ODA) extended to Sub-Sahara Africa (SSA) countries. This paper falls under literature that addresses changes in the structure and functioning of participants in international financial flows. It shows SSA countries’ preference of China ODA as opposed Western ODA that ties aid to stringent conditionality among other reasons. The paper shows a build-up in China ODA as opposed to a low steady assistance flow from Western countries over time.
With the recent influx of China ODA on the SSA market that is termed to be obscured by Western countries, we correlate the annually disbursed China ODA on the Africa market with the intended infrastructure development. The outcome indicates a link between China ODA and growth in the SSA infrastructure and construction sector. However, despite an increase in China ODA to SSA infrastructure and construction sector, the growth rate is slow as compared to the huge amounts injected in the sector given the capital nature of the projects that will only actualise economic gains after some time.
On the backdrop of United Nations (2019) reporting Sub-Saharan Africa (SSA) facing a dilemma between financing development needs and addressing debt vulnerabilities, we formulate China ODA to SSA debt ratio. The results show that China cheap loans and investment extended to Sub-Sahara Africa have contributed to the surged-up debt in the region. The highest ratio was recorded at 55 percent in 2016 when China offloaded US$ 30 billion on the SSA market. In light of financing development needs at the expense of addressing debt vulnerabilities, we conclude by postulating how SSA countries may address the dilemma.
A substantial number of studies on development aid have explored the reasons for donor’s aid allocation decisions, but very few exist for the Sustainable Production and Consumption (SP&C) sector. This fails to provide evidence to policymakers to evaluate regarding inquiries about their allocative efficiency, equal allocation & rhetoric with regard to international commitment of Sustainable Production and Consumption. This study examines donors’ motivations to provide aid for the sustainable initiatives in general and sustainable production and consumption sector in particular using 35 donor and receptor countries worldwide between the time period 1992 and 2016. By examining four rational choice models, the results reveal that donors take into consideration their own self-interests as well as they cater to the recipients’ needs for allocation of aid. The study also finds that, more aid is given to countries with good governance capabilities and thus do not prioritize fragile states.
This paper analyzes the BRICS countries’ activities in the International Development Cooperation (IDC) field through a comparative analysis. In the last decade, some changes have occurred in the IDC landscape as developing countries started to assume a prominent role in a topic historically dominated by traditional donors. Among these new players, the BRICS deserve special attention. Using a descriptive and comparative methodology, we analyze the convergences and divergences among these countries regarding their IDC practices. In particular, we addressed the following question: How have the BRICS countries performed in the IDC field in the last decade? To do so, we analyzed this variable through four analytical dimensions i) historical context, ii) geopolitical context, iii) institutional context, and iv) domestic policy context. The general findings suggest that although their IDC policies present some commonalities, they also manifest important differences, especially regarding the amount and scope of recipients, and adherence to DAC/OECD guidelines and terminologies.
Foreign assistance is increasingly a catalyst for change, and it is helping to create conditions in which poor people are able to raise their incomes and to live longer, healthier, and more productive lives. One of the prominent features of Africa's economic development is its growing partnership with China. While the new partnership has had a positive impact on growth, this paper argues that more needs to be done by both China and African governments to enhance the impact of Chinese development finance in Africa. Against this backdrop, it identifies ways in which Chinese development finance could be used to foster trans-formative growth and development in Africa. The paper also stresses that the responsibility for Africa's development rests primarily with African governments and that China can only play a supporting role. In this context, it underscores the need for African countries to be proactive in their partnership with China to ensure that their development needs are effectively addressed. The paper is organized as follows: section one focuses on trends, patterns, and features of Chinese development finance in Africa, with emphasis on aid, FDI, and debt. Section 2 discusses fundamental differences between Chinese development finance and those of member states of the Organization for Economic Cooperation and Development (OECD). Section 3 examines and analyses the impact of Chinese development finance in Africa and also highlights some of the emerging challenges associated with the new partnerships. Section 4 focuses on how to make Chinese development finance work better for Africa and identifies policy measures that should be taken by both China and African countries to achieve this objective. The final section contains some concluding remarks
Foreign aid has become an increasingly essential foreign policy tool among states’ options especially when combined with other soft-power instruments. One of the reasons behind this trend is that rising powers have increased their efforts and activism in this field. Even though the motivation of rising powers to use aid as a policy tool reflects various economic, political, military and humanitarian reasons, foreign aid is now part of a multi-dimensional and multi-layered foreign policy strategy for these new actors. This study makes a comparison between Turkish and Indian aid and development assistance policies and practices in Africa to produce theoretical and practical inferences regarding the foreign aid strategies of rising powers. A secondary aim is to recommend practically applicable and policy-relevant proposals for Turkey.
This paper assesses the allocative performance of foreign aid donors. It does so by identifying the consistency of the share of donor aid allocated to each developing country with these their shares of global poverty. A given donor's allocative performance is maximised if the share of its aid to each developing country exactly equals its share of global poverty. This is equated with fairness in the international allocation of aid. The allocative performance of all donors, all bilateral donors, all multilateral agencies, all non-DAC donor countries, the EU, France, Germany, Japan, the United Kingdom and the United States for the years 2010–15 is assessed. The best performance is exhibited by all bilateral donors, while that for an individual donor is exhibited by the United Kingdom. Non-DAC donors exhibit the worst performance. The paper also identifies which developing countries receive the most and least aid relative to their shares of global poverty.
India's high growth over the last fifteen years has inspired several recent books and papers to examine the growth's source and sustainability-the two-volume study by Arvind Virmani being a case in point. This paper evaluates these recent works. It is argued that the cause of the take-off does not fit into any easy ideological category as suggested by Virmani. The current high growth has been achieved in several steps, with distinct-factors of propulsion behind each step. There is reason to expect the growth to be sustainable, although destabilizing political tensions will arise from the increasing inequality. The paper also evaluates how India's growth relates to the global economy.
This article analyzes which factors determine the allocation of debt forgiveness. In particular, the role played by various aspects of governance is examined. The results indicate that countries' need is a powerful determinant for debt forgiveness, whereas creditors' political interest is not, apart from United States military interests. Of the various aspects of governance, only the extent to which governments are accountable, respect democratic rights as well as refrain from imposing burdens on business have a statistically significant influence. In order to create the right incentives and to ensure effectiveness of scarce financial resources, countries with good governance should be rewarded with a higher share of total debt forgiveness in the future.
Many studies demonstrate that donor interest, particularly in the form of economic export and military-strategic interests, is an important determinant in the allocation of general development assistance. Does this hold true for food aid as well? This article analyses the allocation of food aid in the 1990s by the world's three biggest donors as well as non-governmental organisations (NGOs). It finds some evidence for donor interest bias, particularly in the form of preferential treatment of geographically close countries. However, neither military-strategic nor export interests seem to matter. Former Western colonies are also not treated differently. Instead, particularly European Union, multilateral and NGO food aid allocation appears quite sensitive towards recipient countries' needs.
This article provides a statistical analysis of the determinants of Arab aid allocation using Heckman's two-step estimator. It is found that poorer, Arab, Islamic and Sub-Saharan African countries are more likely to receive some positive amount of Arab aid (gate-keeping stage). The same is true for countries not maintaining diplomatic relations with Israel as well as those with voting patterns in the United Nations General Assembly similar to Saudi Arabia. Arab and more populous countries also receive a higher share of the total aid allocated (level stage). The same is true for Islamic countries in the case of bilateral aid and countries with voting similarity in the case of multilateral aid. Donor interest, in particular Arab solidarity, plays a clear role at both stages, whereas recipient need as measured by a country's level of income only affects the gate-keeping stage, not the level stage.
We investigate the effect of immigrants' marriage behavior on dropout from education. To identify the causal effect, we exploit a recent Danish policy reform that generated exogenous variation in marriage behavior by a complete abolishment of marriage migration for immigrants below 24 years. The reform influenced immigrants from countries with a high historical rate of marriage migration more than immigrants from country groups with a low rate. We find that the dropout rate for males increases by 25 percentage points as a consequence of marriage to a marriage migrant, whereas the effect for females is small and mostly insignificant. Copyright © The editors of the "Scandinavian Journal of Economics" 2009. .
The authors present estimates of six dimensions of governance covering 199 countries and territories for four time periods: 1996, 1998, 2000, and 2002. These indicators are based on several hundred individual variables measuring perceptions of governance, drawn from 25 separate data sources constructed by 18 different organizations. The authors assign these individual measures of governance to categories capturing key dimensions of governance and use an unobserved components model to construct six aggregate governance indicators in each of the four periods. They present the point estimates of the dimensions of governance as well as the margins of errors for each country for the four periods. The governance indicators reported here are an update and expansion of previous research work on indicators initiated in 1998 (Kaufmann, Kraay, and Zoido-Lobat 1999a,b and 2002). The authors also address various methodological issues, including the interpretation and use of the data given the estimated margins of errors.
This paper presents the broad macro parameters of the growth of the Indian economy since the nation's independence and a cross-country
evaluation of where India stands, drawing out the patterns discernible in these aggregative statistics. The paper gives an
overview of the on-going debate on the components of the Indian growth and the relative importance of the different policies
in the 1980s and 1990s. It contributes to this debate by identifying the landmark years, and analysing the politics behind
some of the economics. The paper also analyses the factors behind the changes in India's savings rate and the relation between
growth and development, on the one hand, and the nature of labour market regulation, on the other.
This paper analyses the organisational structure as well as the characteristics of development finance provided by Arab donor countries. This is done with a comparative view in relation to western donors and with the aim to develop recommendations as to how Arab development finance can be strengthened and rendered more effective for the new millennium. In the 1960s and 1970s Arab donors established a variety of national and multilateral agencies. These agencies share many characteristics of their western counterparts, but some also exhibit distinctive features. Both in terms of absolute volume as well as generosity measured by aid as a percentage of GDP, Arab countries have been important donors in the past, even though recent years have seen a significant fall in Arab aid. Reversing this downfall in aid, targeting its aid better towards the poor and very poor recipient countries and raising the grant share and the concessionality of loans for these countries together with a reallocation of aid towards the social sectors of human development would render Arab aid-giving more effective in terms of poverty alleviation and more in line with western aid. A greater willingness to participate in the ongoing discussions amongst western donors about the proper objectives and design of development finance would help Arab donorsto achieve the recognition they truly deserve. Closer cooperation with western donors would be a logical consequence of taking such a step. However, this would also need to be matched by a greater willingness on the part of western donors to take their Arab counterparts seriously as partners of development finance. Copyright Blackwell Publishing Ltd 2004.
Objective. To analyze the role of human rights in aid allocation of 21 donor countries.
Methods. Econometric analysis is applied to a panel covering the period 1985 to 1997.
Results. Respect for civil/political rights plays a statistically significant role for most donors at the aid eligibility stage. Personal integrity rights, on the other hand, have a positive impact on aid eligibility for few donors only. At the level stage, most donors fail to promote respect for human rights in a consistent manner and often give more aid to countries with a poor record on either civil/political or personal integrity rights. No systematic difference is apparent between the like-minded countries commonly regarded as committed to human rights (Canada, Denmark, the Netherlands, Norway, and Sweden) and the other donors.
Conclusions. Contrary to their verbal commitment, donor countries do not consistently reward respect for human rights in their foreign aid allocation.
The volume of foreign aid has increased during the last four decades, albeit with interruptions in certain years. Over time, the major recipients have changed: while the share of aid to Asia has diminished since the 1980s, that destined for sub-Saharan Africa has grown. There is some evidence that, since the late 1990s, debt relief has assumed a larger share of the increased aid flows to sub-Saharan Africa. The share of technical cooperation-a component of aid that is viewed as being driven by donors-has risen. More recently, there has been an increased emphasis on providing budget support to recipient governments, especially in the form of debt relief. Donor harmonization, national ownership of development plans, and sound policies on the part of the recipients are crucial for the aid to be effective in reducing poverty. Copyright © 2006 International Monetary Fund; Journal compilation © 2006 Blackwell Publishing Ltd.
Responding to the recent upsurge of interest in 'emerging donors', this article argues that the DAC share of aid is likely to decline only slowly from what is a historically high level, and at least some non-DAC donors are likely to see DAC approaches and norms as relevant. Nevertheless, low-income countries seem likely to have a wider range of financing options. Three key risks are that: they prejudice their debt situation by borrowing on inappropriate terms; they use low-conditionality aid to postpone necessary adjustment; and they waste resources on unproductive investments. DAC members should develop constructive dialogue with other bilateral donors based on recognition that sustainable development and poverty reduction should be the core purpose of aid. Copyright 2006 Overseas Development Institute.
Since the end of the Cold War, scholars of international politicshave searched for paradigms that can make powerful and parsimoniousclaims about conflict and cooperation in post Cold War globalpolitics.According to some, the everlasting struggle between rich andpoor countries has become the dominant division in world politics,meaning that the old North-South cleavage has superseded the Cold WarEast-West division. Others argue that global conflict has becomedominated by clashes between different civilizations or that thedominant mode of conflict in global politics is between liberaldemocracies and nondemocracies. Still others discern the rise of acounterhegemonic bloc of states seeking to challenge the dominant powerof the United States. One could argue that all of these views arecorrect on specific issues but that in general there is no singledimension that can explain global conflict since the end of the Cold War.
Analysis have long suspected that politics affects the lending patterns of the International Monetary Fund (IMF), but none have adequately specified or systematically tested competing explanations. This paper develops a political explanation of IMF lending and tests it statistically on the developing countries between 1985 and 1994. It finds that political realignment toward the United States, the largest power in the IMF, increases a country's probability of receiving an IMF loan. A country's static political alignment position has no significant impact during this period, suggesting that these processes are best modeled dynamically. An analysis of two subsamples rejects the hypothesis that the IMF has become less politicized since the end of the cold war and suggests that the influence of politics has actually increased since 1990. The behavior of multilateral organizations is still driven by the political interests of their more powerful member states.
Foreign aid from China is often characterized as 'rogue aid' that poses a threat to sustainable development. However, no econometric study currently confronts this claim with data. We make use of various datasets, covering the 1956-2006 period, to empirically test whether Chinese aid allocation decisions are guided by need in the recipient countries or by China's national interests such as the access to resources or boosting international alliances. We estimate the determinants of China's allocation of project aid, food aid, medical teams and total aid commitments to developing countries, comparing its allocation decisions with traditional and other emerging donors. We find that political considerations are an important determinant of China's allocation of aid. However, when we compare its allocation to those of other donors, China does not pay substantially more attention to politics in comparison. We find only weak evidence that commercial motives determine China's aid allocation. Moreover, China's allocation of aid seems to be independent of democracy and governance in recipient countries. Overall, denominating aid from China as 'rogue aid' seems unjustified.. We thank seminar participants at the Spring Meeting of Young Economists (Groningen 2011), the European Public Choice Society Meeting (Rennes 2011), Ruxanda Berlinschi, Nils-Hendrik Klann, Eoin McGuirk, Hannes Öhler and Shu Yu for helpful comments on earlier drafts of this paper.
Is India doing marvellously well, or is it failing terribly? Depending on whom you speak to, you could pick up either of those answers with some frequency. One story, very popular among a minority – but a large enough group -of Indians who are doing very well (and among the media that cater largely to them), runs something like this. ―After decades of mediocrity and stagnation under ‗Nehruvian socialism', the Indian economy achieved a spectacular take-off during the last two decades. This take-off, which led to unprecedented improvements in income per head, was driven largely by market initiatives. It involves a significant increase in inequality, but this is a common phenomenon in periods of rapid growth. With enough time, the benefits of fast economic growth will surely reach even the poorest people, and we are firmly on the way to that.‖ Despite the conceptual confusion involved in bestowing the term ―socialism‖ to a collectivity of grossly statist policies of ―license Raj‖ and neglect of state's responsibilities for school education and health care, the story just told has much plausibility, within its confined domain. But looking at contemporary India from another angle, one could equally tell the following -more critical and more censorious -story: ―The progress of living standards for common people, as opposed to a favoured minority, has been dreadfully slow – so slow that India's social indicators are still abysmal. For instance, according to World Bank data, only five countries outside Africa (Afghanistan, Bhutan, Pakistan, Papua New Guinea and Yemen) have a lower ―youth female literacy rate‖ than India. 1 To take some other examples, only four countries (Afghanistan, Cambodia, Haiti, Myanmar and Pakistan) do worse than India in child mortality rate; only three have lower levels of ―access to improved sanitation‖ (Bolivia, Cambodia and Haiti); and none (anywhere – not even in Africa) have a higher proportion of underweight children. Almost any composite index of these and related indicators of health, education and nutrition would place India very close to the bottom in a ranking of all countries outside Africa.‖ Growth and Development So which of the two stories – unprecedented success or extraordinary failure – is correct? The answer is both, for they are both valid, and they are entirely compatible with each other. This may initially seem like a bit of a mystery, but that initial thought would only 1 World Development Indicators 2011 (on-line). There is some ambiguity about India's relative position vis-à-vis Bangladesh and Nepal in this respect, due to different reference years (see Table 1).
India's rise in Africa has been largely overlooked, despite the important implications of the growing presence of Indian corporations and a rise in New Delhi's political ties with the continent. Not only are Indian actors providing much‐needed investment and capital, but Indo‐African connections represent a further important diversification of Africa's international relations, something which reflects a major development for the continent. Indian activity in Africa may be said to constitute a middle ground between China's profit‐maximizing and largely statist approach and the much‐resented intrusive conditionalities associated with western policies. It is evident that India's growing activity in Africa has the potential to help African companies become more efficient by exposing them to competition, new advances in technology and modern labour skills. African governments could potentially use the opportunity of an increased Indian corporate presence in Africa as sources of appropriate technology, skills and advice for economic development. However, if not handled correctly, any goodwill that India possesses in Africa will quickly be squandered and/or India will become just another actor in Africa. It is up to Africans to negotiate with Indian actors to ensure that the benefits accrued from Indo‐African ties are evenly shared and that Indian interest in the continent, alongside that of others, may help to serve as a catalyst for economic revitalization. The key issue is how African leaders can seek to leverage newfound Indian investment and interest in Africa so that Africa's place in global trade networks becomes more proactive and beneficial to the continent's citizens.
Major DAC donors are widely criticized for weak targeting of aid, selfish aid motives, and insufficient coordination. The emergence of an increasing number of new donors may further complicate the coordination of international aid efforts. At the same time, it is open to question whether new donors (many of which were aid recipients until recently) are more altruistic and provide better targeted aid according to need and merit. Project-level data on aid by new donors, as collected by the AidData initiative, allow for empirical analyses comparing the allocation behavior of new versus old donors. We employ Probit and Tobit models and test for significant differences in the distribution of aid by new and old donors across recipient countries. We find that, on average, new donors care less for recipient need than old donors. New and old donors behave similarly in several respects, however. They disregard merit by not taking the level of corruption in recipient countries into account. Concerns that commercial self-interest distorts the allocation of aid seem to be overblown for both groups.
With sharp economic growth, the international focus on aid programmes of emerging economies, including India, has gone up considerably. The timing of Indian announcement, of setting up of a new and specialised agency for international cooperation, has further fuelled global speculations about an ambitious Indian commercial agenda. As most of the traditional donors are trying to achieve harmonisation and transparency under Paris Declaration, OECD has called for global discipline in the aid programmes. China has proposed supporting a UN-led initiative instead of joining OECD. While India has major challenge of putting its house in order, it can no longer overlook international placing of its aid programmes, which so far have been projected as a part of South-South cooperation.
Among non-DAC donors, wealthy Arab states are some of the most prolific contributors of foreign aid. Despite this, relatively little is known about Arab foreign aid. The OECD development database offers a paucity of information, aggregating data for “Arab countries†and “Arab agencies,†without identifying the constituent units of either. A further complication is that Arab donors are not uniformly transparent about their aid efforts, publicizing some of them while keeping other donations secret. In this paper, we advance the state of knowledge of Arab foreign aid in a number of ways. We use AidData to document the trends in reported donations from specific bilateral donors (Kuwait, Saudi Arabia, and the United Arab Emirates) and multilateral agencies (Arab Fund for Economic and Social Development, Arab Bank for Economic Development in Africa, OPEC’s Fund for International Development, and the Islamic Development Bank). Notably, Arab bilateral donors have given less generously over time with aid levels remaining relatively stable despite skyrocketing national wealth. We explore reasons for this decline, including that Arab donors have: shifted their giving from bilateral to multilateral channels, given less as DAC donors have given more, and increased domestic spending at the expense of foreign aid with a view to safeguarding regime security. In addition, we look at the sectoral allocations of Arab bilateral and multilateral organizations, and compare the aid practices of Arab donors to their DAC counterparts. Finally, we suggest why an exclusive focus on aid commitments is problematic where Arab aid is concerned.
India and the African continent are currently celebrating the renewal of their partnership. For India, Africa is a source of energy resources, and for the African states, India is an ideal commercial and technological partner. But India- African relationships may come into conflict with the interests of China. India and the African continent are currently celebrating the renewal of their partnership. For India, Africa is a source of energy resources, and for the African states, India is an ideal commercial and technological partner. But India-African relationships may come into conflict with the interests of China.
The world economy is in a state of flux. While most OECD countries struggle to minimize the damage of the global financial crisis, a few countries maintain positive economic growth rates and are thus changing global power configurations. Among the most important emerging economies for international development are the BASIC countries: Brazil, South Africa, India and China. This article analyses why these countries have rejuvenated development cooperation, what they actually do in Africa, and how they do it. It argues that the most important aspect of the rejuvenation of non-traditional donors’ development cooperation with African economies is not the direct effects on these economies, be they positive or negative, but the potential gains that may accrue to African economies in terms of larger room for manoeuvre due to increased competition and the challenge to traditional donors’ development hegemony.
In this introductory essay to the special issue, we introduce a new dataset of foreign assistance, AidData, that covers more bilateral and multilateral donors and more types of aid than existing datasets while also improving project-level information about the purposes and activities funded by aid. We utilize that data to provide a brief overview of important trends in foreign aid. Contributors to this special issue draw on AidData as well as other sources to analyze aid transparency, “new†donors (not previously described or analyzed), aid allocation, and aid effectiveness. Our recurring theme in this introductory essay is that AidData and these initial academic projects refine rather than revolutionize our understanding of aid. The database has added significant numbers of new projects, dollar amounts, donors, and details about those projects, though there is much more yet to add. We worry that aid debates have been driven by too little information, and that many claims are based on limited or very poor evidence. Rectifying these problems will not be instantaneous: refining knowledge takes a lot of time and hard work. The common feature of the papers in this special issue is their careful attention to nuance and detail. In spite of what some recent authors have claimed, aid is neither a simple solution nor a sufficient cause of most problems in developing countries; its motivations, distribution, and effects are complex, and shifting. Capturing this complexity requires detailed data, careful thought, and sophisticated methods that allow scholars to make conditional causal and descriptive inferences.
This paper explores U.S. influence in the World Bank using panel data on World Bank lending to 148 developing countries between 1984 and 2005. I compare a range of UN alignment variables (with differing interpretations), introduce other measures of U.S. interests, and control for voting alignment with the G7 donors. Estimation results suggest that partial correlations for U.S. UN voting alignment partly reflect vote buying and partly reflect broader alliances. The results convincingly reject the hypothesis that U.S. UN voting alignment merely proxies for G7 influence in the allocation of World Bank funds.
Foreign aid critics, supporters, recipients and donors have produced eloquent rhetoric on the need for better aid practices – has this translated into reality? This paper attempts to monitor the best and worst of aid practices among bilateral, multilateral, and UN agencies. We create aid practice measures based on aid transparency, specialization, selectivity, ineffective aid channels and overhead costs. We rate donor agencies from best to worst on aid practices. We find that the UK does well among bilateral agencies, the US is below average, and Scandinavian donors do surprisingly poorly. The biggest difference is between the UN agencies, who mostly rank in the bottom half of donors, and everyone else. Average performance of all agencies on transparency, fragmentation, and selectivity is still very poor. The paper also assesses trends in best practices over time – we find modest improvement in transparency and more in moving away from ineffective channels. However, we find no evidence of improvements (and partial evidence of worsening) in specialization, fragmentation, and selectivity, despite escalating rhetoric to the contrary.
India has traditionally been perceived, both domestically and globally, as an important aid receiver. But it has also had a foreign aid programme of its own which can be traced to the 1950s and 1960s. India’s aid programme was small, focused on building local capacities and viewed as benign. In the past few years, there have been marked shifts in the size, focus and strategic thinking behind India’s foreign aid programme. As an emerging donor on the world stage, India needs to align its aid strategy not with its ambitions but with a realistic assessment of its strengths and historical roots. Otherwise, it will open itself up to the same criticisms which are often directed at the other major donors.
India is not only the world's largest and fiercely independent democracy, but also an emerging economic giant. But to date there has been no comprehensive account of India's remarkable growth or the role policy has played in fueling this expansion. India: The Emerging Giant fills this gap, shedding light on one of the most successful experiments in economic development in modern history. Why did the early promise of the Indian economy not materialize and what led to its eventual turnaround? What policy initiatives have been undertaken in the last twenty years and how do they relate to the upward shift in the growth rate? What must be done to push the growth rate to double-digit levels? To answer these crucial questions, Arvind Panagariya offers a brilliant analysis of India's economy over the last fifty years--from the promising start in the 1950s, to the near debacle of the 1970s (when India came to be regarded as a "basket case"), to the phenomenal about face of the last two decades. The author illuminates the ways that government policies have promoted economic growth (or, in the case of Indira Ghandi's policies, economic stagnation), and offers insightful discussions of such key topics as poverty and inequality, tax reform, telecommunications (perhaps the single most important success story), agriculture and transportation, and the government's role in health, education, and sanitation. The dramatic change in the fortunes of 1.1 billion people has, not surprisingly, generated tremendous interest in the economy of India. Arvind Paragariya offers the first major account of how this has come about and what more India must do to sustain its rapid growth and alleviate poverty. It will be must reading for everyone interested in modern India, foreign affairs, or the world economy.
Traditional aid conditionality has been attacked as ineffective in part because aid agencies – notably the World Bank – often fail to enforce conditions. This pattern undermines the credibility of conditionality, weakening incentives to implement policy reforms. The standard critique attributes this time inconsistency to bureaucratic factors within the aid agency such as pressure to lend, defensive lending, or short-sighted altruism. Pressure from powerful donors provides another potential explanation for lax enforcement. This paper presents an empirical analysis of the political economy of conditionality in international organizations using the case of the World Bank and the United States. The analysis examines panel data on World Bank disbursements to 97 countries receiving structural adjustment loans between 1984 and 2005. Using UN voting as an indicator of alignment with the U.S., the paper presents evidence that World Bank structural adjustment loan disbursements are less dependent on macroeconomic performance in countries aligned with the United States.
We investigate whether elected members of the UN Security Council receive favorable treatment from the World Bank, using panel data for 157 countries over the period 1970–2004. Our results indicate a robust positive relationship between temporary UN Security Council membership and the number of World Bank projects a country receives, even after accounting for economic and political factors, as well as regional, country and year effects. The size of World Bank loans, however, is not affected by UN Security Council membership.
The typical identification strategy in aid effectiveness studies assumes that donor motives do not influence the impact of aid on growth. We call this homogeneity assumption into question, constructing a model in which donor motives matter and testing the assumption empirically.
IMF loans react to economic conditions but are also sensitive to political-economy variables. Loans tend to be larger and more frequent when a country has a bigger quota and more professional staff at the IMF and when a country is more connected politically and economically to the United States and major European countries. These results are of considerable interest for their own sake. More importantly for present purposes, the results provide instrumental variables for estimating the effects of IMF loan programs on economic growth and other variables. This instrumental estimation allows us to sort out the economic effects of the loan programs from the responses of IMF lending to economic conditions. The estimates show that a higher IMF loan-participation rate reduces economic growth. IMF lending does not have significant effects on investment, inflation, government consumption, and international openness. However, IMF loan participation has small negative effects on democracy and the rule of law. The reduction in the rule of law implies an additional, indirect channel whereby IMF lending reduces economic growth.
Through case studies and empirical analysis, scholars have uncovered convincing evidence that individual donors influence lending decisions of international financial institutions (IFIs) such as the World Bank and the Asian Development Bank. Less clear are the mechanisms by which donors exert influence. Potential mechanisms are either formal or informal. Formal influence is through official decisions of the board of executive directors while informal influence covers all other channels. This paper explores the role of informal influence at the Asian Development Bank by examining the flow of funds after loans are approved. Controlling for commitments (loan approvals), are subsequent disbursements linked to the interests of the key shareholders, Japan and the U.S.? I compare these findings with results for the World Bank and consider implications for institutional reforms.
Major DAC donors are widely criticized for weak targeting of aid, selfish aid motives and insufficient coordination. The emergence of an increasing number of new donors may further complicate the coordination of international aid efforts. On the other hand, new donors (many of which were aid recipients until recently) may have competitive advantages in allocating aid according to need and merit. Project-level data on aid by new donors, as collected by the PLAID initiative, allow for empirical analyses comparing the allocation behavior of new versus old donors. We employ Probit and Tobit models and test for significant differences in the distribution of aid by new and old donors across recipient countries. We find that new donors (i) focus on closer neighbors, (ii) care less for recipient need, (iii) exhibit a weaker bias towards badly governed countries, (iv) respond to disasters, but with fewer resources than old donors, and (v) do not pursue commercial self interest. --
Ten of the 15 seats on the U.N. Security Council are held by rotating members serving two-year terms. We find that a country's U.S. aid increases by 59 percent and its U.N. aid by 8 percent when it rotates onto the council. This effect increases during years in which key diplomatic events take place (when members' votes should be especially valuable), and the timing of the effect closely tracks a country's election to, and exit from, the council. Finally, the U.N. results appear to be driven by UNICEF, an organization over which the United States has historically exerted great control.
This paper studies the pattern of allocation of foreign aid from various donors to receiving countries. We find considerable evidence that the direction of foreign aid is dictated as much by political and strategic considerations, as by the economic needs and policy performance of the recipients. Colonial past and political alliances are major determinants of foreign aid. At the margin, however, countries that democratize receive more aid, ceteris paribus. While foreign aid flows respond to political variables, foreign direct investments are more sensitive to economic incentives, particularly "good policies" and protection of property rights in the receiving countries. We also uncover significant differences in the behavior of different donors. Copyright 2000 by Kluwer Academic Publishers
I provide an overall empirical assessment of the motivations of ODA granted by rich countries to developing countries, as revealed by aid allocation behaviors. Aid motives combine self-interested and altruistic objectives. I use a three-dimensional panel dataset, combining the donor, recipient and time dimensions, which shows a lot of heterogeneity in donor behavior. Thanks to the width of this dataset, I can test differences of parameters among donors and, in particular, compare their degrees of altruism. Switzerland, Austria, Ireland and most Nordic countries are among the most altruistic. Australia, France, Italy, and to some extent Japan and the United States are among the most egoistic. Copyright © 2006 The Author; Journal compilation © 2006 Blackwell Publishing Ltd.
This article examines the consequences of the return to Africa of donors that are not members of the OECD's Development Assistance Committee (DAC). It categorises these donors according to form, content, size and modality of their aid. It finds that their return increases external financial flows, in particular to countries not targeted by DAC donors. Moreover, for some donors like China and India the flows are closely related to other financial flow s such as trade and investment. Furthermore, it finds that the return of non-DAC donors may conflict with plans to harmonise aid and may simultaneously raise transaction costs for recipients. Copyright (c) The Author 2008. Journal compilation (c) 2008 Overseas Development Institute..
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Dependent variable: (log) Aid commitments to recipient country) indicates significance at the ten (five, one) percent level
Notes: Dependent variable: (log) Aid commitments to recipient country, sum 2008-2010 / * (**, ***) indicates significance at the ten (five, one) percent level
More Dollars than Sense: Refining Our Knowledge of Development Finance Using AidData
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