The Impact of Aid Dynamics on State Effectiveness and Legitimacy

Abstract

Efforts to build state capacity in developing countries are often predicated on the assumption that external partners can help states improve their effectiveness and earn legitimacy by providing aid for public service provision. In a theory-building exercise, this paper advances a typology of aid dynamics in order to afford a granular picture of how development assistance for public service provision interacts with internal governance processes in recipient countries. Developing a conjunctural conceptualization of aid dynamics, we articulate how the impact of foreign aid depends not just on how much money is involved but also on whether donors or recipient governments are more influential in designing and implementing aid programs. We illustrate the descriptive utility of this typology by applying it to our empirical research on aid in the health and education sectors in Cambodia, Laos, and Uganda. We also probe causal expectations emerging from the typology, anticipating that aid for public service delivery has distinct and separate effects on state effectiveness and legitimacy depending on the precise aid conjuncture through which it is conceived and delivered. We conclude with suggestions for further research on the impact of foreign aid on state–society relations through the lens of public service delivery.