Aid Regime Research Articles

Foreign Aid and Soft Power: Great Power Competition in Africa in the Early Twenty-first Century

AbstractIs foreign aid an effective instrument of soft power? Does it generate affinity for donor countries and the values they espouse? This article answers these questions in the context of Chinese aid to Africa and the competing aid regime of the United States. The study combines data on thirty-eight African countries from Afrobarometer, AidData, and the Aid Information Management Systems of African finance and planning ministries. The authors use spatial difference-in-differences to isolate the causal effects of Chinese and US aid. The study finds that Chinese aid to Africa does not increase (and may in fact reduce) beneficiaries’ support for China. By contrast, US aid appears to increase support for the United States and to strengthen recipients’ commitment to liberal democratic values, such as the belief in the importance of elections. Chinese aid does not appear to weaken this commitment, and may strengthen it. The study also finds that Chinese aid increases support for the UK, France and other former colonial powers. These findings advance our understanding of the conditions under which competing aid regimes generate soft power and facilitate the transmission of political principles and ideals.

Infrastructure violence and retroliberal development: connectivity and dispossession in Laos

This article examines the centrality of infrastructure connectivity within the post-2008 ‘retroliberal’ global aid regime. Through the critical interrogation of connectivity and development discourse within Southeast Asia, as well as longitudinal field research examining repeated bouts of dispossession in Laos, I argue that all Southeast Asian states, regionally operating multilateral development banks and leading regional bilateral aid providers consider transnational infrastructure connectivity essential to development. Following this, I contend that large-scale infrastructure projects frequently increase disadvantaged communities’ exposure to intersectional forms of structural violence, epistemic violence, slow violence and infrastructural violence. Having made these arguments, I suggest that the normalisation of infrastructure connectivity as constitutive of development is producing increasingly violent development outcomes, and that intersectional interrogations of infrastructure violence are needed to better understand such outcomes. The argument presented is based on more than 20 months of in-country fieldwork in Laos and 40 interviews with 18 displaced residents. Fieldwork commenced in 2009 and remains ongoing.

Why Are Developed Countries Giving Aid to India?

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.

Foreign Aid and State Legitimacy

ABSTRACTWhat are the effects of foreign aid on the perceived legitimacy of recipient states? Different donors adhere to different rules, principles, and operating procedures. The authors theorize that variation in these aid regimes may generate variation in the effects of aid on state legitimacy. To test their theory, they compare aid from the United States to aid from China, its most prominent geopolitical rival. Their research design combines within-country analysis of original surveys, survey experiments, and behavioral games in Liberia with cross-country analysis of existing administrative and Afrobarometer data from six African countries. They exploit multiple proxies for state legitimacy, but focus in particular on tax compliance and morale. Contrary to expectations, the authors find little evidence to suggest that exposure to aid diminishes the legitimacy of African states. If anything, the opposite appears to be true. Their results are consistent across multiple settings, multiple levels of analysis, and multiple measurement and identification strategies, and are unlikely to be artifacts of sample selection, statistical power, or the strength or weakness of particular experimental treatments. The authors conclude that the effects of aid on state legitimacy at the microlevel are largely benign.

Distorted promotion of undistorted competition? Commission decisions after formal investigations in the EU state aid regime

ABSTRACT This article aims to explain the Commission's decisions after formal investigations in the EU state aid regime. It proceeds from the idea that the Commission is confronted with an enforcement dilemma: it must weigh the benefits of promoting undistorted competition on the internal market against the potential costs of losing member state support. This study explores to what extent characteristics of state aid cases and characteristics of member states influence this dilemma and thereby the Commission's decisions. Based on multilevel logistic regression analysis of a newly created dataset consisting of all formal investigations initiated and decided on by the Commission between 2004 and 2018, we find that aid that has been granted unlawfully and aid consisting of tax measures is more likely to result in a negative decision. Member states characterized by a larger administrative capacity are less likely to face negative decisions.

Changes to the state aid rules in response to the crisis due to the spread of Covid-19

In these extraordinary times for the world’s economies, it is inevitable that Member States will support their economies in entire sectors and industries, including through public resources. However, this approach must be followed carefully, as such allocation of public resources in the form of state support is subject to strict state aid rules. The article examines the changes in the state aid regime that the economic consequences of the spread of COVID- 19 have imposed.

The Rise of Asian Aid Donors: Recipient-to-Donor Transition and Implications for International Aid Regime

The aims of this article are twofold. First, from a historical perspective, it examines the recipient-to-donor transition of five Asian aid donors, namely Japan, Korea, China, India, and Thailand. Specifically, it examines the evolution of their foreign aid programs and practices. Second, it analyzes the effects of Asian aid donors on the international aid regime. We argue that the mix of economic and security goals, which motivated Asian donors to develop their initial economic cooperation programs, have persisted over time. This explains why Asian aid donors have allotted a disproportionate share of their assistance to neighboring countries and their use of foreign aid as a key tool of their commercial and diplomatic policies. Moreover, we contend that the rise and experience of Asian aid donors have created a new dynamic to donor–recipient partnerships and development cooperation like new approaches and modalities. Key findings of this study add to the growing literature on emerging donors and aid effectiveness debate.

The Implementation of the European Green Deal – Tensions Between a Market-based Approach and State Aid for Renewables

Energy policies which promote a green transition are of particular interest to the European Commission and are one of the key elements of the European Green Deal. This article takes a close look at the interplay and tensions between two theoretically separated frameworks, renewable energy law and the State aid regime, and analyses the impact of the European Green Deal on their revision. As State aid plays a pivotal role in the green transition and in the fulfilment of the Commission’s policy objectives, the implementation of the European Green Deal can offer a great opportunity to establish new State aid control rules. More specifically, the analysis focuses on a market-based approach towards renewable energy support schemes, and attempts to answer the question of whether or not such a solution fits the purpose of achieving the newly established EU sustainable goals defined in the European Green Deal. Recommended Citation

El rol de la cooperación de China en la transformación estructural del Sur Global

En lo que va del siglo XXI, el régimen internacional de cooperación y ayuda para el desarrollo ha visto el aumento de iniciativas ejecutadas por distintas potencias emergentes y países en desarrollo, centrándose cada vez más alrededor de China, cuya peculiar forma de cooperar parece guiar la transformación estructural del Sur global. Por eso, con fin de discutir estas cuestiones, el presente artículo analiza y debate la literatura que argumenta sobre el “modelo” de cooperación Sur-Sur chino, explorando sus características y las peculiares relaciones de China con los países en desarrollo, ante la crisis del régimen cooperación tradicional

FOREIGN AID, DEBT RELIEF AND AFRICA’S DEVELOPMENT: PROBLEMS AND PROSPECTS

In recent years, the Paris club granted a number of African countries, including Nigeria, debt relief. This elicited widespread celebration in the capital cities of affected countries, where it was portrayed asaveritable launchpad to Africa’s development.This paper takes a critical look at the debt relief, with emphasis on its problems and prospects for Africa’s development. It is argued that while debt relief does offer some prospects for development, there is little or no evidence to suggest that such an outcome is automatic. The conditions that precipitated the debt crisis in the first instance, including an inequitable international economic order and political conditions tied to aid, are still very present in the debt relief regime. Corruption of the foreign aid regime by both internal and external actors has been compounded by the recent global economic crisis, posing further constraints on the effectiveness of foreign aid in Africa. If debt relief must yield the desired result, it has to be accompanied by a sustainable campaign to fundamentally reform the world order to make it more equitable, together with a drive for good governance that is not only democratic, but also efficient and development-oriented in Africa.

State Aid Rules and Public Financing of Infrastructure. The Case of Autostrada Wielkopolska S.A.

Abstract The operation of a toll road typically involves an economic activity for which State aid rules apply. However, if the construction and operation of the road infrastructure is bundled and they are tendered out together, they usually fall outside the State aid regime. The reason for it lies in the fact that the use of competitive procurement procedures aim to increase the efficiency of public expenditure and to ensure a level playing field for private operators to compete for public contracts. Nevertheless, based on the European Commission’s decisional practice, it transpires that an economic advantage for a concession holder cannot be ruled out automatically, in particular when there are amendments made to the original agreement. On the example of the Autostrada Wielkopolska S.A. case, critical State aid issues are discussed, among others, the application of State aid rules to public financing of infrastructure, the amendments made to a concession contract in the light of the risk assignment problem, as well as the existence of State aid in the form of overcompensation for a concession holder. The considerations are carried out on the canvas of a concrete case; however, they are enriched by the analysis of relevant legal provisions as well as conclusions from the EU courts and the European Commission decisions made in similar cases.

The Origins of Supranational State Aid Legislations: What Policymakers Must Know and Adhere to. The Case of Estonia

Abstract As an independent country, Estonia can decide on how to promote its economy through state intervention, at least in theory. At the same time, Estonia has been a WTO member since 1999 and an EU Member State since 2004 and must adhere to these rules. Both regimes limit a Member State’s ability to interfere in the economy, setting forth rules on when a state can interfere with consequences if the rules are not met. But these rules differ, and the same situation can have a different result depending on the rules applied. Also, both sets of rules limit the competence of a member country to interfere in economy differently, for example, the WTO applies a rather lenient ex post control while in the EU a strict ex ante control by the Commission is used. Also the consequences for failing to adhere are different. Although one of the smallest EU Member States and represented by the Commission in WTO roundtables, it is still relevant for Estonia to have a position on globally applied state interference measures, and present and protect its views, if needed. To successfully promote its economy nationally and in the EU, Estonian policymakers, like those of any other country in the same position, must know not only the applicable state interference rules but also the underlying principles thereof. The article will provide a historical overview of the framework of the supranational state aid regimes of the WTO and the EU, as well as the domestic rules of Estonia. It is aimed at reflecting the principles behind the state aid rules that the domestic policymakers must consider when designing national state interference measures. The author applies classical research methods, namely, reading and interpretation of texts, but also comparing the WTO, EU and Estonian laws on state subsidies.

Why adaptive management will not save us: Exploring management directives' interaction with practice

SummarySparked by the critique of practitioners and academics on the excessive managerialisation of development project management, the donor community turns increasingly towards adaptive management approaches. Rather than examining the effectiveness of the new adaptive management trend, the article deals with the more fundamental question of how the underlying relationship between management frameworks and practice can be characterised. To this end, the article analyses the practices of a select number of Dutch Civil Society consortia that are working with a new adaptive management framework. Making use of a practice theory approach, the analysis finds that rules are not directly translated into practice. The presented rules (innovations) are always mediated by antecedent practice, shared histories and interactions amongst individuals, communities and artefacts. Notably, the flexibility provided for in the framework does not reach all links in the aid chain equally and is counterbalanced by the institutional realities of the aid system. The article therewith adds to the literature on everyday development management cautioning against overestimating the effects of management tools, as they operate within and are determined by the funding and accountability requirements of the larger aid regime.

Foreign Aid to Timor-Leste and the Rise of China

Foreign aid forms an important part of a state’s identity within the international system. The established dichotomy saw developed countries giving aid, while developing countries were receiving it. Nevertheless, China’s ‘rise’, along with that of other ‘emerging economies’, changed such a dualist view; or at least undermined the traditional concept of aid giving. China is becoming a world power, it is the second largest economy, yet it is still within the group of developing countries. However, it provides a considerable amount of foreign aid worldwide. This is destabilizing the established understandings of aid regimes, as set by the Development Assistance Committee (DAC) donors since the 1950s. In particular, the rise of China in Timor-Leste as an important aid contributor, but working outside the leading aid regime, is affecting the most prominent donor in the country, Australia. Moreover, the rapidly growing presence of China in Timor-Leste seems well received by the local government, although criticism arose amongst the population. Thus, this paper attempts to analyse the issue from different levels. Firstly, it will analyse how China managed to “break” the monopoly of Australian aid by accessing Timor-Leste. It will then explicate the principles and the practices of Chinese aid, and will attempt to establish whether Chinese aid has produced a positive economic impact on Timor-Leste and its people. Finally, this paper suggests that Chinese aid is not challenging, neither threatening the Australian aid assistance in Timor-Leste; rather Chinese aid offers an alternative way of giving aid, and which can also convey to Australia with the possibilities of establishing mutual benefits and effective partnerships with the recipient countries.

Applicability of the EU State Aid and Environmental Rules in the Nuclear Energy Sector · Case C‑594/18 P Republic of Austria v Commission ('Hinkley Point')· Annotation by Alicja Sikora

In its judgment of 22 September 2020 in Case C-594/18 P Austria v Commission (the Hinkley Point judgment), the Court of Justice addressed a number of issues pertaining to the applicability of the EU State aid and environmental rules to the nuclear energy projects under the Euratom Treaty. Although it is not strictly speaking revolutionary for the State aid regime, the Hinkley Point judgment significantly contributes to the wider development of Union law. First, it brings further clarity regarding the links between the Euratom Treaty and the other Treaties on which the Union is founded. Secondly, it addresses a long-standing issue of relationship between the environmental protection and the objective of safeguarding trade and competition within the internal market, even though without bringing a clear-cut definitive answer to all related questions.

State Aid for Solid Biomass: The Case for Improved Scrutiny

This paper asks whether current State aid rules for solid biomass are still fit for purpose and considers the scope for revision of those rules. The paper is structured to present: (i) the rationale and logic of the current State aid regime for support to renewable energy; (ii) the implementation of support for bioenergy deployment since 2005; (iii) the effects of support on markets and the environment; (iv) the relevance of newly adopted policies and policy objectives; and (v) the scope for revision of the rules to better allocate State aid to achieve long-term climate goals. The paper argues that ignoring the external costs of forest biomass use in State aid assessments may lead to a skewed image of its cost-effectiveness as a renewable energy option. This reveals an important discrepancy between the specific way in which biomass support is treated by the current rules and the rationale and objectives of the current State aid regime for renewable energy. Not factoring in external costs of forest biomass may result in an inherently preferential treatment of solid biomass and hinder the development of other – more innovative and cleaner – technologies, which could undermine the principle of technology-neutrality embedded in the Guidelines on State aid for environmental protection and energy (EEAG). This is especially concerning in the case of continuous operating aid for the use of solid biomass as a (close-to) mature technology, which can lead to a lock-in of State aid, of a specific renewable energy technology and of biomass materials for energetic use.

Ništavost i nepunovažnost ugovora kao posledica kršenja prava konkurencije EU i pravila o javnim nabavkama

The presented paper will focus on the extent of requirements of EU law for nullity or ineffectiveness of contracts in specific areas linked to functioning internal market: competition law, including agreements restricting competition, abuse of dominant position, merger control and state aid, and rules of public procurement. The scope of EU-law-based nullity is quite limited and only Art. 101(2) TFEU provides expressed nullity of agreements restricting competition. In the case of abuse of dominance, nullity of contract constituting abuse of dominant position can be drawn from the principle of effectiveness of EU law. Validity or nullity of contracts violating suspension clause in merger control regime are assessed in two periods - before decision on merger and after decision of the Commission. State aid regime cannot rely on EU-law-based nullity of contracts that violate EU state aid rules. Finally, public procurement rules appear the most complex in this context since they operate with the "right" of the contracting authority to terminate contract and power of revision authority to declare "ineffectiveness" of illegally awarded contract, and therefore revision of directives is suggested.

The Chinese South-South development cooperation: an assessment of its structural transformation

This paper aims to analyze the Chinese cooperation with developing countries, its purposes, shapes and intentions in order to explore the peculiar characteristics of Chinese SSC. This work seeks to analyze whether the cooperation carried out by China with countries of the Global South fits the principles of South-South cooperation and if and how China is modifying the international aid regime.

Desajustes territoriales en la distribución del Pago Básico de la PAC en España

El Régimen de Pago Básico es un sistema de ayuda a los agricultores desacoplado de la producción. Los agricultores perciben unas ayudas directas en función del valor de una asignación de derechos de pago referenciadas en la aplicación de la regionalización de las ayudas. En este trabajo se analizan los datos referentes al Régimen de Pago Básico (obtenidos del Fondo Español de Garantía Agraria), tomando de referencia el año 2016 en España. El análisis estadístico se ha realizado desde una metodología de tipo cuantitativa y no experimental, descriptiva y cualitativa analítica, y ha permitido una aproximación a la realidad social, económica y territorial de estas ayudas. En primer lugar, los datos revelan el elevado peso del Pago Base respecto al resto de ayudas y medidas de la PAC (el régimen de pago básico representa un 36% del total de las ayudas en España). En segundo lugar, los datos muestran la presencia de una fuerte masculinización (el 62,7% son hombres) y envejecimiento (un 38,8% tiene más de 65 años) de los perceptores de ayudas del Régimen de Pago Básico, además de una presencia testimonial de jóvenes en el sector agrario. En tercer lugar, se pone de relieve el enorme peso que tienen los pequeños perceptores del pago base (aquellos que perciben menos de 1.250 euros) que, en el caso español, alcanzan un 23,9% sobre el total pero que, por otro lado, sólo perciben un 3,45% del montante presupuestario de este régimen de ayudas. Por último, se destacan los desequilibrios territoriales existentes de este régimen de ayudas y la ausencia absoluta de una solidaridad interterritorial, pese al carácter no discriminatorio de estas medidas.

How Single is the Single Resolution Mechanism?

Since the first of January 2016, the Single Resolution Mechanism (SRM) has become fully operational. For the Member States of the European Banking Union the new regime entails a transferral of the decision-making on failing banks to the European level, specifically the Single Resolution Board (SRB). The political sensitivity hereof is illustrated by the European and Italian reaction to the mounting troubles in some parts of the Italian banking sector. The new European regime raises the question if, and if so to what degree, Member States participating in the European Banking Union (EBU Member States) retain discretion in determining the course of action for, and future of, a troubled bank. This question is explored along three lines of inquiry. First, we analyse the degree of harmonisation provided for by the BBRD and SRM. The second line of inquiry analyses EBU Member States’ influence in the SRB’s decisionmaking process. The third line of inquiry considers the possibilities (if any) for a public recapitalisation of troubled banks without applying the new general bail-in standard. Our first line of inquiry leads us to conclude that the EBU Member States have surrendered the decision-making on bank resolution to the EBU level, specifically to the SRB. The SRM regulation, consequently, provides for maximum harmonisation, leaving no room for national resolution tools. National resolution powers which operate and compete in the same area as the SRM, such as the Dutch nationalisation law, must thus be held as inapplicable. In the second line of inquiry we found that the SRM has both a supranational and an intergovernmental dimension. While the SRB in its executive session has a strong supranational character Member State influence in bank resolution decision remains present through the involvement of the Council and the SRB in plenary session in key decisions. In the third line we conclude that the rules imposed by the BRRD and SRM Regulation in combination with the State aid regime have rendered public recapitalisation without a bail-in virtually impossible.