Foreign Aid Practices Research Articles

Building Bridges or Breaking Bonds? The Belt and Road Initiative and Foreign Aid Competition

Abstract China’s renewed prominence is the most important development in international relations in the 21st century. Despite longstanding rhetoric of its own “peaceful rise”, China is increasingly viewed as a long-term strategic competitor, especially in the United States. Foreign aid is one arena where this competition may be playing out. While Western foreign aid principles have emphasized coordination and harmonization, the rise of China as a development partner has raised the specter of a return to competitive foreign aid practices. Most notably, China's Belt and Road Initiative (BRI), has received a wary reception by those who view it primarily as a geostrategic effort, but our knowledge of responses to the BRI is often anecdotal and fragmentary. To remedy this, we test if the BRI is inducing a competitive foreign aid response by evaluating if countries involved in this initiative are more likely to receive US support for loan packages from the major, Western, multilateral development banks (MDBs). Using an instrumental variable approach, covering 7,850 project/loan packages in 10 MDBs from 162 countries during 2013–2018 period, we find that the United States was more likely to vote for MDB packages to countries that have signed on to the BRI, but predominantly when the actual amount of Chinese aid flowing to those countries is still low, suggesting the United States is competing for “hedging” countries.

The Practices and Processes of Foreign Aid to Africa: A Kenyan Case Study

Kenya is used as a case study in this study of foreign-aid practices and processes. The qualitative research methodology employed involved face-to-face interviews with Kenyan residents who have direct knowledge of foreign aid and were willing to share their perceptions of its effectiveness in alleviating poverty. The main barriers identified included corruption, bureaucracy, and donor fatigue.

A Paradox of New Deal and Foreign Aid for Fragile States in Sub‐Saharan Africa

AbstractThis article investigates aid delivery channels and their potential contribution to state‐capacity‐building in sub‐Saharan African (SSA) fragile and conflict‐affected states (FCSs) by drawing on the New Deal for Engagement in Fragile States. Using the synthetic control method (SCM), the paper examines whether donors have implemented foreign aid following their commitment to the New Deal. It focuses on the period 2005–2019 and 44 SSA countries. Overall, the findings show that less aid is delivered through the public sector in FCSs, where building state capability is more necessary than in non‐FCSs in SSA. This shows that donor foreign aid practices do not match their commitment to the New Deal for Engagement in Fragile States, although there are significant differences in donor practices. The tendency in donor aid‐giving is to bypass the public sector, which does not necessarily help strengthen capacity in FCSs. It is a paradox of foreign aid to fragile states due to the contradiction between the short‐term effectiveness of foreign aid and the long‐term necessity of state‐building in FCSs. With these findings, the paper calls for international efforts to improve aid‐giving to support state capability in FCSs.

The Aid-Contracting Nexus: The Role of The International Contracting Industry in China’s Overseas Development Engagements

Commercial interests in China’s foreign aid projects are widely recognised in the literature. Yet, the role of the Chinese companies involved in such activities remains understudied. Piecing together information from primary sources, this article retells the story of China’s overseas development engagements from the perspective of China’s international contracting industry, the history of which is closely intertwined with China’s foreign aid practices. Identified by the state to be a strategic vehicle for exporting Chinese labour, industrial products, technology, management skills, and capital, international construction contractors (ICECs) have received substantial policy support and have grown into prominent multinational corporations with global footprints. I use the concept of the “aid-contracting nexus” to highlight the linkage between China’s economic diplomacy and domestic economic development strategy. The “aid-contracting nexus” provides a critical lens for analysing China’s overseas development engagements, including why it has focused primarily on infrastructure, and the conceptual confusion over China’s development finance. This analysis also speaks to the popular accusations that Chinese lending practices are predatory or “debt-trapping” by underscoring mercantilist logic as an alternative explanation. The evolving business model if ICECs is likely to pose new challenges for China’s foreign relations.

Trilateral Cooperation

Over the years, China has forged and mastered its own distinctive foreign aid practices as an emerging aid donor. China’s approach to foreign assistance has become highly appreciated as the country’s stature as a provider of economic assistance has matured. In 2013, under President Xi Jinping, Beijing introduced the Belt and Road Initiative, which has become a leading component of China’s foreign policy and triggered a new round of policy reform in its foreign aid agenda. In Africa, China’s foreign assistance has kept in line with the policy of equal treatment. It has shared its development experience, helped many African countries to transition from “poor” to “developing”, from “aid recipients” to “wealth creators,” and many African countries are thus turning their interests from the West to the East. Certainly, the European Union as a traditional aid donor, remains the largest aid distributor in the world, especially in Africa. In other words, the EU’s foreign assistance has become an indispensable source of funding for many African countries. However, foreign aid effectiveness remains low on the African continent because of the absence of native African policymakers in aid programs designed and implemented by Beijing and Brussels. Some critics argue that Chinese and European assistance to Africa is not bringing about the best results as expected. This article argues that a new international architecture of foreign assistance through trilateral cooperation is needed to increase Chinese and European aid effectiveness in Africa. Trilateral cooperation will not only increase foreign assistance efficiency in Africa, but also give a chance to African countries to strengthen their own development capacity through assistance and guidance, reduce Africa’s aid dependence, and hopefully guarantee a smooth “graduation” of African countries from official development assistance.

Donors in transition and the future of development cooperation: What do the data from Brazil, India, China, and South Africa reveal?

SummaryHow are Development Assistance Committee (DAC) donors evolving their financial flows and aid modalities in response to the growing influence and economic power of Southern BRICS? After presenting the shifting landscape of international development cooperation, we explore five hypotheses about the changing nature of DAC aid allocation patterns and modalities in BRICS countries. In our conclusion, we reflect on the evolution of DAC engagement in Brazil, China, India, and South Africa (BASIC countries) and what it might mean for all official donors. Our assessment is that the changing geopolitical environment for development cooperation is once again privileging economic diplomacy concerns within DAC donors, propelling specific kinds of decisions about the choice of instruments, sectors, and modalities in BASIC countries. It would appear that the administrative practice of foreign aid is increasingly derived from changes within the institutional environment for international development.

Building Bridges or Breaking Bonds? The Belt and Road Initiative and Foreign Aid Competition

China’s renewed prominence is the most important development in international relations in the 21st century. Despite longstanding rhetoric of its own “peaceful rise”, China is increasingly viewed as a long-term strategic competitor, especially in the United States. Foreign aid is one arena where this competition may be playing out. While Western foreign aid principles have emphasized coordination and harmonization, the rise of China as a major development partner has raised the specter of a return to competitive foreign aid practices. Most notably, China’s Belt and Road Initiative (BRI), has received a wary reception by some who view it primarily as a geostrategic effort. We test if the BRI is inducing a competitive foreign aid response by evaluating if countries involved in this initiative are more likely to receive US support for loan packages from the major, Western, multilateral development banks (MDBs). Using an instrumental variable approach, covering 6975 project/loan packages in 16 MDBs from 157 countries during 2013-2018 period, we find that the United States is more likely to vote for MDB packages to countries that have signed on to the BRI, predominantly when the actual amount of Chinese aid flowing to those countries is still low, suggesting the US is competing for “in play” countries.

Are Emerging Donors Engaging in Poor Foreign Aid Practices? A Comparison of Traditional Versus Non-Traditional Aid Agencies

Despite the rapid growth of emerging donors, these non-traditional donors are historically left out of the discussion on aid effectiveness. In this paper, we provide the first full evaluation of aid agency best practices. We rank and compare DAC (Development Assistance Committee) donors, emerging non-DAC donors, multilateral, and UN agencies in the following five best practice categories: transparency, overhead costs, aid specialization, selective allocation, and effective delivery channels. Contrary to the impression that emerging donors engage in worse practices, we find that non-DAC agencies rank similarly to DAC donors: both groups are equally poor performers. Emerging donors engage in less aid fragmentation and do not use ineffective delivery channels. Traditional DAC donors, however, are more transparent. Overall, we find that multilateral agencies and UN donors outperform both DAC and non-DAC bilateral agencies. Collectively, our results suggest that most aid donors do not meet their own standards for best practices, and this finding is not unique to emerging donors. We highlight how our results reflect the broader political economy of aid allocation.

Conditionality of Foreign Aid and Its Consequences. Case of the Republic of Moldova

Nowadays, a large number of low-income and middle-income countries recourse to foreign financial aid in order to develop economically and socially, but not all of them comply with the requirements for being eligible to receive this financial aid. In these circumstances, aid conditionality as one of the elements and mechanisms of the lending process raised many questions about its concept and especially its consequences. However, it is still considered to be one of the best monitoring instruments used by the international financial bodies to enhance the economic and social development of the recipient countries, despite the fact that this influence has many negative impacts.Given research paper seeks to examine the theory and practice of foreign aid to understand its political economic implications for both the donor and recipient countries. Though this small study is rooted in the historical context of past experiences, it derives contemporary significance from the fact that despite a global shift from bilateral to multilateral aid and foreign aid to foreign direct investment, various forms of foreign aid still flows to the developing countries and in substantial amounts, and the rationality of foreign aid as a promoter of growth and development of the underdeveloped/developing countries remains by and large uncontested both in theory and in practice.The main goal of this paper is to study and analyze the role of foreign aid conditionality for different countries such as the Republic of Moldova.Our opinion is that Moldova needs to improve the efficiency and equity of its public spending, in particular through better management of public capital investments, which are crucial for higher growth. Administrative and judicial reforms remain a challenge for improving public sector governance, which is a precondition for European integration and economic modernization. Taking into account all presented data, in our personal opinion, the government of the Republic of Moldova has to forget the word “stability” in foreign aid inflow, until it will achieve positive changes in the level of economic and social development of the country. Stability for Moldova in the present situation equates with persistence of high outflow of work force/lost of citizens, corruption, human trafficking, weak economy, political uncertainty and impoverished population. Proper word that could describe the government's will in Moldova should be “changes”, operated in all fields of the socio-economic life, and first of all in the role which government plays in national economy that should become an active, interventionist one.The aid conditionality as the foundation of the aid agreements must be strongly revised and reformed, in accordance with the existing countries’ experiences in order to be treated as a benefic mechanism both by the donor and the recipient countries. As being a quite new mechanism and proceeding from the fact that the national governments started to be more disciplined, we think it is possible to optimize this instrument and to continue the main purpose of it: to grow the international level of population’s welfare.

An Economic and Constitutional Analysis of Foreign Aid

The purpose of this paper is not to fully analyze the various programs or arguments that have been given over the years to justify or attack foreign aid, but rather to examine the practice of foreign aid through the lens of economic analysis and constitutional analysis, which has not really been done in the literature. Most analyses of foreign aid do not apply either utilitarian economic analysis (or they don’t apply it properly) or constitutional analysis to this very important issue. The aim of the present paper is to fill that gap in the literature.

Social Representations of Foreign Aid: Exploring Meaning-Making in Aid Practice in Sulu, Southern Philippines

Conceptualising foreign aid as a controversial social object, this study utilised Social Representations Theory as a social constructionist framework to understand the meanings that arise from people's social interactions in relation to foreign aid practice in a particular historical, political and social context such as the province of Sulu in Southern Philippines. Key informant interviews and group discussions with representatives of various social groups involved in the practice of foreign aid in Sulu were conducted. Research data were examined using thematic analysis. Results showed two interrelated representational systems about foreign aid in the province. First, foreign aid was understood as a valuable resource for peace and development in Sulu. Second, based on narratives of aid practice in the province, the same social object was also represented as a profiteering enterprise that operates at various levels of the aid structure. Results are discussed in terms of meaning-making in aid practice; the possible psychological, social and political consequences of the social meaning of foreign aid as a profiteering enterprise; and the potential of these social representations for reflection, critique and transformation in the practice of foreign aid.

Welfare and Foreign Aid Practices in the Contemporary United States: a Governmental Study

This article aims to expose the main governmental shifts in recent American history (1961-2000) by examining two programs: the Assistance to Families with Dependent Children (AFDC) and the Agency for International development (US-AID). Through the exploration of primary and secondary sources, we analyse the production, organisation and circulation of governmental practices in the realms of both domestic and foreign policy. In the American context, practices of government typically revolve around freedom, efficiency models and individual responsibility. Throughout the analysis, we find that the general critiques which have guided reforms and experiments in both areas converge around the same elements. This testifies to the fact that the reflexions and technical models directed at the optimal management of populations are more far-reaching than they first appear. Moreover, the historical transformations in welfare and foreign aid practices bear out the increasingly disciplinary nature of the administration and objectification of the poor, both within the United States and internationally.

Transition and Foreign Aid Policies in the Visegrád Countries: A Path Dependant Approach

The paper argues that the current emerging international development policies of the Visegrád (V4) countries are heavily influenced by the certain aspects of the Communist past and the transition process. Due to these influences, the V4 countries have difficulties in adapting the foreign aid practices of Western donors and this leads to the emergence of a unique Central and Eastern European development cooperation model. As an analytical background, the paper builds on the path dependency theory of transition. A certain degree of path dependence is clearly visible in V4 foreign aid policies, and the paper analyses some aspects of this phenomenon: how these new emerging foreign aid donors select their partner countries, how much they spend on aid, how they formulate their aid delivery policies and institutions and what role the non-state actors play. The main conclusions of the paper are that the legacies of the Communist past have a clear influence and the V4 countries still have a long way to go in adapting their aid policies to international requirements.

Revisiting Foreign Aid Theories

Foreign aid, as a subject matter of political economy, has been intensely debated in global development discourse and international politics. Does aid lead to growth and development of the underdeveloped countries? Or is it an instrument used by donor countries to promote their domestic and foreign policy interests? The theory and practice of foreign aid suggest that even if it may be useful for the economic development of underdeveloped and developing countries in the initial stages; development comes through indigenous efforts and not through foreign aid. Moreover, there are serious political and economic hazards of a foreign aid led growth model and long-term dependence on foreign aid. Therefore, foreign aid may be desirable but not essential for the development of these countries. But more importantly, while negotiating aid, the recipient countries should be cautious of donor motives and their own national and foreign policy interests.

The economics of gender

The economics of gender

Criteria and Methods of Generating Education Cooperation Projects for External Funding

This paper discusses criteria and methods and procedures of generating projects for external funding in the education sector, with particular reference to para 0.40 of the World Bank's Education Policy Summary which states: A review of Bank experience suggests that methods of generating educational projects have not been adequate. It also has particular reference to the other document distributed, namely the Report of the Bank's External Advisory Panel, which has rightly had a considerable influence on the Bank's policy paper. Panel's Report is criticized in the present paper for not having sufficiently taken into account a number of special features of foreign assistance which apply to all sectors including education and which form part of what may be called the general theory and practice of foreign aid. For instance, it appears often to assume that because something is a priority for a nation's development it is also a priority for foreign aid; and that the fact of the Bank's funding having increased at one educational level rather than another is an indication of Bank priorities. two major factors that are underestimated are first that the role of outside aid is to supply what countries cannot supply indigenously. Educational priorities are the educational criteria; but the aid criteria are different ones. Some levels of education, e.g. technological institutes, science teaching etc., figure largely in foreign aid because they are large consumers of skills and equipment that need to be imported. They may also be the educational priorities, but they may not be. Others like primary education, can be top priorities but small consumers of external aid. This under-estimation leads to an over-estimation of what can be achieved by policy decisions based primarily on educational priorities without sufficient regard to the cooperation process. funding of international co-operation programmes that takes place is a mixture of what is thought out in advance by policy making bodies and what is done about it by intermediaries. procedures and methods used at the intermediate level in regard to the actual generation of projects are as crucial to the co-operation programme as are the policies. John White of the University of Sussex concludes [1] his major study of foreign aid policy, with the following observation: The crucial figure in the development of these practices is to be found at the intermediate level... makings of an aid policy lie in the hands of those who actually administer it. An example that can be seen as either confirming or refuting the White view, according to the time perspective taken, is the case of Unicef aid to education, which is the second largest operational programme in education after that of the World Bank, slightly exceeding that of

Foreign Aid with and without Dollar Shortage

DURING the period of the European Recovery Program (ERP), the first large scale provision of foreign aid by the United States in peacetime has been experienced. Foreign aid did not begin with ERP, and it may continue to exist as a general institution well beyond the duration of that particular program. But the practice of foreign aid outside times of acute national emergency required a deeper search for its rationale. The attention of policy makers and students came to be focused on the dollar shortage. The dollar shortage of foreign countries served as an explanation of the need for our aid, and its computation served as a means for establishing the amount of aid required. The search for an explanation of foreign aid in peacetime has suffered somewhat from the fact that the extraordinary situation of aid to Europe was not considered a part of a series of extraordinary situations that have been with us almost continually since 1940. The general problem of our foreign aid, its apparently prominent place in our scheme of things, was not sufficiently clear. It seemed necessary to rediscover some of the broader insights gained in World War II, especially during the great Lend-Lease discussion, regarding the nature of the relations between the United States and certain groupings of foreign countries. At the same time, it became apparent that it was necessary to distinguish between various phases of foreign aid which are characterized by different approaches. The dollar shortage is merely one line of approach. The dollar shortage is understood here as a particular process of foreign aid administration. This is not offered as a novel definition but rather as an attempt to catch the common meaning of the term in the time when it appeared and became operational in international economics. In particular, it seems useful to use the term not merely as a synonym for either United States foreign aid or a United States export surplus. Two Viewpoints on Dollar Shortage