The Roles of Aid in Politics Putting China in Perspective

The Roles of Aid in Politics

Putting China in Perspective

An Annotated Bibliography

Ward Warmerdam with Arjan de Haan

February 2011

The perceived failure of aid promulgated in the popular media, the expected failure of many aid recipient nations to attain their Millennium Development Goals, the apparent failure of the military and development missions in Afghanistan and Iraq to quell terrorism and bring about socio-economic development, and the deepening global recession tightening national budgets have caused many governments to re-evaluate their development assistance programs and priorities. Political parties leaning more to the political right are, in many countries, demanding a reduction in foreign aid expenditures in light of their own nation’s struggling economies and welfare systems, with some, in contradiction to OECD best practices, advocating for development assistance programs that also benefit the donor nation’s economies. The fiscal questioning of foreign aid has further led to the questioning of aid’s political roles and its value within and benefits to national governmental frameworks, calling for it to justify its continued existence and its budgetary demands.

Furthermore, the increasingly prominent role of emerging donors such as China and India has provided an altered international political situation in the context of which traditional donor governments must re-evaluate their foreign policy and foreign aid strategies (Broadman 2007). The (re-)emergence of such donors could provide new opportunities for cooperation with traditional donors and improved insights into processes and methods through which to stimulate socio-economic development, in light of South-South cooperation (e.g. Bräutigam 2009; de Haan 2009, 2010; Dollar 2008; Gill et al 2007; IOSCPRC 2005; Ravallion 2008; Tjønneland et 2006). Cooperation could also reduce the burden of traditional donors in the development assistance programs, and might provide the appropriate levels of aid flows to the developing world in order for it achieve much aspired development goals (Eisenman and Kurlantzick 2006). The (re-)emergence of China as donor and the increasingly global reach of its economic relations have often been met with a certain degree of suspicion (noted by e.g. Bräutigam & Tang 2009; Bräutigam 2009). During the Cold War, much of China’s relations with other developing countries were viewed in the context of the global ideological battle and the Communist geo-strategy for world domination (Black 1968; Li 2007; Mushkat 1972). However, post-Cold War post-Economic Reform and Opening Up, China’s foreign policy and foreign aid strategies have markedly changed (Li 2007), and should be studied as such in light of the altered global and domestic contexts.

It is in response to these new circumstances that the politics of aid needs to be reevaluated. This bibliography was compiled with the intention of providing an exploratory first step in this process. It draws together observations and conclusions from the realms of development studies, political science, international relations and economics, written over the last sixty years, concerning the roles of foreign aid in politics. This time period was chosen as it saw: the birth of the modern incarnation of foreign aid; post-war reconstruction in the centers of pre-war wealth and power; former colonies gaining their independence; the geo-strategic ideological battle of the Cold War; the collapse not only of the second largest superpower of the time but also of the socio-political and economic framework that sustained it and its allies; political and economic transitions in these former Communist states; civil wars based on opposing ideologies; civil wars in countries where, with the departure of imperial powers, there were no viable political systems within which power struggles could be mediated; the establishment of multilateral intergovernmental organizations such as the UN, the World Bank and IMF, and regional organizations like the EU; the emergence of global terrorism; the growing popular awareness in developed nations of the plight of the suffering in developing nations; the emergence of new donors, some of whom are themselves still foreign aid recipients, who, some have argued, have different political and economic agendas than the traditional donors; in addition to countless humanitarian disasters and a number of regional and global recessions. The broad time period in which and concerning which publications contained in this compilation were written should allow recurring and emerging trends to become apparent, leading to an increased understanding of how current global circumstances, and domestic political forces, can and will shape the future political roles of foreign aid. Additionally, this should provide a comprehensive understanding of the patterns of foreign aid policies that emerging donors could take and highlight possible methods and theoretical lenses through which a more thorough investigation in China’s foreign relations with other developing countries could be analyzed.

Domestic Origins of Foreign Aid

A natural starting point for an investigation into the politics of aid is to consider the domestic determinants of foreign aid. Foreign aid policies are, like domestic and foreign policies, formulated in consideration of domestic political realities and the context international circumstances. This means that as domestic political situations change and the international context changes, foreign aid policies are reformulated to adapt to the new set of conditions. There are a number of factors within domestic political contexts that can influence the ways in which foreign aid policies are formulated and reformulated. Lancaster (2007a: 18) calls these the domestic political forces which she defines as falling into four categories:

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  Ideas: Lancaster argues that the most fundamental “ideas” shaping aid are “worldviews”, the values shared by a given society based on their culture, religion and/or ideology. These worldviews are the origins of the norms and principled beliefs of a society.
  
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  Political institutions: According to Lancaster these form the “rules of the political games” (2007a: 18). She analyzes the electoral rules, role of legislatures, role of local governments and semi-public entities, the political system (parliamentary and presidential) and the effects these have on shaping the purposes of foreign aid.
  
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  Interests: These, she argues, broadly fall into three different groups, namely: 1) commercial interest groups, 2) NGOs and public interest groups, 3) as well as groups that have religious, ethnic or otherwise associations with specific foreign countries.
  
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  Organization of aid refers to the way that aid is managed within the government structure, particularly whether there is a dedicated development ministry, or whether it is a department within another ministry or ministries. She argues that the organization of aid has a strong influence on the purposes of aid.
  

The current authors believe that the interaction of these domestic political forces can be represented as depicted in figure 1 below:

In her compilation of cases studies Lancaster analyzes the US, Japanese, French, German, and Danish models of foreign aid policy determination using the above described framework. Her findings suggest that foreign aid can only be understood through the lenses of both constructivism and realism (ibid.). She argues that although foreign aid was initially a realist response to the Cold War, by the end of the century the notion that more affluent states have an obligation to provide aid to less-well-off states has become a widely unchallenged norm (ibid.). Lancaster attributes this in part to the establishment of a political constituency for development aid in most donor countries, both inside and outside of the government (ibid.). She states that outside the government NGOs grew in number, size and influence, while inside many governments aid agencies were created with increasing budgets and staff sizes along with a progressive strengthening of professional capacities, and programs to inform the general public about development issues (ibid.). Lancaster cites the Japanese and French cases as proof of the influence of the domestic constituencies in guiding foreign aid towards its increased use for development purposes, as in both these countries, such constituencies are weak or lacked access, and therefore the development purpose of their aid allocation is weakest (ibid.). The author finds that domestic constituencies also increasingly took the role of monitoring government aid for development purposes, complementing international pressures from multilateral organizations such as the OECD-DAC, the World Bank, and UN agencies, promoting the use of aid for development purposes (ibid.). Interestingly, Lancaster notes that acceptance of the aid-for-development norm is dependent on whether the aid-giving nation’s socio-economic condition is sufficiently healthy that foreign aid allocations are not seen to be sacrificing the needs of the poor at home (ibid.). Furthermore, she adds that its acceptance is also dependent on the perceived effectiveness of government aid allocated for development purposes (ibid.). In her compilation of cases studies she observes a number of differences in the domestic political forces affecting aid, most notably varying influences of the different ideas and institutions which shape the purposes of aid. Lancaster’s broad analytical framework captures many of the aspects concerning the roles of aid in politics as discussed below.

These authors believe that the figure below, based on Lancaster’s framework, provides a simplified yet adequate representation of the interaction of domestic political forces and their further interaction with other members of the international system:


Figure 2. Simplified representation of the interaction between domestic and other members of the international system, based on Lancaster (2007a).

Goldstein and Keohane (ed.) (1993) investigate the influence of ideas on policy through a compilation of essays on different aspects and forms of ideas and their influence on policy formation and practice. They categorize ideas as being: world views, principled beliefs, and causal beliefs (ibid.). The authors define principled beliefs as consisting of the normative ideas used to determine right from wrong (Goldstein & Keohane 1993: 9). They further define causal beliefs as beliefs concerning cause-effect relationship, based on the shared consensus of recognized elites (Goldstein & Keohane 1993: 10). Goldstein and Keohane argue that principled or causal beliefs affect policy formulation when these have become ingrained in political institutions and provide ‘road-maps’ to assist actors in policy formulation in strategic situations where there is no unique equilibrium (ibid.). They conclude that it is the combination of interests and ideas that has causal weight in the explanation of actions.

In a similar vein Cingranelli (1993) analyzes the effects of different moral positions on the relations of the US with the Third World through an historical analysis. He states that foreign policy formulation in the US is guided by a political culture composed of the values of: individualism, capitalism, civilian control of the government, rule of law, political equality and democracy (ibid.). The author further identifies four moral positions prevalent in American politics based on who the political leaders are willing to be held responsible by and whose interests these leaders should promote (ibid.). He categorizes these positions as: nationalist, exceptionalist, progressive, and radically progressive, although the latter position has less of a voice due to its similarity to the Marxist moral position. He also analyzes Marxism as a moral position taken in relations with the Third World. The author states that different presidential administrations cannot be classified as falling solely within these four categories, rather their positions will, on average, tend to fall in one category, though their positions will vary in relation to different issues (ibid.). Cingranelli defines these positions as shown in the table below, and analyzes how these positions have affected US relations with the Third World and other weaker nations throughout US history until the Reagan and Bush senior administrations. He concludes that there has been a general trend towards the Progressive moral position, although this has been gradual with regular fluctuations towards the nationalist position (ibid.).

(1) [S]elf-determination or autonomy, (2) nonintervention into the affairs of other states except under extraordinary circumstances, (3) the rejection of certain means no matter how worthy the ends, (4) social, political, and economic justice, (5) the existence of (and obligation to protect) universal human rights (as those rights are defined in international agreements, and (6) a commitment to multilateral as opposed to unilateral action … (Cingranelli 1993: 7-8).

Cingranelli argues that this trend towards a more Progressive moral position is driven by institutional changes in foreign policy making structures and processes initiated by Progressive administrations, the Cold War rivalry, the altered role of the US in the international structure and the shifts in American values (ibid.).

Stokke (1989) also describes how aid policies are formulated through the interaction of the external environment with a country’s domestic environment, norms, interests and traditions. His compilation of analyses regarding the foreign aid policies of five Western middle powers¹ seeks to identify the extent to which different outcomes of foreign aid policy formulation can be explained with reference to the basic values and ideologies predominant in the nations under analysis, which, for the nations in question, he defined as being generally varieties of humane internationalism (ibid.). In the context of foreign aid policy Stokke argues humane internationalism implies: the recognition of the responsibility of developed nations to assist the Third World, a belief that a more just world is in the long-term interests of developed countries, and an understanding that this is not in the disinterest of their own national economic and social welfare policies. Stokke analyzes the foreign aid policies of these five Western middle powers in relation to variations of this ideology, and concludes that there has been a general move towards liberal internationalism in these five nations within the period of study (ibid.). Liberal internationalism, according to Stokke’s definition shares the core concepts of humane internationalism, and adds to it a commitment to an open and multilateral trading system as well the realist internationalism notion that nations ought to pursue economic and political self-interest in the short- and long-term (ibid.). Liberal internationalism, he states, recognizes a responsibility towards the South and aims for economic growth there, through seeking to promote common interests between rich and poor countries (ibid.). Stokke argues that this is motivated by the humanitarian aspects of humane internationalism while recognizing the opportunities for both the North and South in integrating the Third World into the Western market economy (ibid.). Liberal internationalism, he notes, is further characterized by a general objection to state and interstate intervention, as well as procurement tying, rather it favors the mobilization of the private sector in development efforts and the use of ODA to support this, in addition to favoring multilateral agencies which practice open bidding (ibid.). Stokke’s descriptions of different forms of internationalism provide useful measures with which to evaluate foreign aid policies, including the foreign aid policies of China and other emerging donors.²

A number of authors have looked more specifically at certain aspects of domestic politics which influence foreign aid policy. Thérien and Noël (2000), for example, look at the influence of political parties on foreign aid. Their findings suggest that the impact of political ideologies on foreign aid goes beyond the mere support for or opposition to foreign aid policies, but that a political party which remains in power for a longer period of time is able to make its own particular concepts of social justice central to the political debates of their nation (Thérien & Noël 2000). The centrality of these conceptions of social justice in political debates, the authors argue, shapes the formulation of foreign aid policies and priorities (ibid.). Additionally, Thérien and Noël show that social-democratic parties have an influence on levels of development assistance, though the effects of this are only apparent in the long-term (ibid.). Moreover, alongside the influence of political parties on foreign aid expenditures, the authors also identify the significant roles played by welfare institutions and social spending in determining foreign aid spending (ibid.). These findings reflect those from their earlier study (Noël & Thérien 1995), which proposes that the institutionalization of socialist welfare principles at the domestic level shape the nature and practices of a nation’s foreign aid policy, arguing that states with more institutionalized welfare principles at the domestic level are more likely to provide foreign aid and development assistance and to base the provision of aid on similar principles. The influence of a governing party’s prolonged rule on a nation’s concepts of social justice, and therewith the impact on its foreign aid policies is a vital consideration in the analysis of the foreign aid policies of China and other emerging donors, and will provide useful information on which predictions regarding the future directions of these policies can be made. Additionally, and investigation into the extent to which socialist welfare principles are institutionalized in the domestic polities of China and other emerging donors will give an indication of the moral principles on which their aid provision is based.

In a separate article dealing with the effects of the economic ideology of US governments on foreign aid Tingley (2010) finds that economic ideology plays in important role in determining aid allocations. He suggests that progressively more conservative governments commit progressively less of their GDP to foreign aid efforts than more liberal governments (ibid.). This, Tingley states, is especially the case with aid allocations to poorer countries and multilateral organizations, which he purports indicates that conservative governments attach higher importance to trade and geopolitics than development assistance (ibid.). These findings reflect those of a number of studies mentioned above, such as that of Thérien (2000).

Domestic socio-economic and political conditions are clearly taken into consideration when foreign aid policies and priorities are devised. These and other publications contained in this bibliography should give insights into the nature of the domestic political forces that shape foreign aid, and how these interact with international circumstances to formulate aid policies. Similar studies on the nature of the domestic political forces, as most comprehensively formulated by Lancaster (2007a), in China and other (re-)emerging donors will also provide understandings into the possible changes in international foreign policy and foreign aid system.