The Roles of Aid in Politics Putting China in Perspective

This paper surveys recent research on aid and growth. It also provides an overview of research on inter-recipient aid allocation. The overall focus of the paper is on the relevance of these issues for poverty-efficient aid, defined as a pattern of inter-recipient aid allocation which maximises poverty reduction. It identifies a range of poverty reducing criteria on which aid allocation or selectivity might be based, calling for a broader selectivity framework. The paper argues that this framework should be built on a recognition that the effectiveness of aid in increasing growth, and by implication in reducing poverty, is contingent on a range of factors in addition to the quality of recipient country policy regimes. These factors include political stability, democracy, post conflict reconstruction, and economic vulnerability.

This article surveyed two related strands of literature on the allocation of development aid among recipient countries. The first strand consists of those studies seeking to describe or evaluate the allocation of aid against normative criteria. The second strand comprises those that seek to prescribe the interrecipient allocation of aid by deriving the amounts of aid each country should receive, also based on normative criteria. A specific objective of the article was to compare the allocations of different prescriptive approaches, not only among each other but also with actual aid allocations. This exercise revealed some interesting results. Without exception, actually implementing these approaches would see tremendous changes in the way aid is allocated, with some countries receiving much more aid than they actually do and others receiving far less.

It should be emphasized that the prescriptive literature is still a very young, emerging one; that, to date, only a handful of studies have been conducted emphasizes this. The usefulness of these studies can be gauged by their impact on actual donor behavior, hopefully resulting in more developmentally oriented, and less politically oriented, patterns of aid allocation. Further work is required if this outcome is to be observed. A useful start to this work involves addressing inter alia the criticisms outlined in this study. These criticisms include a possibly excessive reliance on growth as a determinant of poverty reduction, ambiguities over the relevance of recipient policy regimes for aid effectiveness, and possible disincentive effects of allocating aid based on need alone. More generally, there remains unresolved the difficult normative issue of whether poor countries necessarily deserve more aid than others even if they themselves have done little to enhance the welfare of their citizens.

McKinlay, Robert D. (1978), “The German Aid Relationship: A Test of the Recipient Need and the Donor Interest Models of the Distribution of German Bilateral Aid, 1961-1970,” in European Journal of Political Research, Vol. 6, No.3, pp. 235-257.

The major premise of this paper is that an identification of the criteria of aid allocation is of interest specifically to explain the distribution of aid and more generally to indicate the nature and role of aid. The variety of criteria which potentially can explain the distribution of aid can be organized in terms of the perspectives of recipient need or donor interest. If the distribution of aid is accurately portrayed by recipient need criteria, then the interpretation of aid in terms of economic assistance is valid, whereas if the donor interest criteria are accurate, then the foreign policy interpretation is more appropriate.

The fit of the recipient need model against the annual distribution of German aid over the period 1961-70 is inadequate. It is clear, consequently, that the German aid programme is not based primarily on humanitarian or welfare criteria. The economic assistance interpretation of aid, therefore, is not valid, and an explanation of the German aid programme primarily in terms of a “moral obligation” is inaccurate.

The donor interest model, on the other hand, provides a good fit to the distribution of German aid. Consequently, we can interpret German aid in terms of a foreign policy conceptualization. While a variety of German interests underlie and dictate the pattern of German aid, the clearest and most important are trading or, more specifically, export interests. However, in addition to finding that the distribution of German aid is not explicitly ‘antithetical to humanitarian nor welfare dictates, we also find, within the general rubric of a donor interest interpretation, evidence of a quasi-humanitarian component.

Thus, the German aid programme cannot be adequately summarized by either a stringent recipient need or a stringent donor interest model. Nonetheless, we suggest that the German aid programme is premised primarily from the perspective of German “vital interests”, and that as a consequence the interpretation of German aid from the perspective of its foreign policy utility is valid. However, this interpretation must be modified to accommodate a quasi-humanitarian component.

McKinlay, Robert D. (1979), "The Aid Relationship: A Foreign Policy Model and Interpretation of the Distributions of Official Bilateral Economic Aid of the United States, the United Kingdom, France, and Germany, 1960-1970," in Comparative Political Studies, Vol. 11, No. 4, pp. 411-463.

While the humanitarian interpretation of aid transfers provides a very clear explanation of the aid relationship, it is now generally accepted that this interpretation is inaccurate. The criticisms leveled at the humanitarian interpretation consistently suggest that aid transfers are premised more on the foreign policy interests of the donor than on the welfare or humanitarian needs of the recipient. In general, however, the foreign policy view is stated only negatively – that is to say, in the form of a critique and rejection of the humanitarian view. We have tried to establish a more positive and systematic foreign policy model on the basis of the proposition that aid provides the utilities of commitment and dependence which a donor can employ to promote and protect a variety of interests. If this model and the test procedure are accepted, then it should now be clear that we have a reasonable, albeit rather low-level, explanation of bilateral aid transfers.

The obvious point of reference from which to make a higher-level evaluation of our findings lies in the literature on imperialism. ⁴⁸ Unfortunately, it is not easy to aggregate our findings with this literature. In the first place, the analysis of aid comprises only one segment of imperialism, and, furthermore, our study, covering only the distribution, neglects the impact of aid. Secondly, there is no such thing as the theory of imperialism. Quite apart from its size and diversity, the literature on imperialism is frequently polemical, written at a very gross level of aggregation and characterized all too frequently by untestable proposition. It is quite simply beyond us to use our findings to test or evaluate the multitude of so-called theories of imperialism. Rather, we shall indicate the approach to the analysis of imperialism that we find most persuasive, and then summarize our findings in terms of this approach.

Cohen’s work (1974) represents, in our opinion, the most productive approach to the analysis of imperialism. Imperialism is defined quite simply and unambiguously as “any relationship of effective domination or control, political or economic, direct or indirect, of one nation over another.” The attraction of this definition is that it begs no questions and contains no overt or covert assumptions. The forms and forces of imperialism, as Cohen points out, should be divorced from the definition of imperialism, and treated as subjects for empirical inquiry.

Moving beyond the purely conceptual stage, we agree with Cohen that the taproot or explanation of imperialism lies not so much in the domestic structure of advanced industrial states as in the structure of the international system. ⁴⁹ (In fairness to Cohen, we should point out that from now on we are not paraphrasing his work). In particular, the international system is characterized by a high level of overt and unmoderated competition. This competition stems from the absence of any basic normative order and the lack of complementary or collective goal formulation and implementation. The presence of substantial asymmetries within this environment of unmoderated competition encourages dominant actors to use control strategies to promote their interests and thereby maintain dominance.

In order to amplify this characterization of the taproot of imperialism, we can use the distinction between a social system and a system consisting of social interactions. Whereas the former consists of a set of components which interact within a basic normative order to pursue a set of complementary or collective goals, the latter consists simply of interactions which take place without any pronounced normative order or collective goal formation.

The advanced industrial states are unequivocally highly developed social systems. Each component subsystem manifests a large number of formal and informal rules, invariably reinforced by formal or informal sanctions. Furthermore, there are rules and sanctions governing the interactions of all the component subsystems. These rules and sanctions create the basic normative order. In addition, although all the component subsystems do not display identical goals, there is commonly a high level of complementarity. ⁵⁰ What is most critical, however, in this context is the growth in the roles and capabilities of the central government. This organization has come to assume responsibility for an enormous range of collective goals, and in the process has become the “grand orchestrator” of modern industrial societies.⁵¹ Thus, while competition within industrial societies is still very prevalent, the combination of rules, sanctions, and collective goals serves to moderate this competition, and provide a basic order for domestic interactions.

In contrast, the international system should be seen either as a system comprising social interactions or at least an embryonic social system. Though formal and informal rules, at both official and private levels, do exist, they are not nearly as extensive. Sanctions to reinforce these rules, particularly at the formal level, are even less well developed. Collective goal formulation and implementation is virtually non-existent. The most highly developed manifestations of rules, sanctions and collective goals are found in the activities of intergovernmental organizations (IGOs). Without disputing the important innovations of these organizations as far as international rule-making and collective goal formation are concerned, a number of important caveats must be noted: IGOs possess limited resources and few sanctions. Their resources are tied to nation state contributions, and their outputs reflect quite closely the international hierarchy. Many IGOs simply reflect and thereby reinforce prevalent international cleavages and tensions. A number of important issues or areas of interaction (such as nontariff barriers or the Eurodollar market) are outside their sphere of jurisdiction. Finally, major states often bypass these organizations. Thus, not only is it abundantly clear that IGOs are very far removed from supranational authorities, but also we would argue that, by virtue of rejecting and reinforcing the international hierarchy, they can actually exacerbate competition.

While the growth of interaction and interdependence within the nation state has been accompanied by a concomitant expansion of integrative and regulatory mechanisms, this has not been the case in the international system. As a consequence, the propensity for international actors to use domination strategies to control their environment is much more pronounced. This propensity to domination is further encouraged and facilitated by colossal asymmetries.

We can distinguish two forms of imperialism, which we label political and economic, in terms of the rationales underlying attempts to maintain dominance. The political form has its origin in competition stimulated by preoccupations with national security, and consequently control and influence strategies are employed by dominant states to enhance their security. The economic form derives from competition stemming from issues such as trade and investment. Consequently, control and influence strategies are used in the pursuit of material well-being.

Our proposition that aid provides the donor with commitment and dependence utilities is compatible with the imperialism assertion that dominant states employ control and influence strategies. Our proposition that donor interests underlie and structure the distributions of commitment and dependence is compatible with the imperialism argument that, in an environment of essentially unmoderated competition, states employ control and influence strategies in order to protect their interests and thereby preserve their dominance. Furthermore, the interests profiled by our model accommodate both the political and economic interpretations.

We find strong confirmation for the foreign policy interpretation for each of the donors. There is a further similarity among the donors in that, although different interests underlie the distributions of commitment and dependence of any donor, these interests tend to be complementary. Finally, while there are changes in the interests structuring each donor’s distributions of commitment and dependence, there is generally a high degree of consistency in the critical interests over the period 1960-1970.

There are, however, important difference among the donors in how systematically and comprehensively developed the foreign policy basis of their aid relationship is, and in the particular interests which are promoted.

The foreign policy basis is most highly developed in the aid relationships of America and France. On account of the size of its aid programme, America achieves high levels of commitment and dependence. Furthermore, a clear set of complementary interests provides a good explanation of its distributions of commitment and dependence. The much smaller aid programmes of the European donors mean that none can rival the global scope and scale of the American programme. By concentrating its aid in a relatively small number of countries, France can equal, and, in some respects, even surpass America in a more restricted sphere. This is true, however, only for the French aid relationship with its former colonies. Although the extension of French aid to nonformer colonies is certainly compatible with the foreign policy interpretation, the low levels of dependence established in these recipients indicate that the foreign policy basis of this aid relationship is not highly developed.

These two donors, however, pursue quite different sets of interests. The centrality of power political and security interests in the American aid programme reflects clearly the global superpower security role of America, and makes this aid relationship directly consonant with the political interpretation of imperialism. The salience of trading interests in the French aid programme makes it more compatible with the economic interpretation. There are also aspects of the political interpretation present in the importance attached to the maintenance of a sphere of influence in the context of the former colonies. However, the correspondence between France’s trading interests and its sphere of influence perhaps make the significance of the sphere of influence more politicoeconomic than purely political.

The foreign policy basis, though certainly very clear, is less highly developed in the British and German aid relationships. While neither has an aid programme modeled primarily on humanitarian considerations, there is a quasi-humanitarian component in both programmes. Furthermore, neither follows the French strategy of concentrating aid in a relatively small number of recipients. Consequently, neither can match the global levels of commitment and dependence established by America or the more restricted levels established by France. Britain, however, does allocate relatively more aid to smaller countries, and consequently achieves comparatively high levels of commitment and dependence. Furthermore, we can provide good explanations of the distributions of these distributions. On the other hand, the comparatively low levels of German aid dependence and the relatively poor explanations of the distributions of relative commitment and dependence lead us to conclude that Germany does not manipulate its aid allocations so as to maximize the benefit it could gain from its aid programme.

The centrality of trading interests indicates a basic similarity in the German and French aid relationships. However, the German aid relationship does not incorporate a sphere of influence dimension, and also its foreign policy basis is considerably less developed than that of France. Consequently, Germany’s aid programme more weakly reflects the economic interpretation of imperialism. Britain has parallels with both the American and French aid relationship. Like France, Britain pursues the maintenance of a sphere of influence, but, unlike France, the rationale for this seems to be political rather than economic. Thus, the British sphere of influence does not correspond as closely with British gross trading interests. In this respect, Britain, like America, conforms more closely to the political interpretation of imperialism. The critical difference between Britain and America is that while the former in some respects does attempt to play a global role, its interests are considerably more parochial than American ones. Thus, former colonial ties, though not all-embracing, are still very prevalent, while security considerations more closely reflect past associations than they do the more current preoccupation with the containment of communism.

While there are important differences in the types of interest pursued and in how systematically and comprehensively the foreign policy orientations are developed, the aid relationships of each of the four major Western donors are compatible with the foreign policy interpretations of aid. Thus, in rather more general terms, the major Western bilateral aid programmes can be seen as dimensions of different manifestations of contemporary imperialism.

The rationale for this paper is based on the proposition that although the foreign policy view of aid is now dominant, it has not been developed systematically. Initially we establish an analytic foreign policy model of aid allocation. The model suggests that the provision of aid enables the donor to form relations of commitment and dependency. These in turn afford foreign policy utilities that can be used by the donor to promote and protect certain of its interests.

The research objective is to identify the substantive interests pursued by the United States through its aid program over the period 1960- I970. Although there is some variation in the specific interests associated with commitment and dependency, our findings indicate that power-political and security concerns are the central interests supported by and controlled through the U.S. aid program. There is, therefore, an underlying complementarity between commitment and dependency in the sense that both are used to pursue the same sets of interests. Furthermore, we find that, during the period examined, there is a high degree of consistency and stability in the interests that are pursued.

The foreign policy model that provides the most satisfactory explanation of the U.S. aid program conforms to a general view of international relations characterized by the political interpretation of imperialism. Imperialism assumes that there is inequality among states, and that the dominant states employ strategies of control and influence to preserve their dominance. There are, however, various interpretations of imperialism that are distinguished by the rationale underlying and explaining the attempts to maintain dominance. The political interpretation characterizes the international system in terms of competing nation-states operating in an anarchic environment. The combination of competition and anarchy encourages a preoccupation with national security. The strategies of control and influence that are associated with imperialism can be used by states to enhance their security. Our proposition – that the provision of aid affords the utilities associated with commitment and dependency – permits aid to be seen as a dimension of imperialism. Our substantive finding – that power-political and security interests structure the pattern of commitment and dependency established through U.S. aid – is consonant with an explanation of the U.S. aid program in terms of the political interpretation of imperial- ism.²²

The foreign policy critique of the humanitarian interpretation of aid (namely, that aid is more closely related to the interests of the donor than the needs of the recipient) has not been developed more positively into a clear and systematic formulation of the aid relationship. We have attempted to provide a more positive and satisfactory alternative by establishing an explicit foreign policy model. Aid is conceptualized as a form of commitment and dependency, and the rationale underlying its distribution is seen in terms of the attempt by the donor to promote and protect a variety of its interests through the utilities inherent in commitment and dependency. We have suggested that we can test our foreign policy model and interpretation of aid in the case of France by examining whether clear and explicit interests underlie and explain its aid distribution.

The appearance of a clear set of interests, which can explain well the distributions of commitment and dependency established through French aid, suggest strong confirmation of the foreign policy interpretation of the French aid relationship. More precisely, our findings lead to the conclusion that France maintains two distinct aid relations. While both are compatible with the general foreign policy interpretation, the aid relationship with the former colonies is more stringently foreign policy oriented. The legacies of the assimilation and association colonial policies are still very apparent in that former colonies are selected as recipients precisely because they constitute a distinct sphere of influence. The two major themes, characterizing the allocation process in the former colonies, are the promotion of French trade and the maintenance of a sphere of influence. Similar considerations underlie the French aid relationship with its non-colonial recipients. The diversification of French trade has been closely followed by the diversification of its aid, so that by 1970 France has incorporated virtually all its major trading partners into its aid system. Furthermore, an analysis of the allocation process illustrates the salience of French overseas economic interests. However, the foreign policy basis of this relationship is not as highly developed. The non-colonial recipients do not constitute a sphere of influence, and the level of dependency is so low that we can interpret aid only in terms of commitment.

This evaluation of the French aid relationship can be placed in perspective by comparing it with our findings on the nature of the aid relationship of the US and UK.²³ We have found that our general foreign policy interpretation of aid provides a good explanation of the aid relationship of each of these donors. However, differences appear among the donors in how systematically and comprehensively the foreign policy basis of their relationship is developed, and in the particular interests promoted and protected through aid.

In terms of the systematic development of the foreign policy basis of its aid programme, France in some extent rivals the US and certainly surpasses the UK. Simply by virtue of the size of its aid programme the US can achieve much higher levels of commitment and dependency than any European donor.²⁴ France compensates to some extent, however, by having a relatively larger aid programme than the US and by concentrating its aid on a much smaller number of recipients.²⁵ Thus, while France cannot rival the global scope and scale of the US programme, it can equal the US in a more restricted sphere. In contrast, the UK does not follow France’s compensatory strategy. The relative size of the UK aid programme more closely resembles that of the US than France, while the number of UK recipients shows that the UK has a global commitment which again is closer to the US than France.²⁶ Thus, while France certainly cannot equal the US, by pursuing a compensatory strategy it manages to maintain a well developed foreign policy basis and, unlike the UK, avoids being a pale imitation of the US.

When we examine the major interests promoted and protected by the aid programmes of the three donors, the independence and well articulated foreign policy basis of the French aid relationship is once again apparent. While France and the US are similar in having a well developed foreign policy orientation, they pursue quite different types of interest. Power political and security considerations, reflecting very clearly the global superpower security role of the US, are the central interests underlying the distributions of US aid commitment and dependency. France demonstrates none of these concerns. While the maintenance of a sphere of influence has some parallel with the security concerns of the US, the security considerations of the US are strongly influenced by the current preoccupation with the containment of communism, whereas the French security concerns are not only less salient but also more parochial and more closely related to historic ties. Furthermore, the predominant influence of overseas economic interests in the case of France has no counterpart in the US context. Superficially, there appears to be some resemblance between French and British interests. Britain is certainly preoccupied with a sphere of influence which again is strongly reliant on historic associations. However, the UK aid relationship has signs of a quasi-humanitarian influence which is not apparent in the French relationship; the UK also manifests a more extensive and general antagonism to communism, albeit not as pronounced as in the case of the US; the UK’s sphere of influence is not nearly as clearly defined as France’s; and, finally, the UK appears to be interested solely in a sphere of influence per se, and, unlike France, not in maximizing any particular interests within this sphere.

Thus, all three major Western donors have an aid relationship which is generally consonant with a foreign policy interpretation. In contrast to the US, the French aid relationship reflects its status as a major as opposed to a superpower. In contrast to the UK, the French aid relationship reflects a major power status characterized by a more marked degree of independence and a better articulated set of interests.