Thérien, Jean-Philippe and Noël, Alain (2000), “Political Parties and Foreign Aid,” in American Political Science Review, Vol. 94, No. 1, pp. 151-162

The findings presented in this article help clarify how foreign aid is shaped by domestic politics. Our model confirms the primacy of welfare state socialist attributes and government social spending in the explanation of development assistance policies. At the same time, it shows, contrary to previous quantitative studies of the topic, that political parties do matter, not directly and in the short run, but indirectly and over the years. Our findings lend support to the intuition of qualitative studies that have long emphasized the role of partisan cleavages in the formulation of foreign aid policies. For scholars interested in parties, the model also can be useful, since it offers a new assessment of partisan effects. It confirms the empirical relevance of cumulative scores of partisanship and shows how social-democratic power operates through other political determinants.

Most international relations scholars agree that the question is no longer to determine whether domestic explanations should be integrated with international ones, but to establish exactly how this can be done (Moravscik 1993, 8). In our opinion, it is imperative to look closely at domestic conflicts and to do so with the help of the comparative politics literature. This study suggests that political parties, welfare institutions, and social spending play a significant role in the aid policy process, probably because parties and the welfare state “render some ideas more politically influential than others” (Yee 1996, 93). As is explained in the theoretical model section, when parties hold power for a long period, they put forward specific conceptions of social justice that become established as central to a country’s political debates. Foreign aid, in particular, appears strongly influenced by “the capacity of a society to accept and institutionalize nonmarket principles of income redistribution” (Noël and Thérien 1995, 549).

The exact processes through which this influence becomes effective and evolves can only be assessed with case studies. Our findings are consistent with a host of such studies, as well as with Lumsdaine's (1993, 179) observation: “The parties that supported aid were those concerned with issues of equality and alleviation of poverty, not those concerned with the free market or with military and strategic issues.” The influence of these concerns is felt mainly in the long run, as parties establish their primacy in society and as their ideas become institutionalized. The partisan history of Scandinavia and Britain, for instance, has shaped these countries’ public debates: “Liberalism and social democracy have been hegemonic ideological forces in the arena of political reasoning for close to a century. They have structured the political dialogue around questions of liberty and equality, individual property rights and the central government’s power to intervene in the marketplace, social class and citizenship” (Kitschelt 1994, 265). We agree that such public debates matter, and we argue that they matter not only for domestic politics but also for foreign policy.

The aid regime is a complex international institution which, over the years, has experienced a number of transformations. Most of these changes, however, can be made sense of only if they are relocated within the ideological environment that spawned them. That insight has made it possible here to examine foreign aid in an innovative manner, whereby its evolution has been shown to be characterized by an ongoing conflict between the Right and the Left. Considering that the notions of Right and Left refer to a continuum rather than discrete realities and that, in addition, their meanings have varied through space and time, one could no doubt object to our interpretation on grounds of reductionism. This is a common liability of arguments developed in terms of ideal types. Ultimately, however, using the Right-Left distinction as a conceptual road map to understand development assistance offers many more advantages than drawbacks. Indeed, the Right-Left division has made possible an analysis of aid that is at once systematic, solidly rooted in political reality, and less mechanical than the realist, liberal, and neo-Marxist interpretations that have traditionally dominated the field of international relations.

Looking beyond this specific study of foreign aid, it is important, by way of conclusion, to emphasise that few international phenomena – be they economic, social, environmental or security issues – are exempt from the Right-Left opposition. Yet, despite its manifest descriptive capabilities, the Right-Left distinction has until now received very little attention from students of international relations. It is hoped that this omission may one day be corrected. Among the likely benefits that introducing the terms Right and Left would bring to international relations theory, three are worth underscoring. First, these terms could help improve the dialogue between the fields of comparative politics and international relations. Second, they would provide a conceptual bridge linking the positive and normative dimensions of the analysis of international processes. Above all, however, they would open the way to making the language of the experts less cryptic for the ordinary citizen.

Thorbecke, Erick (2000), “The Evolution of the Development Doctrine and the Role of Foreign Aid, 1950-2000,” in Tarp, Finn (ed.), Foreign Aid and Development: Lessons Learnt and Directions for the Future, pp. 17-47, London and New York: Routledge.

The retrospective appraisal undertaken in this chapter revealed the close interdependence throughout the last five decades of the twentieth century among (i) development objectives, (ii) the conceptual framework and models, (iii) data systems and information, (iv) strategies and (v) the role of development aid. In each period, the nature and scope of the prevailing development strategy and the role of aid were largely predetermined by the state of the art, the available data systems and the prevailing conditions at the time. Thus, for example, a very limited analytical framework such as the totally aggregate (one-sector) model of the 1950s and the predominance of a data system relying almost exclusively on national income accounts, predetermined that the corresponding development strategy would be couched within a uni-sectoral setting. In contrast, the multi-sectoral framework of the 1990s, based on a much clearer understanding of the elements and mechanisms (some endogenous) influencing the development process and the availability of an extremely disaggregated set of socio-economic data, allowed the design of a stabilization-cum-growth-cum-poverty alleviation strategy.

The conception of the role of aid evolved in parallel with the evolution of the development doctrine. In the 1950s, the role of aid was seen mainly as a source of capital to trigger economic growth through higher investment. Faith in the capacity of recipient governments to plan successfully and use aid efficiently was strong. In the 1960s, the role of foreign assistance, in the light of the two-gap models, was considered important in removing either a savings deficiency through an increased flow of foreign savings or a deficit in the current account of the balance-of-payments by providing the necessary foreign exchange. The 1970s witnessed a major change in the role of aid, i.e. that the primary objective of foreign assistance should be to raise the standard of living of the poor largely through increased employment. The focus on poverty alleviation required new types of investment and new forms of intervention.

With the advent of the debt crisis and the debt overhang, in the 1980s the role and conception of aid changed in a major way. The primary purpose of aid became twofold; as a stop gap measure to salvage the shaky international financial system and to encourage the implementation of appropriate adjustment policies in third world countries through conditionality attached to programme lending. In that decade, characterized by pro-market and anti-government rhetoric, there was a strong and lingering case of ‘aid fatigue’ influenced by the rising fear that foreign assistance was generating aid dependency relationships in poor countries. The issue of the effectiveness of aid conditionality was also critically debated. The socio-economic havoc created by the Asian financial crisis engendered a fundamental re-examination of the role of aid and the uncritical acceptance of Bretton Woods rules of the game and the ‘Washington Consensus’. The World Bank, in particular, took the leadership in advocating poverty alleviation and improvement in human welfare as the overarching objective of development and of foreign assistance.

A common and very robust result in the public opinion literature is that individuals who are more conservative are also less likely to support foreign aid. The literature on legislative voting on foreign aid in the US finds a similar pattern. However, the evidence based on cross-country analyses has been more mixed. This paper presents the first analysis that systematically explores the domestic political determinants of aid behavior over time and within countries. I have argued that political and economic variables play an important role in capturing trends in foreign aid. Notably, as governments become more conservative, the share of GDP committed to foreign aid effort declines.

Interestingly, economic ideology appears to matter more for aid to poorer developing countries and multilateral institutions than aid to wealthier developing countries. This is broadly consistent with Fleck and Kilby (2006) who find that more conservative US governments to give more aid to trading partners, while more liberal US governments give more aid to countries needy countries. This also suggests that aid to richer countries could possibly be more about trade or geopolitics. These results have important implications for how we understand the economic impact of foreign aid. First, changes in domestic political ideology through regularly occurring elections could introduce changes in aid levels, which in turn create volatility in aid. The magnitude of this volatility and its effect is of course an open empirical question. But volatility in aid is an increasingly cited cause of aid ineffectiveness (Arellano et al., 2009; Bulir & Hamann, 2003; Bulir & Lane, 2002; Eifert & Gelb, 2005; Lensink & Morrissey, 2000). However, this literature generally has been silent on the causes of volatility. Insofar as the policy prescriptions from this literature generally seek to limit volatility, a more thorough understanding of the sources of volatility—for example, donor politics as outlined in this paper—seems worthwhile.

Another contribution is that the analyses show that changes in donor level political variables lead to changes in aid effort that differ across particular types of aid. Hence, governments may have different strategic and economic interests depending on their ideological orientations. Constancy in the international political environment could mask important domestic sources of change in economic and strategic interests. This could have important implications for identification strategies used in the aid effectiveness literature. The results of this paper echo a conclusion laid out by Fleck and Kilby (2006, p. 220) “(o)ur results point to an important caveat for those attempting to instrument for aid with political variables: the political circumstances in donor countries are likely to affect not only the amounts of aid to developing countries, but the motivation for providing that aid—including the extent to which aid is focused on reaching development objectives. Thus, political variables may instrument, in part, for the purpose of aid. And the purpose of aid will likely influence the effects of aid on development” (see also Fleck & Kilby 2008; Kilby & Dreher 2009). As a result of changes in aid motivation, the strength of instruments may change over time, as could the satisfaction of the exclusion restriction. Treating country interests as though they are fixed and independent of domestic politics leads to faulty assumptions in attempts to solve endogeneity problems in the analysis of the relationship between aid and growth.

While domestic ideological factors appear to influence aid effort, undoubtedly other ideological and structural factors can influence commitment decisions. For example, the literature argues that there may be some externalization of ‘moral’ beliefs (Lumsdaine, 1993). While my analysis controlled for domestic welfare state policies, changes in the debate about the morality of aid might influence aid effort. For example, consider the recent warming to foreign aid from conservative Republicans in the United States. Pundits and scholars attribute this fact to changes in moral agendas of Evangelical Christian groups that have come to see foreign aid to poor countries as an important function of government (Busby, 2007). Geo-political and security concerns could overwhelm otherwise salient ideological positions, as could international influence following broader consensus across donors (Lumsdaine, 1993, p. 140). It will be an interesting empirical question over the next decades to see if other changes at the international level have an effect on the type of political coalitions in donor countries that support foreign aid.

Toye, John (1991), “The Aid and Trade Provision of the British Overseas Aid Programme,” in Bose, Anurdha and Burnell, Peter (eds.) (1991), Britain’s Overseas Aid Since 1979: Between Idealism and Self-Interest, pp. 97-124, Manchester: Manchester University Press.

The ATP scheme has had a major impact on lowering the quality of UK aid. Ideally the real-terms reductions in the aid budget in the decade after 1979 could have been offset to some extent by raising the ‘quality’ of individual aid projects. Less transfer of purchasing power to developing countries, but wiser spending, should mean that the developmental impact overall would not fall proportionately. This is not an ignoble prospectus. But the retention and expansion of the ATP scheme has meant that the leaner and fitter aid budget remains a prospectus rather than an achieved fact.

ATP not only has an undesirable bias against aid for the poorest and aid that is environmentally-friendly, its sketchier appraisals make it generally more accident-prone it its efforts to promote development. The critics of ATP have made these points before. Additionally, however, it must be understood that the commercial advantages which the UK is said to gain from the scheme are much more dubious than is generally realized. The maximization of the value of exports – if necessary using government subsidies – is not a self-evidently desirable national economic objective. The ATP scheme trades off developmental benefits for a policy objective which lacks a defensible economic rationale.

What is not in doubt is that ATP has created a vested interest of a classic kind. It has brought together a small number of large capital goods firms with a common interest in maintaining and expanding the scheme. The scheme itself, by adding to their profits, provides them with the wherewithal to finance the costs of their own political lobbying. Successive governments have allowed themselves to be captured by this vested interest. Even the Thatcher government, dedicated to ‘fiscal discipline’, ‘continence’ and ‘free trade’, never had the courage to strike down this wretched abuse of taxpayers’ money. Were the Tory pessimists, who mused on the vanity of human wishes, right after all?

Using and anchor-and-adjust conceptualization, we offered a multiple streams model to account for interactions between domestic and external factors in explaining U.S. foreign aid allocations. Our findings have implications for the study of public policy, the future of the foreign aid program, and theoretical attempts to develop more generalizable explanations of policy that encompass foreign and domestic issues.

We have carried the multiple streams approach forward in three ways. First, this is the first attempt to examine quantitatively hypotheses derived from the multiple streams approach. We have shown that the hypotheses can be tested empirically and that the results are largely consistent with the theoretical expectations. The effects are in many instances significant only when some factors (problems or politics) interact with other in the presence of open policy windows. We conclude that Kingdon’s work is a good way to organize diverse types of information and to illustrate the interactive nature of the policy process. Second, we have extended Kingdon’s model to incremental decision making. Our empirical work reinforces the overwhelming importance of budgetary momentum in foreign aid allocations. Finally, we have extended the multiple streams model that was initially used to explain agenda setting in domestic politics to the area of decision making. More important, we have used the same model to explore questions of foreign policy. By demonstrating that this can be done with little analytical loss, we aim to encourage further research in this direction. Contrary to conventional wisdom, which currently views foreign policy as a distinct area, with its own models largely divorced from domestic policy, we maintain that the two are different sides of the same coin. The difference between them are more imagined than real. Surely, foreign policy involves fewer constituencies and a more closed circle of political elites. But as our study shows, such characteristics are not detrimental to theoretical developments that view both policies as conceptually similar enterprises. The study aims to encourage more theoretical cross-fertilization between foreign and domestic policy models.

Further, our study yields important insights as to the future of the foreign aid programme. For example, we uncovered an aid-trade substitutability effect that was in existence even before the end of the Cold War. This implies that the desire of post-Cold War administrations, such as Clinton’s, to use increased trade ties as a mechanism for reducing economic aid already had a history. The substitutability relationship also suggests that as free trade on a global scale grows, aid is likely to diminish in amount and importance. Greater commercial ties and not ideological struggles may spell the end of the program. Additionally, we offer nuance to particular arguments on whether domestic politics makes a difference on foreign aid. We have found that it is not Democratic control of the presidency that counts but rather Democratic control of the Senate that exercises a systematic negative bias on aid allocations of security funds. There is no such effect over the allocation of economic assistance. The finding that domestic politics, as represented by Senate control, has an effect varying across programs suggests that there is much to be learned about how specific societal pressures affect foreign policy.

Finally, our work has sought to integrate multiple areas of research by analyzing them in reference to one model. The use of a single model has done more than offer a more parsimonious way of analyzing public policy. As globalization takes hold, old divisions between domestic and external affairs become more blurred. For political science, this has meant renewed attention to breaking down disciplinary barriers particularly between international relations and comparative politics (Caporaso, 1997). Despite some promise, however, not much has been accomplished beyond the recognition that it should be done. Work on two-level games has provided one interesting, but limited, way to model interactions between external and domestic effects on policy (Putnam, 1988; Evans, Jacobson, & Putnam, 1993). Two-level game models show how domestic coalitions, resources, and institutions shape the winning set of solutions and interact with the external environment as a way of crafting strategies to achieve success in foreign policy. The major point is that games in one level (international) cannot serve as inputs for games in the other (domestic). Policies are made by playing on two levels simultaneously. Our multiple streams model used a different point of departure. We have sought to overcome the single actor assumption of two-level games, which we find unrealistic, while still striving to model the interactions between external problems and domestic politics on the formulation of public policy. In light of attempts at theoretical integration, we conclude that the use of multiple streams models to study both domestic and foreign policies is a good place to start.

Tuman, John and Ayoub, Ayoub (2004), “The Determinants of Japanese Official Development Assistance in Africa: A Pooled Time Series Analysis,” in International Interactions, Vol. 30, No. 1, pp. 43-57.

In this paper, we have attempted to clarify the determinants of Japanese ODA to Africa. The findings suggest that humanitarian considerations, as measured by real GNP per capita, human rights, democracy, and food insecurity have figured prominently in Japanese aid decisions. The model also points to the importance of trade and Japanese ODA in Africa, although oil-exporting countries did not receive more Japanese ODA, on average, during the study period. Aid is given to promote certain U.S. security interests, including rewarding countries that house U.S. military personnel and in recipients that shared a border with a communist regime. Other U.S. economic interests were found to have little explanatory value, however.

The results of this study indicate that the humanitarian interests supported by Japanese ODA may vary somewhat cross-regionally. Although human rights and regime type have been shown to be relatively unimportant determinants of Japanese ODA in Latin America and Asia (Inukai, 1993; Tuman, Emmert, and Sterken, 2001), we find that human rights and democracy have had an effect on aid disbursements in Africa. For other humanitarian interests, however, there does appear to be consistency across different regions. This study, like previous analyses of Africa (Schraeder, Hook, and Taylor, 1998),²⁶ shows that Japanese ODA concentrates in countries with lower per capita income. A number of other studies have found the same relationship between Japanese aid and national income in Asia and Latin America (Chan, 1992; Inukai, 1993; Cingranelli and Gomez, 1996; Katada, 1997). The negative association between recipient income and ODA throughout the world suggests that Japanese aid policymakers share a global concern for poverty reduction.

Similarly, the national economic interests associated with Japanese ODA are not consistent across different regions of the developing world. As noted, Japanese ODA in Asia and Africa is often linked to the promotion of trade with recipients (Rix, 1996; Stein, 1998; Schraeder, Hook, and Taylor, 1998). Nevertheless, trade and direct investment have been shown to have little influence on Japanese aid in Latin America (Tuman, Emmert, and Sterken, 2001). The reasons for this regional contrast are not entirely clear. Possibly, Japanese ODA in Africa and Asia responds to a much broader range of national interests than in Latin America because the former regions offer advantages to Japanese corporations. For example, while U.S. companies account for the majority of trade and direct investment in Latin America, they have little presence in Africa. As a result, Japanese companies involved in Africa are in a strong position relative to potential competitors, and ODA might be used to maintain that advantage. Likewise, the association between ODA and trade in Asia might reflect Asia’s close proximity to Japan, its efficient and low-cost workforce, and its natural resource base.

An additional implication concerns the motives of different OECD aid donors in Africa. As two of the largest and most politically powerful donors on the continent, the U.S. and Japan pursue remarkably similar goals. While seeking to use aid to improve trade with Africa, the U.S. has also linked aid to containing communism, safeguarding its security interests, reducing poverty, and promoting market-oriented reform (Schraeder, Hook, and Taylor, 1998; Stein, 1998). Likewise, Japanese aid in Africa has also been used to promote Japanese national economic interests, U.S. strategic interests, and idealism. The only divergence between the U.S. and Japan in Africa, as noted, has been over support of structural adjustment.

Given recent U.S. efforts to stabilize to international system, the cooperation of Japan and the U.S. in the area of foreign assistance is potentially significant. Since initiating the war on terrorism, for example, the U.S. has expected Japan and others to provide more assistance to countries that support U.S. strategic and security interests (Ministry of Foreign Affairs, 2002). The findings of this study suggest that Japan has already promoted U.S. strategic interests in Africa for many years now. Quite possibly, then, the collaboration between the U.S. and Japan in the area of African aid can be used to build cooperation in other areas, including in West Asia and the Middle East.²⁷