A Foreign Policy Model of U.S. Bilateral Aid Allocation

Abstract

Two views, founded on divergent rationales, have been used to explain the allocation of official bilateral aid. One view explains the allocation of aid in terms of the humanitarian needs of the recipient, the other in terms of the foreign policy interests of the donor. Although the foreign policy view is now clearly dominant, it has not been developed systematically. This paper initially develops an analytic foreign policy model of aid allocation. The model suggests that the provision of aid leads to the establishment of commitment and dependency, enabling the donor to realize certain foreign policy utilities. These utilities in turn allow the donor to pursue its interests. These interests may be ordered into five substantive foreign policy models. The main research objective of the paper is to test these models in the context of U.S. aid by making a cross-national, longitudinal study of the distribution of U.S. aid over the years 1960- 1970. We find that the foreign policy model which best explains the allocation of U.S. aid is one that is consonant with the political interpretation of imperialism.

Are democratising countries rewarded with higher levels of foreign aid?

“…The quantitative aid allocation literature has long traditions, dating back to the works of McKinley -Little (1977, 1979 as well as Maizels -Nissanke (1984). Most studies group the determinant forces into three basic categories: donor interests, recipient needs, and, more recently, recipient merit (McGillivray 2003;Hoeffler -Outram 2011).…”

Do Remittances Reduce Aid Dependency?

“…The first studies that test the -donor interest‖ against the -recipient need‖ model are McKinlay and Little (1977, 1978a, 1978b, 1979. The authors analyze the two models for four donors (United States, France, Germany, United Kingdom) using data for [1960][1961][1962][1963][1964][1965][1966][1967][1968][1969][1970] and find that the donor interest model performed better than the recipient need model for all four donors.…”

Self-interest, foreign need and good governance: Are bilateral investment treaty programs similar to aid allocation?

“…To answer these questions, we will borrow from the theoretical framework used in the aid allocation literature. Ever since McKinlay and Little (1977), it has become common in this literature to distinguish between factors of donor interest and recipient need, both of which are expected to influence the allocation of aid to developing countries (see, for example, Trumbull and Wall, 1994;Schraeder, Hook and Taylor, 1998;Alesina and Dollar, 2000). What is less commonly known is that McKinlay and Little already tested for the role of what they called 'political stability and democracy' on aid allocation.…”

“…What is less commonly known is that McKinlay and Little already tested for the role of what they called 'political stability and democracy' on aid allocation. The focus of many later aid allocation studies on aspects of good governance, particularly democracy and human rights (see, for example, Cingranelli and Pasquarello, 1985;Carleton and Stohl, 1987;Poe, 1992;Svensson, 1999;Neumayer, 2003), can therefore also be traced back to McKinlay and Little (1977). Can this framework be transplanted to the scheduling of BITs?…”