The First Tranche
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Bad Behavior, Good Politics, and Ideas: Making Sense of Theories of Aid Allocation

The aid allocation literature remains fragmented and largely inaccessible to many policymakers and practitioners. Two books published in the past year could change that.

August 27, 2012
Chrissy Sherman

Why do some countries give more aid than others? What determines how much aid a country receives, and why? What makes a ‘good donor’?  The existing literature offers an array of answers to these questions. Scholars have refined their measurements, identified new predictor variables, and employed more sophisticated econometric procedures. Yet, the aid allocation literature remains fragmented and largely inaccessible to many policymakers and practitioners.

dictator's handbook

Two books published in the past year could change that. Both books offer compelling and complementary arguments and insights about the way aid allocation is determined. In The Dictator’s Handbook, Bruce Bueno de Mesquita and Alastair Smith argue that donor partners give aid to benefit their own people by "purchasing" policy concessions from other countries. They present "coalition size," defined as the number of people whose support is required for a given regime to stay in power, as a variable to predict aid allocation. To stay in power, large coalitions (such as democracies) must "appease" a broad base of people, while smaller coalitions (such as autocracies) must only appease the ruling elite.

The amount of aid awarded to a country partners is therefore determined by:

         1.) how much money is needed by the country's chief executive to keep

               his or her coalition happy (in spite of the policy concession), and

         2.) how much money the donor partner is willing to pay for that policy concession.

Bueno de Mesquita and Smith argue that it is cheaper for donor partners to buy their policy concessions from countries with smaller coalitions—even if the cost of the concession is high, there are fewer members of the coalition to pay off. Thus, even democratic countries give aid to autocratic regimes – under the right circumstances.

Ideas, interests and foreign aid

Meanwhile, in Ideas, Interests and Foreign Aid, Maurits van der Veen proposes that global patterns of aid allocation only emerge within the context of the political elite’s “frames” for conceptualizing foreign aid. For example, if the political elite in a donor country views aid as a means for improving the well-being of country partners (i.e. the humanitarianism frame is prominent), then aid provision will increase as the donor partner country's GDP grows. If development assistance is viewed as a mechanism for preserving a donor partner country’s international reputation (i.e. the reputation frame is prominent), then a strengthening of the “status quo” aid allocation pattern will increase the provision of aid.

While both books attempt to explain patterns of aid allocation, they come from two different schools of thought in the international relations (IR) discipline: rationalism (Mesquita and Smith) and constructivism (van der Veen). Some argue that these two approaches are fundamentally irreconcilable. However, others insist that the battle between the two "isms" is ultimately a false choice.

Having read both books, I now see these two analytic paradigms as strongly complementary.Ideas, Interests and Foreign Aid asks how ideas about aid allocation are formed, and studies how to go about measuring those ideas. Dictator’s Handbook asks how we can predict the way donors will make decisions regarding development assistance, given the presence of varied perceptions of aid. Together, these books answer both parts of what Jeffery Legro calls the ‘two step’ in IR research: “first we describe preferences then we describe actions”.

Of course, areas of disagreement exist. Bueno de Mesquita and Smith assure us that we shouldn’t blame democratic governments for their seemingly self-interested decisions. Rather, we should blame ourselves: any change in aid allocation must begin with a major shift in voters’ attitudes towards aid and accountability. Van der Veen, however, attributes more agency to states in crafting aid priorities, arguing that “governments are far from passive participants in the aid discourse,” and political elites sometimes “expended considerable effort” bringing public opinion in line with their own views.  

However, here too I see opportunities for cross-fertilization. Maybe a change in aid allocation does have to begin with a change in voter attitudes, but how are voter attitudes formed in the first place? Maybe political elites do have agency in defining aid policy preferences, but how can this agency be understood as a function of leaders’ desire to stay in power, given the preferences of their constituents?

In short, these two books significantly improve our understanding of aid allocation. More striking, though, is the joint value they offer without any direct collaboration. The potential for reconciliation between constructivist and rationalist scholars bodes well for the future of aid allocation research, and IR research more generally.

This is a continuation of the First Tranche’s look at the the effectiveness of aid allocation theories. See here for related posts on the subject.

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Chrissy Sherman (’14) is an AidData Intern at the College of William & Mary.