Development finance from international organizations represents a distinct institutional form of aid-giving and lending that stands apart from bilateral financing. The multilateral nature of IO development finance – requiring member governments to negotiate and agree upon shared policies – may alter the underlying politics and motivations driving multilateral aid as compared to bilateral aid. But is assistance from international organizations actually different in its causes and consequences? Does divergence in institutional form lead to differences in content and function? Are the underlying motivations of IOs truly distinct from their bilateral counterparts? Does IO development finance have different effects on recipientsAnd how are new governance arrangements at multilateral agencies, such as the inclusion of non-state actors on governing boards and the increasing use of trust funds, likely to shape the allocation and the effects of IO development finance going forward?
Scholars have made progress answering some of these questions, but many empirical and theoretical issues remain unresolved. At least three challenges have constrained research on IO development finance. First, data coverage on development finance has been primarily limited to time-series–cross-section statistics covering organizations by year. Second, data on IO development finance have generally been aggregated broadly across sectors, geographies, distribution channels, implementation partners, and financial modalities, among other things. Third, the nature of the aid enterprise often limits the methods that can be used to acquire new knowledge.
The articles in this special issue address all three of these challenges in by improving data coverage, employing more granular data, or using new methods to answer the types of questions articulated above. But before summarizing the contributions in this special issue, we first describe the ways in which development finance from international organizations differs in form from traditional bilateral aid. We then elaborate on the three research challenges introduced above and describe how the political economy literature has started to make progress in addressing these challenges.