Chapter 4 Foreign Aid (Week 4)
4.1 Discussion questions
(Bearce & Tirone 2010) What is the research question? Why is it puzzling? In your own words, tell us what are the authors’ explanations. Do you agree? Why? What evidence do the authors provide to support their argument? Are they convincing?
(Dietrich 2016) What is the research question? Why is it puzzling? In your own words, tell us what are the authors’ explanations. Do you agree? Why? What is the author’s main hypothesis? What evidence does she provide? Is it convincing?
(Bearce & Tirone 2010) What are the alternative explanations according to the authors? What other potential explanations can you think of? What are the merits and limitations of this research? (*)
(Dietrich 2016) What additional evidence do you need? Why? What alternative explanations can you think of? What are the merits and limitations of this paper? (*)
Can we promote peace by deepening economic exchanges between countries and across the world? (*)
4.2 Is foreign aid effective?
4.3 When is foreign aid effective? (Bearce & Tirone 2010)
What is the research question and why is it important (and yes, this is the same question you should ask yourself for your essay 1)? They situate their question along the debates concerning conditional (economic) effectiveness of foreign aid vs. unconditional ineffectiveness. And their selling point (innovation) comes from switching the focus on recipient countries’ conditions to donor governments’ political-strategic motivations. Now, pause for a second and think about the previous question.
Turning to their explanations, let us think about the theory and mechanisms laid out in their paper. They argue that foreign aid can help promote economic growth only when the strategic benefits are small. This is because only under this situation will donor countries be able to credibly enforce economic reforms which are the prerequisite of economic growth. Note that they acknowledge there are at least two main mechanisms where foreign aid can promote economic growth (what are they?). Here they only focus on the second one.
Ignoring their empirical design for a moment, let us jump ahead and think about alternative explanations and possible avenues to advance the research. How do they (and how would you) respond to the alternative explanations via globalization and the Washington consensus.
4.4 Why do some states resort to bypass aid? (Dietrich 2016)
Let us go through the three questions asked above.
- What is the research question and why is it important?
- What is the theory and mechanism?
- What are the alternative explanations and possible directions for future research?
The puzzle: if states use bypass aid to improve its effectiveness, why do we observe the variations across different donors (i.e. why don’t all donors use this tactic)? She presents an explanation from donor countries’ domestic political economies: whether they rely on markets or states for the delivery of public services. More specifically, she lays out a conditional explanation of bypass aid: when the recipient countries’ governance quality is low (i.e. higher risks of aid capture), LME donors are more likely to use bypass tactics than CME donors. This is because donor officials’ preferences of delivery methods are based on their respective states’ roles in goods and service delivery.
In terms of alternative explanations, the author briefly responds to the role of foreign aid in a state’s foreign policymaking. But there are other possibilities. For instance, states could be giving out different types of foreign aid. The U.S., for instance, is handing out a higher proportion of tied aid. It could also be explained by the types, sectors, or the proportion of bilateral aid (for instance, attitudes toward the EU involvement) in different countries’ ODA.
4.5 Additional sources
OECD International Development Statistics, has the most up-to-date data. May not cover all donors such as China.
AidData’s Global Chinese Development Finance Dataset, Version 2.0
AidData Core Research Release, Version 3.1, comprehensive and covers the years between 1947 and 2013.
Angus Deaton: «Development aid is cynical» – Swiss Television SRF
Obama on what most Americans get wrong about foreign aid
Is Foreign Aid Money Well Spent?
Simone Dietrich in “When Is Foreign Aid Effective?”
Friendly Fire: How Foreign Aid Hurts Development | Abhishek Parajuli | TEDxOxford