Foreign Aid: Diplomacy, Development, Domestic Politics

by Carol Lancaster

Overview

A twentieth-century innovation, foreign aid has become a familiar and even expected element in international relations. But scholars and government officials continue to debate why countries provide it: some claim that it is primarily a tool of diplomacy, some argue that it is largely intended to support development in poor countries, and still others point out its myriad newer uses. Carol Lancaster effectively puts this dispute to rest here by providing the most comprehensive answer yet to the question of why governments give foreign aid. She argues that because of domestic politics in aid-giving countries, it has always been—and will continue to be—used to achieve a mixture of different goals. 

Drawing on her expertise in both comparative politics and international relations and on her experience as a former public official, Lancaster provides five in-depth case studies—the United States, Japan, France, Germany, and Denmark—that demonstrate how domestic politics and international pressures combine to shape how and why donor governments give aid. In doing so, she explores the impact on foreign aid of political institutions, interest groups, and the ways governments organize their giving. Her findings provide essential insight for scholars of international relations and comparative politics, as well as anyone involved with foreign aid or foreign policy.

Product Details

ISBN-13:	9780226470450
Publisher:	University of Chicago Press
Publication date:	12/01/2006
Pages:	288
Product dimensions:	5.90(w) x 8.70(h) x 0.40(d)

About the Author

Carol Lancaster is associate professor in the Edmund A. Waslh School of Foreign Service at Georgetown University and director of the Mortara Center for International Studies. She is the author of Aid to Africa, also published by the University of Chicago Press, a coauthor of Organizing U.S. Foreign Aid: Confronting the Challenges of the Twenty-First Century, and a former deputy administrator of USAID.

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Foreign Aid
Diplomacy, Development, Domestic Politics

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By CAROL LANCASTER
THE UNIVERSITY OF CHICAGO PRESS
Copyright © 2007
The University of Chicago
All right reserved.

ISBN: 978-0-226-47045-0

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Chapter One Why Foreign Aid? Setting the Stage

Foreign aid is among the "real innovations which the modern age has introduced into the practice of foreign policy," according to Hans Morgenthau, one of the fathers of the study of relations between states. Aid is such a familiar and expected element in those relations today that it is often hard to recall just how truly new it is. At the end of the Second World War, foreign aid as we know it today did not exist. There had been a few temporary programs of humanitarian relief in the nineteenth and first half of the twentieth centuries. But the gift of public resources from one government to another (or to an international organization or nongovernmental organization), sizable and sustained over time, an important purpose of which was to help improve the human condition in countries receiving the aid, was unheard of-even unimagined-in policy circles or by the public.

Today, in many of the world's poorer countries, activities funded with aid from foreign governments and international organizations are widespread and familiar. They include billion dollar reconstruction projects in war-torn countries like Iraq and Afghanistan and microenterprise loans of $50 or less to impoverished women in Bangladesh and El Salvador. They comprise international research to find more productive crops and less polluting energy sources, scholarships for PhD economists in world-class universities, and the expansion of primary education in rural Uganda. Aid supports girls' education in Peru, and it helps finance the budget of the Ministry of Education in Ghana. Children in Guatemala, Indonesia, and Ethiopia and in numerous other countries are inoculated with aid-funded vaccines. Couples in Latin America, Asia, and Africa use family planning services subsidized with aid. Aid pays for HIV/AIDS research and prevention and is beginning to finance the distribution of life-saving antiretrovirals. It funds economic reforms in Malawi, debt relief in Mozambique, and enterprise development in Russia. Political party and media training, elections, judicial reform, and civil society development are supported in numerous countries in Africa, Asia, and Latin America with foreign aid, as is humanitarian relief for natural and man-made disasters throughout the world.

The number of organizations and countries involved in providing foreign aid is also large. Several dozen international organizations, like the World Bank, the Asian, African, and Inter-American Development Banks, and the United Nations Development Program (UNDP), plus approximately thirty governments have significant programs of foreign aid, including all the rich countries of North America, Western Europe, and Japan as well as oil-producing countries in the Middle East and "middle-income" developing countries, like Korea, Thailand, and Turkey. Former socialist bloc countries in Eastern Europe are setting up new aid programs, and even relatively poor countries, like India and China, provide aid to other poor countries. And in at least one case, a rich country-the United States-has aided another rich country-the UK (to promote peace in Northern Ireland). Total aid worldwide in 2004 amounted to just over $100 billion. And if we tally up all the public aid provided by governments to other governments, international organizations, and nongovernmental organizations (NGOs) between 1960 and 2004, the total amount exceeds $1.6 trillion.

Foreign aid, though large and commonplace, is not without controversy, especially in major countries providing aid. This controversy centers on the volume of aid that donor governments should provide and the related issue of the impact of aid on development. Aid's critics complain that aid has been ineffective and should be cut. Aid's advocates argue that it has been effective, can with reforms be more effective in the future, and therefore, on moral and practical grounds, it should be dramatically expanded. However, an important part of the debate on aid effectiveness is often missing-the mix of purposes for which aid is provided. Aid has been provided not only to promote growth and poverty reduction abroad. It has been and continues to be provided for a variety of purposes, of which development is only one.

If we are to understand the controversies over foreign aid, if we are to assess fairly aid's past impact and ensure its future effectiveness, if we are to comprehend this important innovation in relations between states, we need to understand why aid has been given over the past sixty years, how and why aid's purposes have differed from country to country, and why and how they have changed over time. It is the intent of this book to answer these questions.

SO WHY AID?

Though we now take aid-especially aid for development-for granted, a moment's thought will remind us that aid is not only a relatively new phenomenon but, in historical terms, a rather puzzling one as well. States are responsible above all for the security and well-being of their own citizens. Why then would they provide their own scarce public concessional resources to promote, among other things, the well-being of people in other countries?

Questioning the purposes of aid is not new among scholars of international relations. Those scholars who interpret relations between states through "realist" lenses-that is, that states operate in an anarchic environment in which power, security, and survival are their predominant preoccupations-answer that aid is, indeed, primarily a tool of hard-headed diplomacy. (Aid's impact on the poor is incidental or instrumental-as a means of increasing the security of the donor nation, for example, through reducing the temptations of communism or terrorism.) Among the early "realists" who argued aid was a tool for enhancing national power and security was George Liska (like Hans Morgenthau, a well-known professor of international relations), who articulated the view that "Foreign aid is today and will remain for some time an instrument of political power." And there are a handful of qualitative scholarly studies illuminating the national-interest motivations in the aid programs of individual countries.

During the 1970s and 1980s, a group of scholars began to use formal modeling techniques to ascertain aid's purposes. Their models tended to rely on correlations between how much aid was provided particular countries and characteristics of those countries to indicate purposes (e.g., low per capita income to indicate development purposes; amount of trade with donor to indicate commercial purposes). The conclusions of most of these studies gave further support to the realist prediction that bilateral aid donors have been driven importantly by their own interests: for example, the United States has been motivated by Cold War concerns; the French by maintaining a postcolonial sphere of influence in Africa.

Marxist scholars and their "dependency," postmodern, and (often) anti-globalization cousins have a different take on the purposes of foreign aid: they regard it as a tool of dominant states at the center of world capitalism to help them to control and exploit developing countries. They can point to plenty of instances of foreign aid being tied to the export of goods and services from donor countries or securing access to needed raw materials imports on the part of those governments.

Liberal internationalists and others of the liberal tradition in international relations would see foreign aid as an instrument or reflection of the tendency of states to cooperate in addressing problems of interdependence and globalization. Growing amounts of aid have been channeled through international institutions and used to expand international "public goods," such as controlling the spread of infectious diseases worldwide or reducing environmental degradation.

Foreign aid has also been interpreted through the lenses of "constructivism"-the newest tendency among international relations scholars-as the expression of a norm that has evolved in relations between states that rich countries should provide assistance to poor countries to help the latter better the quality of lives of their peoples. The principal proponent of this view in the recent literature on foreign aid is David Lumsdaine in his book Moral Vision and International Politics. Lumsdaine argues that "economic foreign aid cannot be explained on the basis of donor states' political and economic interests, and that humanitarian concern in the donor countries formed the main basis of support for aid.... Support for aid was a response to world poverty which arose mainly from ethical and humane concern and, secondarily, from the belief that long-term peace and prosperity was possible only in a generous and just international order where all could prosper." Several excellent studies of aid from the Nordic countries and the Netherlands have also interpreted that aid through the prism of ideas, norms, and values, especially the social democratic traditions prevailing in those countries.

None of these theories of international politics explain adequately the complexities of aid's purposes. And all of them together lack one important element: the impact of domestic politics on aid-giving. Foreign aid constitutes a public expenditure of significant size, repeated year after year. As such, it is periodically reviewed (and often influenced) by a variety of elements within the executive and legislative branches of aid-giving governments. Further, it is frequently the subject of debate by the public as well as criticism, attack, and pressures from organized groups-representing both public and private interests-in donor countries. All of these groups can and often do influence the purposes of aid. Finally, aid-giving governments themselves must create coalitions of support for foreign aid within their legislatures and publics to sustain aid expenditures over time. The constituents of these coalitions in turn expect their political agendas to be reflected in aid programs. As a result, the purposes of aid are frequently as much the result of what happens inside of a donor government's borders as what happens outside them.

This study offers an analysis of aid's evolving purposes, beginning with an international history of aid-giving (chap. 2). It then provides five case studies of aid-giving in major donor countries: the United States, Japan, France, Germany, and Denmark (chaps. 3-7). The first four countries have been the largest bilateral aid donors; Denmark was long the largest aid-giving country relative to the size of its economy. Although the narratives of aid's evolving purposes are different from country to country, each of these case studies addresses two basic questions. First, what was the profile of aid's purposes in each country and how did it evolve over time? Second, why did governments choose the particular mix of purposes they did? This second question is answered in a common framework that emphasizes the role of domestic political factors in aid-giving. A final chapter draws conclusions on the nature of foreign aid and on how various elements in the domestic politics of that aid influence its purposes. It ends with several observations on the policy implications of this study and offers conjectures on the future of foreign aid.

ARGUMENT AND FINDINGS OF THIS BOOK

In its narrative of aid's history, this study will show that aid (for purposes other than humanitarian relief) began as a temporary expedient of Cold War diplomacy. It was not primarily an expression of altruism on the part of aid-giving countries. Nor was it driven mainly by commercial interests or a desire to spread capitalism. If there had been no Cold War threat, the United States-the first and, for most years, the largest aid-giving country-might never have initiated programs of aid or put pressure on other governments to do so. While aid commenced as a temporary diplomatic expedient, by the year 2000 it had become a common, and expected, element in relations between better-o? and poorer states, with an increasing emphasis on improving the quality of life in recipient countries.

This history reflects the development of an international norm that the governments of rich countries should provide public, concessional resources to improve the human condition in poor countries. This norm can be observed in the discourse on aid, the distribution and use of aid, and the management of foreign aid in donor governments. It did not exist in 1950. By 2000 it was widely accepted and uncontested. It evolved in significant measure because of the domestic politics of aid-giving in donor countries-the imperatives of governments gaining domestic support for annual aid expenditures, the creation and professionalization of aid agencies (which in effect became lobbies within their own governments for aid for development), and the rise of development-oriented NGOs, which created a domestic constituency for aid's development purpose.

Diplomatic and developmental goals, evident in the history of aid, have long been among the most prominent of aid's purposes. However, there have been others: humanitarian relief, commerce, culture, and, after the end of the Cold War, promoting democracy, supporting economic and social transitions, addressing global problems, and preventing and mitigating conflict. Within aid-giving governments, these purposes have always been mixed, even if one has usually been predominant. For example, in the United States, diplomatic and development purposes have predominated. In Japan, commercial and diplomatic goals long prevailed. In Denmark, the priority has been on development and commercial goals. Further, aid's purposes and the priorities among them have differed from government to government, and they have converged over time, with an increasing priority on development evident across governments, as mentioned earlier.

The domestic politics of foreign aid that have had a major impact on aid's purposes include widely shared ideas relevant to aid-giving, a country's political institutions, the interests competing for control over aid-giving, and the way governments organize themselves to manage their aid. "Ideas" are one of the bedrock factors in the domestic politics of aid-giving. The widely shared values and worldviews in donor countries, especially about the appropriate role of the state in society and the role of the donor country in the world, affect public attitudes toward the legitimacy and use of aid and, more indirectly, toward the interests competing for control over aid. Further, while values are slow to change, the way political elites frame aid-giving in terms of those values can have a visible impact on public support for aid. This latter point is demonstrated in the country case studies of aid-giving in Denmark and in the United States.

Political institutions are another bedrock factor in the politics of aid-giving. They determine who has access to decisions, who decides, who vetoes; and they create incentives for action on the part of organized interests. This book will show that the structure of government (especially the role of legislatures and their power to demand accountability from the executive, the access they give to interest groups, and their ability to legislate aid policies) and even electoral rules affect aid-giving by influencing how and when aid issues get on the national political agenda and how they are handled. The rigidities in where and how the United States spends its development assistance, for instance, arise from congressionally imposed restrictions, which reflect, in turn, the power of that branch in the US presidential system and the multiple points of access it provides organized private interests to influence decisions involving foreign aid. The prominence of development as a purpose in German and Danish aid can be traced in part to parliamentary systems based on proportional representation, such that political parties at times have had to offer other parties concessions involving the organization and volume of development aid in order to create and maintain governing coalitions.

(Continues...)

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Excerpted from Foreign Aid by CAROL LANCASTER
Copyright © 2007 by The University of Chicago. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

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Table of Contents

Preface
1 Why Foreign Aid? Setting the Stage
2 Aid’s Purposes: A Brief History
3 The United States: Morgenthau’s Puzzle
4 Japan: The Rise and Decline of an “Aid Superpower”
5 France: Rang et Rayonnement
6 Germany: A “Middle of the Roader”
7 Denmark: The Humane Internationalist
8 Conclusions and Conjectures
Interviews
Abbreviations, Acronyms, and Foreign Terms
Notes
Index

Editorial Reviews

Official foreign aid, which recently exceeded $100 billion a year for the first time, has become a normal component of the international relations of rich countries. Yet it remains something of a puzzle: Why, exactly, do democratic governments, responsible for the well-being of their own citizens, give financial and technical assistance to foreign governments? Lancaster, a former deputy administrator of the U.S. Agency for International Development, attempts to answer this question both historically (when foreign aid was much influenced by the Cold War) and currently (when the focus has shifted more, but still far from exclusively, to the promotion of economic development). She examines in detail the foreign assistance programs of the four largest donors (the United States, Japan, France, and Germany) and the most generous donor relative to GDP (Denmark). She finds in all these cases that domestic politics plays a greater role in determining the level, destination, and character of aid than most supporters of aid normally recognize or acknowledge and that each government's organizational setup for aid also influences the flow and character of aid. The book offers a dispassionate and thorough examination of a government activity of continuing and even growing importance, but it does not attempt to evaluate the success of aid in achieving its diverse and often competing -- and sometimes even incompatible -- objectives.

Foreign Affairs

"Foreign Aid succeeds in reminding the reader that development assistance programs were born to further the diplomatic and security interests of the governments that created thme."

World Economics - Leonardo Martinez-Diaz

"[The] study provides a useful insight for postgraduates and academics of international relations and comparative politics, as well as practitioners involved in the field of aid giving and foreign policy. It also provides an accessible introduction for newcomers to the topic."

Political Studies Review - Khalid Salem Almezaini

"This is a comprehensive assessment of why aid is given, rich in historical and institutional detail, and meticulous in its coverage of the economic and political factions which affect aid programmes."

Development Policy Review - Mark Arvin

"Lancaster offers a helpful and thoughtful retrospective account of sixty years of aid practices and a useful study on the question of how we got to the norms, bureaucracies, politics, and institutions that govern foreign aid today. For academics and practitioners alike, Lancaster's study offers a compelling narrative for understanding why governments give aid, how it is done, and what it is expected to accomplish."

Michigan Journal of Public Affairs - Daniel M. Rothschild

"This is an important contribution to the literature on comparative foreign policy making."

Choice

This is a unique and excellent work, a story told from the inside and the outside, a book on an important subject for the new millennium. Lancaster lays out the main themes behind aid programs and also offers a better framework for understanding policy and relations among nations.”

William Zartman

The grand themes Lancaster introduces and develops will become classic statements about foreign aid. And the assembly of country details relevant to aid—coalition politics in Germany, bureaucratic business traditions in Japan, national self image in France and Denmark—adds considerably to the literature in comparative politics. I can imagine scholars in international politics using this book as a definitive source upon which to construct other arguments and stories about international affairs in the contemporary era.

Raymond F. Hopkins

"Lancaster affords a significant contribution to the current scholarly work on foreign assistance, as she elucidates the aid problematic and its complexity with a refreshing and suitable set of case studies. She writes for an educated, well-read audience, yet reaches beyond specialists in her field, and offers an intelligible, eloquent comparative analysis on an intriguing issue that will remain on the political agenda of governments in the twenty-first century."

Development and Change - Arnaud Kurze

"Because Lancaster has the dual vantage point of having been a government official and a professor, the analysis rings true and eschews simplistic motivations and conclusions."

Political Science Quarterly - Phyllis R. Pomerantz