Impact of Donors National Interests on Aid Distribution.

Since 1920s and 1930s providing development aid to developing states has become one of
the main directions of the foreign policy of leading states. Essential and wellknown motives of
donor countries are often stated as spreading democratic values and supporting certain economic and
social projects. However, the real motives and aims of giving assistance and their conformity with
the national interests of donor countries is one of the most debated topics in international relations
studies. The aim of this article is to analyze donors national interests impact on distribution of
assistance among recipient countries. The paper includes two main sections which review the
historical aspects of the issue and theoretical debates over dependence of aid distribution on donor
motives.
In the first place, it is important to clarify what type of aid is considered developmental. Aid
is an ambiguous term and there is no common agreement on its definition. Different sources explain
this word in a different ways, including or excluding variety of items. Generally international aid
can be defined as the transfer of resources from rich to poor.
If to consider aid in the framework of development studies, the key category of aid is ODA
(Official Development Assistance). ODA is defined as those grants and loans provided at
concessional terms, by public agencies, to developing countries, for the expressed aim of promoting
economic development and welfare. It includes emergency assistance and technical assistance, but
excludes aid for military purposes or loans, which are not concessional. Official development
assistance is defined as those flows to countries and territories on the DAC List of ODA Recipients
and to multilateral development institutions which are provided by official agencies, including state
and local governments, or by their executive agencies and each transaction of which is administered
with the promotion of the economic development and welfare of developing countries as its main
objective and is concessional in character and conveys a grant element of at least 25 per cent
(calculated at a rate of discount of 10 per cent) [1].
The concept of aid for development first emerged in colonial era. That period is featured by
proactive policy of economic development assistance towards poor colonies. By the 1920s and
1930s countries like Germany, France and Britain were providing regular aid to their colonies in
Africa, Latin America and Asia. Colonial powers used their money to build infrastructure - ports,
roads and railways. However, aid contributions did not become widespread until the 1940s and
1950s. This period coincided with the beginning of decolonization, the start of the Cold War and the
earliest days of Bretton Woods, which saw the establishment of institutions such as the IMF.
During the Cold War, dramatic shifts in political, economic and moral allegiances emerged.
Within a few years the world had split into what were called three worlds: the first world, Western
democratic countries; the second world which was the Soviet Union and its Communist satellites;
and then what became known as the third world, which were the former colonies and countries that
had come under imperial influence, which were now all independent and that formed themselves
into the non-aligned movement in the early 1950s.
The amounts, forms and destinations of development aid at those times were strongly
affected by the national interests of donors. Foreign policy of United States of that period is a good
illustration of how development assistance is provided to serve countries ambitions on the
international arena. In the post-WWII decades, the United States became the worlds biggest aid
donor, starting with the Marshall Plan to help Europe rebuild. The Marshall Plan was by no means
the first U.S. aid program for post-war Europe. Officially termed the European Recovery Program
(ERP), the Marshall Plan was approved by Congress in the Economic Cooperation Act of April
1948. Most of U.S. assistance under the ERP took the form of grants [2]. A larger amount was given
to the major industrial powers, as the prevailing opinion was that their resuscitation was essential for

general European revival. Somewhat more aid was also directed towards the Allied nations, with
less for those that had been part of the Axis or remained neutral. The largest recipient of Marshall
Plan money was the United Kingdom (receiving about 26% of the total), followed by France (18%)
and West Germany (11%) [3].
Further, as the Cold War developed, the two super powers and their allies would use aid to
encourage political allegiances. For instance, the U.S. official aid at that time began with an urgent
search of the government for nonmilitary tools to contain the expansion of Soviet influence in
Greece and Turkey and in Western Europe afterwards. Aid was intended to stabilize the economies
of these countries as well as to promote the economic growth, which would exclude conflict and
communist sympathies. C.Lancaster argues that humanitarian or long-term development goals
alone would have never moved an isolationist, fiscally conservative Congress to support transfers
for Greek and Turkish aid in 1947 or the even larger ones for the Marshall Plan, announced later that
same year.[4].
It is noteworthy to mention that the governments of the United Kingdom, France, Germany,
Scandinavian countries and Japan established or expanded their aid in the 1960s mostly due to their
own reasons, some involving postcolonial policies, others responding to domestic pressures for
development aid. At the end of the 1960s, ideas about the purpose of aid began to change under the
influence of Robert McNamara, who became head of the World Bank in 1968. He promoted the idea
of using donor-funded programs to meet people's basic needs in health, education, water and
sanitation. That was a decade where people began to talk about poverty, and whether it was possible
to have economic growth that was more equitable, which would be focused on reducing poverty
rather than just assuming that economic growth would ultimately benefit everybody. This discussion
is a constant theme in debates in development studies.
By 1970 pressures from developing countries, from other developed countries organized in
aid donor clubs like the DAC and from domestic groups within aid-giving countries had turned
aid giving from a temporary diplomatic expedient into a common element in international
relations [5]. It was really at that time when the aid programs started to formulate and take shape
and become a more definite commitment. That's where one may see the start of the evolution of a
0.7% target of countries giving 0.7% of national income in development assistance.
In the 1980s basic needs disappeared off the agenda as a result of the global recession that
was a result of the oil shock of the 1970s. Many developing countries were heavily indebted as a
result of the recession, and donor countries lent them money in order to manage their debts, but on
the basis of them having to restructure their economies, and to particularly stop spending so much
money on social services. This process was called structural adjustments.
It is also worth noting that following the end of the Cold War, with the collapse of the USSR
in 1991, the volumes of aid funding declined significantly. This decline occurred for several reasons.
First, the end of the Cold War reduced both aid and the ability of recipients to manoeuver among
donors. In donor countries most engaged in the Cold War struggle, particularly the United States and
the Soviet Union, domestic support for aid evaporated with the end of the global ideological clash.
In other words, the Cold War end made the international assistance less important for donors.
Second, globalization of economic and cultural production has subordinated links originating in
earlier colonial ties and spheres of influence. These pre-Cold War ties were important for great
powers in justifying and allocating aid in the 1950s and 1960s. The desire of France and Britain to
maintain economic and cultural links with former colonies, and similar desires by the United States
with respect to areas it formerly governed or strongly controlled, such as the Philippines, Liberia and
Panama, encouraged aid that could provide direct budgetary support to friendly governments.
The third reason for the decline of aid is budgetary constraints. Many OECD governments reduced
their aid in the 1990s, which was a consequence of broader efforts to lower government deficits. For
instance, among European countries, the decision to meet the Maastricht treatys criteria for entering

the Euro-currency arrangement required substantial shrinking in budget deficits in the years leading
up to January 1999.
Another reason for the decline in aid volumes is disappointment with performance. Aid has
been seen to fail in many countries, especially in Africa. The failure of developmental programs and
projects in some countries, ones increasingly targeted for aid in the 1980s, was particularly
disappointing.
The fifth reason for a decline in aid support is the fact that special economic interests in
donor countries become less powerful. It is argued, that groups inside donor countries that gain
selective advantage from it mostly support aid. These include firms with investments in recipient
countries, or the ones, who provide exports related to aid, and bureaucracies with employees with
career interests in aid, including NGOs.
Basically, international processes that took place during 1990s have changed the aid
architecture. Over the past decade, more attention has been paid to working out the most effective
way to spend aid money. This has included the rise of impact evaluation, a set of methodologies that
allows agencies to determine the effectiveness of development programs. The shift in global power
relations has also impacted aid relationships. Some former aid recipient countries have now become
important economic and political powers in their own right. These rising powers have a different
approach to aid, which they describe as development cooperation on the basis of mutual selfinterest, when both donor and recipient country pursue their personal motives in aid relations.
One of the most prominent examples of this is the relationship between China and African states.
For instance, China provides a lot of economic infrastructure and support for social development,
and in return becomes the privileged buyer of African raw materials for China's growing economy.
[4].
On the philosophical side, new sovereign powers stress that the cooperation is horizontal,
that it's not the old vertical relationship that the former colonial powers have with their erstwhile
colonies that are now aid recipients. While this is an attractive philosophical position, a number of
observers believe it is not much different from what the old donors were doing in the 1960s when
they emphasized support for economic development.
Historical overview of aid relations demonstrates that the motives of donor nations for
providing foreign assistance have evolved over time: while aid in the 1960s focused more on
development, recent aid has increasingly reflected strategic considerations. For example, since the
terrorist attacks of September 2001, the objective of reducing terrorism has been increasing interest
among donors giving aid to developing nations.[5]. Thus, despite many changes over the years, there
has been one constant in the history of aid providing, namely that the development objectives of aid
programs have been distorted by the use of assistance for donors economic and political advantage.
All industrialized countries provide assistance to a wide variety of countries, but there are
different characteristics in aid distribution patterns of each donor country. The choice of recipient
countries as well as the amount distributed to them differs across donor countries, often reflecting
economic, cultural, historical, and geo-political motives of the donor country.
One of the most often reported reasons for providing aid is the moral case. As Lumsdaine
states foreign aid cannot be explained on the basis of the economic and political interests of the
donor countries alone, and any satisfactory explanation must give a central place to the influence of
humanitarian and egalitarian convictions upon aid donors. [6]. Lumsdaine argues that foreign aid is
driven by the same moral vision and sense of justice that underpins the development of domestic
welfare states. The argument that domestic politics and values drive aid allocation decisions has also
been addressed by Maurits van der Veen. Van de Veen ilustrates how Norways aid tends to be
driven by humanitarian convictions, but Belgiums aid, for example, is driven by a sense of
obligation to its former colonies. So moral vision is important, but it does vary in its precise form
across different countries [7].

The reasons for giving aid are different from donor to donor, but in general several clusters
of motives can be identified. Riddell proposes these seven - to address emergency needs; to assist
recipients with achieving their development goals; to show solidarity; to further their own political
and strategic interests; to help promote donor-country commercial interests; due to historical ties; to
provide and strengthen global public goods [8].
Degnbol-Martinussen and Engberg-Pedersen have further narrowed the motives down to
four clusters: economic motives; motives concerning national security; environmental motives;
moral and humanitarian motives [9].
Following a combination of these two proposed sets of motives, three essential types of
motives could be identified. First include political and strategic interests. Political interests are the
oldest motive for allocating development aid. Political motives usually include security concerns,
intention to demonstrate power and preventing migration flows. For instance, as it has been already
mentioned after the World War II, the United States came with a Marshall plan to rebuild the
Western European Countries. According to Todaro and Smith, the United States didnt care so much
about their economic interests though: a prosperous Europe would be a buffer against the expansion
of Communism [10]. Later, a large part of aid given by the government of the United States was
targeted at Middle and Eastern Europe, at those countries who could possibly be influenced by the
Communist threat. In the 1990s, the focus on these countries was renewed as the issue of refugees
and migrants became important with respect to allocating development aid. The United States and
the European Union sought to halt the unwanted flow of immigrants to their regions, which
translated to a shift in aid flows to Eastern and Central European countries [11]. According to
Todaro, since 2001 aid flows have shifted towards Islamist countries, again presumably with the
donors own security in mind [12].
Providing aid can also be considered as means to support allies or bond with other states. It
can be used as a reward or as leverage. It is a way to demonstrate power as well as to gain power.
With respect to gaining power, the main objectives in case of bilateral aid are to exert influence and
to obtain a voice in international institutions. According to Alesina and Dollar, the countries whose
votes, for instance, in the United Nations were in line with those of the major donors on average
received more aid, which shows, how aid can be used to buy political support. Although it seems
contradictory, aid often flows to those countries, which are either involved in a conflict or are
performing very well in terms of their political policies and protection of human rights. With respect
to the latter, aid is used as a reward to strengthen policies the donor agrees with. Alesina and
Dollars research proved that more open and democratic countries receive more aid than autocratic
ones. The same goes for countries, which are more open with respect to their economy [13].
Second motivation can be determined by the historical ties. At the end of the colonial era, the
newly independent countries faced a lot of problems, but lacked the expertise, the infrastructure and
the money to confront them. To relieve feelings of guilt, sooth their bad conscience and provide
some sort of compensation, the former colonial powers provided large sums of development
assistance. The influence of the colonial past varies from donor to donor. Alesina and Dollar hold
that the longer the colonial history, the stronger the ties are nowadays. They found that for Belgium,
France and the United Kingdom in the period from 1970 to 1994 99.6% of aid flows were
determined by their colonial past, but the link between former colonial powers and their old colonies
is waning. To the extent that such a strong link still exists, instead of looking at history, the motives
for giving aid to these regions can often be found in current economic interests.
The third, a lot of investment in developing countries comes in the form of loans instead of
grants. For this to be considered as development assistance, it has to include a grant element of at
least 25%. In theory, both donor and recipient are winning by these investments: while the former
acquires interests, the latter can stimulate its economic growth. Development aid is also often used
to open markets to a donors product, to promote the donors own firms and enhance employment in

the donor country. One of the ways to do this is through the tying of aid. In the case of formal tying,
the aid is provided in the form of trade as the recipient is obliged to purchase goods and services
from the donor country. Donors thereby have direct financial gain through the orders placed by the
recipient country. In addition, by participating in these development projects, companies in the
donor country hope to gain access to the markets in recipient countries [14]. There are also less rigid
forms of aid tying, but in each case it is important to note that the donor is winning much more by
this than the recipient. Providing aid can enhance the economy in the donor country by increasing
donor exports because of either a growing economy in the recipient country, and thus increasing
imports from the donor, or because aid reinforces already established economic and political ties.
Donors to secure scarce materials also use aid. This is another reason why former colonial powers
still have strong ties with their old colonies: they want to maintain privileged access to their
resources and markets.
In conclusion, after analyzing the history of aid giving, tracing the patterns of its distribution
and considering various literature one may conclude that donor states provide assistance in
accordance with their national interests and needs. Changes in the necessities and interests of
donors determine the aid flows and their allocation. In my opinion, examining the dependence of
assistance on aid provider states goals contribute to the understanding of failure of development
assistance in some cases. I think situations when donor state would declare, for instance, spreading
democratic values as their main objective for providing development assistance are irrelevant
nowadays. The whole system of foreign aid relations is changing with the emergence of new
donors. These newly emerged donors are starting to change the rules of the game by being more
transparent in stating their true interests in providing assistance. The newly introduced idea of
development cooperation based on the mutual self - interest proves donor states confessing that
they provide assistance in accordance with their personal motives. In fact, this does not
necessarily mean that this is by definition negative for the recipients, as there are often positive
consequences for them as well, but it sheds a different light on the idea of development aid as
helping the recipient.

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