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aid effectiveness, policies and reform
aid effectiveness, policies and reform
by shukralla, elias kedir, ph.d., western michigan university, 2005, 99 pages; aat
3188452

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abstract (document summary)

the effectiveness of foreign aid in developing countries is one of the most

controversial topics in the development literature. in particular, issues relating
to the link between aid and growth, and whether aid works better when good
policies and reforms are undertaken, and how aid should be allocated have been
hotly debated by economists and policy makers. as a matter of fact, developing
countries continue to receive large amounts of foreign aid every year, and the
controversies surrounding aid also remain strong. this dissertation reexamines the
links between aid, growth, policies and economic reforms in aid recipient
countries and sheds light on some prevailing controversies.

the first chapter develops a simple model of asymmetric information and compares
two aid allocation rules: need-based and performance-based. while need-based
allocation is efficient, it is not incentive compatible and hurts the donor's
budget. it turns out that state independent (equal aid) and performance-based
allocations solve the incentive problem but unfortunately create an efficiency
problem. with respect to the role of policies, it is seen that the premise 'aid is
more effective in the presence of good policies' holds up better in a model of
asymmetric information.

in the second chapter an empirical model is developed to test the effectiveness of

aid and the role of policies. using currently popular policy measures and a
semiparametric empirical model that addresses nonlinearity and misspecification
bias, we show that good policy always helps economic growth. additionally, when
non-linearity in both aid and the interaction between aid and policy are properly
addressed, the empirics also support the claim that aid works in a good policy
environment.

the third chapter deals with one major deficiency in the aid-growth literature---
the use of aggregate data that do not distinguish between emergency and
developmental aid, which presumably have different effects on growth. by using aid
that goes only to social and economic infrastructure and production sectors, we
find improvement in the relevant estimates (though not sizable), especially with
regard to the aid-policy interaction term.

the last chapter examines the aid-growth relationship in the context of economic
reform. we do find policy to be more effective in facilitating growth in the post
reform period. however, there is no evidence that reform itself makes aid more
effective. therefore, the finding is that reform shapes policies and thus helps
growth indirectly, rather than reform directly contributing to growth. finally, on
the question: do reform and good policies attract aid? this study does not find
empirical affirmation of that link.

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foreign aid and influence: paradoxical power dynamics in japan's official
development assistance to china
by watanabe, shino, ph.d., university of virginia, 2007, 284 pages; aat 3239969
abstract (document summary)

to what degree does aid-giving give a donor leverage over a recipient? the
conventional wisdom is that when a donor provides a large sum of aid to a
recipient, the donor is likely to have influence over that recipient. since aid is
a one-way transfer of money, recipients who are asymmetrically dependent on a
large donor would seem particularly subject to this type of aid leverage. but do
donors in fact gain (and use) aid leverage in this way? what factors make donors
more or less likely to employ aid sanctions? this dissertation elucidates how
"paradoxical power dynamics" often prevent donors from imposing aid sanctions on a
recipient exactly at that point when recipients are most vulnerable.

based upon a close examination of japan's aid policy toward china from 1979 to
2006, this dissertation argues that the pattern of aid sanctions a donor adopts
vis-à-vis a recipient depends on two factors: a recipient's level of vulnerability
to an aid cut from a donor; and the donor's level of expectations about the
returns it expects from continuing to aid the recipient. the higher a recipient's
vulnerability and the more positive a donor's expectations, the more likely it is
that the donor will hesitate to use aid sanctions as a means of pressuring the
recipient. this reluctance follows from donor concerns that an aid freeze might
trigger economic turmoil, a political crisis in the recipient state, or bilateral
frictions affecting trade and investment, any of which can result in negative
externalities for the donor.

this dissertation enriches our understanding of the use of aid sanctions by

identifying specific circumstances under which donors are likely or unlikely to
use aid as a way to exercise its political leverage, not just in the japan-china
case but in other aid relationships as well. it also identifies important lessons
for major powers that are considering making offers of foreign assistance to
former or potential adversaries. a donor should not allow its aid to become vital
to a recipient if the donor intends to use the aid as leverage to influence its
behavior.
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governance and foreign aid allocation
by akramov, kamiljon t., ph.d., the pardee rand graduate school, 2006, 164 pages;
aat 3223933
this dissertation addresses foreign aid allocation and development effectiveness.
this is an important issue as each year donors transfer tens of billions of
dollars in foreign aid to developing countries. moreover, based on new pledges and
greater commitments to development assistance from donor nations, there is
possibility of scaling up of foreign development assistance far beyond the current
levels. from donors' perspective, the commitment to increase aid flows to
developing countries is only the starting point. this in turn raises issues
regarding the role of the donors' aid allocation policies in ensuring aid
effectiveness. this dissertation examines some important propositions relating
governance to foreign aid allocation and effectiveness. the study contributes to
the debate on foreign aid through unraveling the critical heterogeneous impacts of
governance and different aid categories on development outcomes. one striking
finding suggests that aid to the production sector can be effective in promoting
growth in countries with low quality of governance. on the other side, aid
allocated to economic infrastructure is efficient in countries with medium and
high quality of governance.
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official development assistance unmasked: theoretical models of international
relations and the determinants of american, german, and swedish aid
by dewaard, chad, ph.d., southern illinois university at carbondale, 2006, 339
pages; aat 3215020
the extensive and outwardly comprehensive foreign aid literature implies that few
stones are left unturned. yet there is an on-going debate among politicians, aid
administrators, and the general public who struggle to define the proper role of
bilateral official development assistance (oda) as an instrument of western
foreign policy in an ever-changing post-cold war international environment. much
of the difficulty results from two persistent shortcomings in the literature: (1)
incomplete scholarly appreciation for the motivating factors that have driven the
establishment and perpetuation of western aid programs and (2) the failure, by and
large, among scholars to take greater advantage of theoretical models of
international relations (ir) to identify the state attributes that determine the
distribution of western oda.

this cross-national, exploratory study seeks to identify the state attributes that
define the "attractive" or "appropriate" aid recipient during and after the cold
war. hypotheses generated from assumptions associated with leading ir schools of
thought---realism, neorealism, idealism, neoliberalism, and neo-marxism---are
tested on the distribution of american, german, and swedish oda for the years
1980, 1985, 1995, and 2000. the passing of the cold war offers ir scholars an
exceptional opportunity to evaluate the explanatory power of their models in a
fluid international environment by applying them to an important, if
controversial, component of western foreign policy---the distribution of oda.

results from probit and regression analyses indicate that the end of the cold war
had a relatively minor impact on the distribution of oda. results also indicate
that the aid patterns of all three donors more consistently reflect neoliberal and
idealist assumptions than either realist, neorealist, or neo-marxist assumptions.
further, the findings suggest that bureaucratic politics and social constructivist
models may add additional clarity to the oda picture.
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three essays on foreign aid
by tamura, fumiko, ph.d., brown university, 2006, 102 pages; aat 3227944
in this dissertation, i investigate how foreign aid is distributed and how it
influences the recipient's economy. the main contribution is that the instruments,
developed from political variables, exogenously account for both cross-country and
time-series variations in aid flows. in chapter 1, i examine u.s. vote-buying
behavior in the u.n. security council (sc) in order to find determinant factors of
aid flows. i present a model that takes into account (1) u.s. cost-benefit
considerations of aid-giving, and (2) veto powers of the permanent members. using
the probit and ols estimations, i find empirical evidence supporting the
hypothesis that the u.s. traded foreign aid in exchanged for rotating members'
votes on vital issues for the period of 1960-2001. the finding that sc seat
rotation can be a useful, reasonably exogenous predictor of u.s. foreign aid
distribution constitutes a basis for the 2sls estimations in the chapters that
follow. in chapter 2, i address the question of whether foreign economic aid
replaces recipient countries' government expenditure, or acts as additional
funding for donor-favored activities. to correct for endogeneity in aid
distribution, i use a political variable---recipient countries' seat-holding in
the sc---as an instrument for aid flows, coupled with variables that capture the
importance of resolutions voted upon in the sc. based on unbalanced panel data
from 87 countries for 1970-2001, the iv estimator supports a high degree of
crowding-in, namely the "flypaper effect." this result sharply contrasts with the
result obtained by the ols estimation, which indicates crowding-out. in chapter
3,1 reassess the effectiveness of foreign aid on economic growth using the same
dataset and ivs employed in chapter 2. the iv estimator suggests that aid dollars
raise a recipient's living standard, measured in per-capita gdp, by more than the
amount of aid received. economic growth rate, however, does not always increase in
response to a rise in the aid/gdp ratio; aid failed to enhance the growth in the
1990s. overall, the 2sls estimators are larger than the ols estimators, implying a
downward direction of bias caused by endogeneity with respect to the true
estimates.
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saudi arabia development and cultural assistance to sub-saharan african countries,
1975--1995
by alghoraiyr, khaled m., ph.d., howard university, 2001, 247 pages; aat 3040792
development assistance is one of the most important tools in any country's foreign
policy. saudi arabia's multilateral and bilateral development and cultural
assistance to sub-saharan african countries is a faith-based assistance model to
be emulated by other muslim countries. this is the first major study that
describes and analyzes the largest economic assistance from developing to less-
developed countries. it is, in fact, one of the largest development assistance
programs of its kind in the third world.

this study does not focus on development assistance only, but also the historical
connection between saudi arabia and africa. saudi arabia's geographical location,
surrounded on three sides by water and shielded by a large open desert on the
fourth, plays a significant role in formulating its foreign policy. saudi arabia
and africa have close relations in terms of people, customs, history, and
geography, even though the red sea separates the two regions. saudi arabia, as the
site of the two holiest mosques in islam, is the epicenter of islamic devotion and
prayer worldwide. it is the heartland of islam and the birthplace of its message.

this study attempts to examine the various factors associated with saudi
development and cultural assistance and its unique impact and outcome rather than
any other form of assistance. its basic assumption is that economic assistance
coming from a developing country is more acceptable than that from industrialized
countries. saudi development and cultural assistance employs a mix of geo-
politics, security, religion, ethnicity, historical, and humanitarian components
which influence its multilateral and bilateral missions. in order to accomplish
its mission, saudi development assistance is a collaboration with the saudi fund
for development, the arab bank for development in africa, and the opec fund. these
institutions are engaged in financial assistance to promote and help africa with
grants and loans for infrastructure, health, water supply, energy, agricultural
projects, and educational centers. also, saudi arabian cultural assistance helps
africa in building islamic centers and education by providing scholarship to
africans. it has been accomplished through the organization of islamic conference,
the islamic development bank, and the muslim world league.

the findings of this study are that saudi arabia has pursued a foreign assistance
program that is largely inspired by islam and the principles of national interest.
data collected for this study have allowed us to reach certain conclusions
regarding the relationship between saudis and africans. the first conclusion is
that saudi arabia has over the years given more financial assistance per capita
than many of the developed countries. second, the study suggests that saudi
arabian development and cultural assistance has made a major impact in minimizing
the poverty level among the targeted sub-saharan african countries. third, islam
has continued to play an important part in formulating the implementation of saudi
foreign assistance which effectively enhanced the indigenous islamic education and
humanitarian institutions. fourth, the political and cultural ties between saudi
arabia and africa have been enhanced by collaborative capacity building of the
public and private development sectors. and, finally, saudi development assistance
effectively contributes to the quality of life of the recipient countries more
than military assistance as a tool of foreign policy.
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bureaucrats and rebels: the odd alliance reshaping japan's foreign aid
by hirata, keiko, ph.d., university of hawai'i, 2000, 289 pages; aat 9977550
this doctoral dissertation examines the changing role of japanese foreign aid at
the turn of the millennium. specifically, it analyzes the changing relations
between the japanese state and nongovernmental organizations (ngos) in promoting
effective aid policies, focusing on japanese ngos engaged in international aid and
development.

first, two popular models of japanese aid policy making are examined: (1) the
unitary developmental state model, promoted originally by johnson (1982) for the
analysis of japan's economic development and later adopted by arase (1995) for the
analysis of aid policy making, and (2) the bureaucratic politics model, a modified
version of allison's bureaucratic politics model (1971; 1972) by rix (1980) and
orr (1990). although refuting the applicability of the unitary developmental state
model to japanese foreign aid policy making, this dissertation modifies the
bureaucratic politics model by emphasizing the emerging role of ngos in
influencing japanese aid policy. i propose a bureaucracy-led pluralist model which
acknowledges the predominant role of the bureaucracy in aid decision making, but i
also take societal forces into consideration. in contrast to the unitary
developmental state model, this pluralist model stresses that the state is not
insulated from societal groups but is, on the contrary, directly influenced by
them.

highlighting the emerging roles of japanese ngos in aid policy making, the
dissertation attempts to answer the following two questions: (1) how have japanese
ngos come to play an increasingly important role in aid policy making? (2) how are
the state and ngos interacting in the competitive policy environment? to answer
these questions, the changing nature of japanese foreign aid policy for the past
forty years is examined, followed by an analysis of the internal and external
factors that have contributed to the rise of ngos in the area of international aid
and development. obstacles to ngo development are explored, including legal and
cultural restrictions on ngos and corporate sector opposition to the shift from
infrastructure-based "hard" aid to grassroots-based "soft" aid. finally, state-ngo
relations in foreign aid policy making and implementation are analyzed. the study
examines the implications of changing state-ngo relations on governance in japan.
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ideas and interests in foreign policy: the politics of official development
assistance
by van der veen, anne maurits, ph.d., harvard university, 2000, 586 pages; aat
9972445
this dissertation introduces a new theoretical approach to explaining the wide and
puzzling variation in development aid policies across donor states and over time.
it makes three broad claims. first, shared ideas about the goals and values of
development aid shape aid policy. second, these ideas cannot be reduced to
underlying material interests or humanitarianism--instead, they are likely to
include considerations of reputation, obligation, and enlightened self-interest.
third, these ideas are partially endogenous, and governments will attempt to
affect them through public education efforts and by manipulating the visibility of
aid.

measures of the relative importance of different motivations for aid are derived
by analyzing the rhetoric of legislators in four countries--belgium, italy, the
netherlands, and norway--over a period of almost fifty years. each motivation is
associated with general predictions about aid policy and with certain explanatory
factors. by combining these factors with the relative salience of each motivation,
we can predict when they will affect aid policy. empirical validation takes the
form of statistical analyses of the determinants of the volume and geographical
distribution of aid, as well as case studies of the four countries examined. to
improve the analysis of the distribution of aid, a new two-stage, sample-selection
model is developed, separating the selection of aid recipients from decisions
regarding the size of aid flows.

the statistical analyses both of aid volume and of its geographical distribution
support the claim that the influence of different explanatory factors varies with
the relative strength of the associated goals and that motivations of prestige,
obligation, and enlightened self-interest are of considerable importance. the case
studies show that the dutch disproportionately emphasize the goals of power and
humanitarianism, belgians obligation and wealth, italians reputation and wealth,
and norwegians humanitarianism, reputation, and enlightened self-interest. more
importantly, the volume, distribution, quality, and sectoral priorities of aid in
these countries all reflect these different priorities. finally, the case studies
support the hypothesis that governments actively seek to shape public ideas about
aid and manipulate the visibility of aid in order to increase or reduce the
constraints imposed by those ideas.
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development assistance under contract
by berrios, ruben, ph.d., university of pittsburgh, 1998, 186 pages; aat 9919259
this study examines the procurement process at the u.s. agency for international
development, specifically the types of contracts awarded, to whom the contracts am
awarded, and the performance of these contracts as measured by the agency. of
interest is whether the contracts awarded are optimal in terms of meeting broad
objectives of the privatization effort. usaid has been selected for this analysis
because in 1993 it was an agency singled out as a "test case" by the national
performance review headed by vice-president al gore seeking to "reinvent
government." this research examines usaid's procurement process and whether the
process conforms to practices typically associated with the goals of the
privatization initiative.

to analyze the procurement process at usaid, a model drawn from economic theory of
contracting is used. the model is developed by mcafee and macmillan and describes
three types of contracts: fixed-price, cost-plus, and incentive type contracts.
the model argues that incentive-type contracts--those that reward contractors for
cost-savings and/or good performance--are often the most desirable from the
government's point of view when it contracts out for services; and fixed-price
type contracts are best for the procurement of goods, and, cost-plus (or cost-
reimbursement) contracts, are the least desirable. the model suggests how the
government can achieve the optimal contract--that is, how it can act like a
competitive business, both in how it manages the procurement process and in how it
awards its contracts.
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