Unraveling red tape: foreign aid allocation and the domestic bureaucracy

Abstract

Researchers from Hans Morgenthau and Bruce Bueno de Mesquita have suggested that donor countries view foreign aid as a strategic tool in their economic arsenal. In contrast, however, donor countries actually describe their foreign aid as purely altruistic, as a way to alleviate poverty in the countries that receive aid. I argue this discrepancy exists due to the different motivations of donor governments and aid bureaucracies. Strategic and political interests often motivate governments, while foreign aid bureaucrats tend to have personal altruistic motivations. This divergence creates conflicting goals with governments seeking economic and political advantages from foreign aid and aid bureaucracies, the implementers of policy, seeking to increase economic and social development in recipient countries. Due to these conflicting goals and motivations, the level of autonomy of aid agencies shapes their aid allocation decisions. The variation in the institutional designs of these bureaucracies then explains the variations we see in the foreign aid policies across donor countries. This dissertation demonstrates the importance of bureaucratic autonomy for aid outcomes (donor selectivity, policy coherence, and involvement in the aid community) across three empirical chapters. Donor selectivity refers to how aid recipients and projects are chosen (for example, least developed countries vs. middle income countries, health sectors vs. budget support). An aid agency’s policy may be altered when a new government is elected; however, an agency with greater autonomy is more likely to retain a consistent agenda over time. Bureaucrats with greater autonomy are also more likely to take advantage of that autonomy to increase their role in policy development. Through the creation of a novel dataset of aid agency autonomy, I conduct a cross-sectional analysis of twenty agencies. I further provide an in-depth comparison of three of these agencies. Finally, I conduct a temporal case study of the United States' Agency for International Development, comparing it to the United Kingdom’s Department for International Development. Each chapter provides support for my hypothesis that more autonomous aid institutions are more likely to allocate aid based on the development needs of recipient countries, have policy coherence across governments, and greater involvement in the international community. Bureaucracies are known to be important policymakers in their own right in other fields of political science; however, international relations often ignores bureaucracies. This work seeks to amend this by illustrating the importance of bureaucrats in international political outcomes. The institutional design of these agencies must be taken into account given the role it has in determining policy outcomes. Moreover, this dissertation expands our knowledge of the aid allocation process specifically. With greater knowledge of how aid allocation decisions are made, scholars and practitioners can improve their assessment of aid outcomes and encourage more effective aid through changes on the institutional level.

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