Donor Positioning: Development Assistance from the U.S., Japan, France, Germany, and Britain

• Date: 01 March 2005
• Author: James H. Lebovic
• Published date: 01 March 2005
• DOI: 10.1177/106591290505800111
• Subject Matter: Articles

Does it mean anything to the U.S., Japan, or any other

donor that it is, or is not, the main source of bilat-

eral aid for any given developing country? More

precisely, once accounting for factors that directly affect the

amount of bilateral aid that donors give to a country, do

attempts by self-interested donors to achieve or remain the

primary donor for that country qualify it for a bonus alloca-

tion? To address that question, I specify and test Heckman

treatment models that explain the bilateral allocation of aid

to 101 countries (in the 1970-1994 period) by the U.S.,

Japan, France, Germany, and the United Kingdom, the five

largest bilateral aid donors of the OECD Development Assis-

tance Committee (DAC). These five (cross-sectional time-

series) analyses disclose that traditional models fail to

account for a theoretically important, windfall profit that

countries receive from their primary donors. This bonus can

be viewed as a significant indirect effect of donor interests

on aid.

DONOR INTERESTS, COMPETITION, AND COORDINATION

Although tests of quantitative models reveal that donors

are self-interested (Lebovic 1988; Meernik et al. 1988;

Schraeder et al. 1998), these models ignore effects should

self-interested donors try to multiply the impact of aid by

becoming the main contributor for a country. These indirect

effects are suggested by the so-called bargaining model

(Moon 1983: 317-20) which posits that donors use aid to

reward (or compensate) a country for its UN votes, trade,

security links, et cetera. This model informs most quantita-

tive studies of self-interested donor behavior (Richardson

1978: 64; Poe 1992: 153). It can also explain why donors

become dominant donors if: (1) by reason of interest,

donors regard certain countries as aid priorities, (2) donors

stake and defend their priorities by “outbidding” other

donors, and (3) being a primary donor confers prestige

(Morgenthau 1985: 87) upon the donor or entitles it to

additional compensation, such as indivisible concessions

(e.g., military basing rights). If these assumptions hold, the

self-interested donor is a “strategic” donor that concentrates

its aid for competitive advantage: it settles for no less than

being the largest donor for priority countries.

These assumptions fit comfortably with the realist argu-

ments that states compete with each other, often pursue

their priorities with large resource commitments, and view

power as profoundly relative (Waltz 1979). But the model

draws useful insights, as well, from the neoliberal logic by

which competition induces cooperation (Keohane and

Martin 1995; Martin 1992). Competition currently exists

among DAC donors by virtue of nationalistic, practical, and

philosophical concerns that prevent donors from ceding

operational control of aid to other donors, efforts by recipi-

ents to play contributors off against one another, and clashes

in donor interest (Krueger et al. 1989). At the same time,

donors want to avoid inequities that would result if they

were to aid the same countries, inefficiencies in develop-

ment policy that occur when donors work at cross pur-

poses, or the costs when donors must pay a “market price”

for recipient concessions. By coordinating policies with

other donors, a donor avoids colliding with them: it steers

aid toward countries in which it has an overriding interest

and away from countries with which it does not. In turn, by

collaborating with other donors, a donor realizes the longer

term benefits of upholding institutional frameworks by

accepting certain costs. The benefits include inter-donor

understandings that allow each donor to concentrate aid in

countries of interest; the costs include providing aid to

countries that no donor has a strong interest in assisting and

having to remain the primary donor for countries that are

no longer priorities.

119

Donor Positioning: Development Assistance

from the U.S., Japan, France, Germany, and Britain

JAMES H. LEBOVIC, GEORGE WASHINGTON UNIVERSITY

In this study, I show that traditional models fail to account for a theoretically important, windfall profit that

countries receive from their primary donors and that a consequence of neglecting this “bonus effect” is that

models understate important (indirect) effects of donor interests on aid. Using a Heckman treatment model, I

assess bilateral aid distributed to 101 countries, between 1970 and 1994, by the U.S., Japan, France, Germany,

and the United Kingdom, the OECD’s five largest bilateral aid donors. These five analyses assume that, for a

prospective aid recipient, a donor makes two interrelated decisions: (1) how much aid to give that country and

(2) how to position itself relative to other donors (i.e., whether or not to be the primary donor). The findings

support realist and neo-liberal arguments about the sources of donor aid policy.

NOTE: An earlier version of this article was presented at the annual meet-

ing of the International Studies Association, Portland, 2003. I wish

to thank Rory Austin, Eric Lawrence, and Langche Zeng for their

methodological advice and assistance and Lee Sigelman and Jay

Smith for their very helpful comments on earlier drafts. Additional

information on the data and statistics is available at the author’s

homepage at http://home.gwu.edu/~lebovic.

Political Research Quarterly, Vol. 58, No. 1 (March 2005): pp. 119-126

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