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Foreign Aid Literature Review

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The literature on foreign aid suggests that this phenomenon is usually considered from two different perspectives. First, foreign aid is a policy tool to influence the behavior of receiving state and promote national interests. Second, foreign aid is a tool to promote global prosperity and development. To address these different motives for foreign aid, I look at aid-for-policy deals developed by Bueno de Mesquita and Smith (2007, 2009) and aid for development purposes (Lumsdaine 1993, Noel and Therien 1995). Moreover, there is an expanding literature saying that both of concerns are true for aid allocation and cannot be mutually exclusive (Heinrich 2012). First, let me consider main sources that frame foreign aid as an important diplomatic …show more content…

Lumsdaine (1993) states that citizens in one county care about those in others. Heinrich (2013) also supports this idea that news coverage of misery conditions in recipient states trigger people in donor countries to allocate aid. Furthermore, aid for humanitarian purposes (Noel and Therien 1995) is also aid for economic development. According to him, strong welfare state institutions forms the foreign aid policy. Our perception of aid as selfish or selfless aid might influence our understanding of the effectiveness of that phenomenon. Aid given for development purposes takes burden that it should positively correlate with economic growth. Consequently, when it appears that it does not, we suspect aid for not being …show more content…

The logic behind this theory is that large winning coalitions push the leader to pursue political decisions that would have positive consequences as economic growth and welfare. On the other hand, countries with small winning coalitions are more likely to experience oppression, and all goods mainly channeled to the narrow network of the leader. Therefore, Bueno de Mesquita et al. (2003) argue that political and economic outcomes of policies are a function of winning coalition and selectorate. Emergence of new foreign aid providers is an interesting case to examine the explanatory power of selectorate theory. It involves countries with re-emerging aid programs that experienced transition in development, industrialization and integration into international cooperation. Moreover, most of these processes took place and still happening among states, which have small winning

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