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Instrumental Philanthropy: Trade and the Allocation of Foreign Aid

Published online by Cambridge University Press:  28 September 2010

Erik Lundsgaarde*
German Development Institute
Christian Breunig*
University of Toronto
Aseem Prakash*
University of Washington
Erik Lundsgaarde, German Development Institute, Tulpenfeld 6, D-53113, BonnGermany.
Christian Breunig, University of Toronto, Department of Political Science, Sidney Hall, Room 3018, 100 George Street, Toronto, Ontario M55 363, Canada.
Aseem Prakash, University of Washington, Department of Political Science, Box 353530, Seattle, WA 98195-3530, USA.


Abstract. “Trade, not aid” has long been a catchphrase in international development discourse. This paper evaluates whether the “trade, not aid” logic has driven bilateral aid allocations in practice. Using a dataset that covers development assistance from 22 donor countries to 187 aid recipients from 1980 to 2002, we find that donor countries have dispersed bilateral aid in ways that reinforce their extant bilateral commercial ties with recipient countries. Instead of “trade, not aid,” bilateral aid disbursement has followed the logic of “aid following trade.” The policy implication is that bilateral aid allocation patterns have reinforced the disadvantages of poor countries that have a limited ability to participate in international trade due to a variety of factors such as geography and a lack of tradable resources.

Résumé. «Le commerce et non l'aide» est un slogan qui continue d'occuper une place importante dans le débat sur le développement international. L'article qui suit vise à évaluer la mise en pratique de ce principe dans les allocations de l'aide bilatérale. S'appuyant sur une base de données recouvrant l'aide distribuée par 22 pays donateurs à 187 pays récipiendaires entre 1980 et 2002, notre analyse révèle que l'aide a été allouée en fonction des liens commerciaux bilatéraux existants et les a renforcés. C'est donc le principe de «l'aide après le commerce» qui a prévalu. Les allocations d'aide bilatérale ont ainsi aggravé les désavantages des pays pauvres dont la capacité à bénéficier du commerce international est limitée en raison de divers facteurs, dont la situation géographique et le manque de ressources marchandes.

Research Article
Copyright © Canadian Political Science Association 2010

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