Strategic Donor Competition in Foreign Aid - Evidence from a Spatial Panel Model

• In Event: Poster Session: Formal Political Theory; Political Methodology & Canadian Politics
  In Poster Session: Poster Session: Political Methodology

Abstract

Do donor countries react to aid flows of others? Are economic and political competitions between donors a reason for this strategic interaction? Through ongoing trends of Globalization and the emergence of new economies, developing countries in Sub-Saharan Africa are enabled to cooperate with traditional western but also new donors like BRICS countries and specifically China. In the manner of a South-South narrative, non-DAC countries have used foreign aid to gain a significant influence and challenge the ancient foreign aid architecture. This paper aims at explaining underlying patterns of how donors react in a globalized foreign aid market. In order to do so, this paper builds upon a mixed-methods approach that develops a combination of expert interviews and a spatial lag panel model by including spatially competition-weighted lag aid shares of other donors to the same recipient country.
The analyses conducted provide evidence in favor of a positive relationship between a donor's engagement in a specific recipient country and other donors for which this recipient is of similar strategic importance. Furthermore, economic competition between donors turned out to be a core driver in aid allocation. Our research shows heterogenous reactional patterns for different countries and provide useful information to understand donors behavior in times of an increasingly competitive aid market and give a further clue about how donor countries interact when allocating their foreign aid resources. Having validated a reactional pattern between donor countries, we hope to contribute to understand inherent and systemic sources for inefficient allocation. At the same time, we deliver a practical approach of multi-reactional spatial panel models in the field of IPE and International Relations that can explain reactional patterns of states and serve as an analytical tool for foreign policy evaluation.

Authors

• Luca Elias Messerschmidt, TUM School of Governance, Technical University of Munich

• Marcel Alexander Schliebs, University of Oxford