Edited by B. Mak Arvin and Byron Lew
Chapter 7: Geographical allocation of aid: lessons from political economy
The allocation of ‘foreign public aid for development’ should be coherent with the officially proclaimed international development agenda (currently focused on reducing human poverty across developing countries). Although few policy-makers would publicly deny this assertion, the truth is that the debate on the ‘geopolitics of aid’ has been in force since the beginning of the aid system. Just a decade after the launch of the first aid programs, leading economists such as Gunnar Myrdal – later Nobel laureate – warned that the only way to allocate resources in a purely philanthropic way was to give up the ‘bilateralism’ of the aid system and to delegate the management of the resources in a single multilateral agency (Myrdal, 1956: 124). Indeed, if the international donor community shared the same ‘altruistic’ motivations, it would probably be enough to manage aid through a single multilateral agency. Nevertheless, the literature on the geographical distribution of official development assistance (ODA) suggests that donors do not allocate aid for purely altruistic reasons and thus they are not particularly consistent with their international development commitments. In reality, donors disburse aid in an ‘eclectic’ way so that developing countries with greater political, historical and cultural affinities with donors, as well as countries with greater economic and geo-strategic importance, receive more aid than other countries with similar – or greater – levels of developmental needs.
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