Edited by B. Mak Arvin and Byron Lew
Chapter 29: Donor competition for influence in recipient countries
For many poorer countries, official development assistance (ODA) from donors is a critical means of financing development programmes. Many low-income countries face meagre domestic savings bases and restricted opportunities for taxation, and thus have come to rely on capital inflows from abroad. While international private capital flows have expanded dramatically over the past 25 years, these remain heavily concentrated in only a few emerging market countries. Consequently, for many countries ODA remains important for financing capital accumulation, government expenditures and imports. As a result, ODA remains the focus of a considerable amount of research, which it has been for the past half century. One strand of this research on ODA consists of the many studies that have attempted to identify the factors that determine the allocation of development assistance. These studies typically use regression analysis to ascertain which recipient country characteristics are associated with greater or lesser ODA flows. One of the debates that this line of research has often addressed is that of donor motivation, with a focus on determining the relative importance of ‘recipient need’ and ‘donor interests’ in generating observed allocation patterns. Most key donors have been examined using this lens, though often without regard for the behaviour of other donors.
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