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Instrumental Philanthropy: Trade and the Allocation of Foreign Aid

Erik Lundsgaarde and Christian Breunig, and Aseem Prakash. "Instrumental Philanthropy: Trade and the Allocation of Foreign Aid." Canadian Journal of Political Science, Vol. 43, no.3, 2010, pp. 733-761.

“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.

https://www.cambridge.org/core/journals/canadian-journal-of-political-science-revue-canadienne-de-science-politique/article/instrumental-philanthropy-trade-and-the-allocation-of-foreign-aid/6924CFD08B764748C0D09E95BA0EF383

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