CONDITIONING AID

Recent events in Gaza and Colombia have led to calls for the conditioning of foreign aid—a controversial but longstanding element of the US foreign policy toolkit for pursuing economic and political aims abroad.

A 2007 article by STEVEN HOOK looks at the effort to condition foreign aid as part of the post-Soviet transition following the Cold War.

From the article:

“Upon the Cold War’s demise, the global development aid regime coalesced around the overarching goal of sustainable development. Among other components of this goal, such as preventing ecological decay and restraining population growth, the promotion of democracy emerged as a primary concern. Bush and Clinton looked to foreign assistance as a primary vehicle to promote the expansion and consolidation of democratic rule. The stated objectives of the US Agency for International Development (USAID) were aligned with those of other major donors and international organizations, with themes related to all aspects of sustainable development assuming a high profile. Leaders of USAID announced new standards for aid qualification and reorganized the agency’s bureaucratic structure, in Washington and in overseas field missions, around the new mission. In some cases, most notably former Zaire (now the Democratic Republic of the Congo), USAID missions were closed because their host governments had proven to be ‘poor partners’ in implementing reforms. The agency’s central challenge became convincing a skeptical Congress and general public that global democratization was as vital to US national interests — and as worthy of the country’s financial sacrifice — as was communist containment during the cold war.

The rhetorical alignment of US aid policy with that of the development aid regime represented a profound departure for the United States, which had long diverged from regime norms in the qualitative aspects of aid policy even while serving as the primary donor of aid at an absolute level. The uneven results of the US policy may thus be attributed to unresolved tensions between the principles advocated by the aid regime and the coexisting and often contradictory foreign-policy objectives of the US government. While changes in the international environment may alter the substantive foreign-policy priorities of donors, and while transnational regimes may impose pressures on donors to promote objectives that cross national boundaries, the ultimately political role of foreign aid as an instrument of foreign policy remains its distinguishing feature.”

Link to the text.

• “During the Cold War, donors’ geopolitical objectives diminished the credibility of threats to condition aid on the adoption of democratic reforms.” A 2004 article by Thad Dunning examines the effectiveness of conditioning aid in Africa following the Cold War. Link.
• “First generation conditionality focused on economic reform and came in the wake of growing economic crisis in of many Third World countries, particularly in Latin America and sub-Saharan Africa.” Olav Stokke introduces a 1995 volume on political conditionality. Link. And a 1998 volume edited by Tony Killick looks at conditionality in IMF and World Bank loans. Link.
• “By quietly offering alternatives to aid-receiving countries, emerging donors are weakening the bargaining position of western donors.” Ngaire Woods examines how increasing aid from countries outside of the OECD challenges conditionality. Link.

NEW RESEARCHERS

Chile’s Export Diversification

AMIR LEBDIOUI is a research fellow at the Latin American and Caribbean Centre at LSE. In a 2019 paper, Lebdioui investigates the causes of Chile’s export diversification under the Pinochet dictatorship.

From the paper:

“By analyzing the dynamics underlying the emergence of the salmon, fruit, forestry and wine sectors in Chile’s export basket since the 1960s, the findings of this research show that, in contrast to the laissez-faire narrative, the role of the Chilean state has been crucial in catalyzing human capital accumulation, ensuring sustainability, and diffusing expertise and technology in non-copper related sectors, through different types of vertical policies and through various public institutions (including government agencies, the Central Bank, Fundación Chile and universities). The opening up of the economy in the 1980s took advantage of the specialized human capital, knowledge and technological capabilities accumulated through vertical interventions prior to liberalization. It appears that the Chilean government had thus relied on several policy tools to effectively govern the market through what could be termed industrial policy ‘in disguise,’ especially during the seemingly economically liberal military regime (1973–90).”

Link to the paper.

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• Watch a recording of Thursday’s panel on investment and decarbonization, featuring Anusar Farooqui, Yakov Feygin, Daniela Gabor, Robert Hockett, JW Mason, Saule Omarova, Tim Sahay, and Adam Tooze. Link.
• For background reading, see this thread of work from the panelists, featuring proposals for a public green ratings agency, the National Investment Authority, a macro case for the Green New Deal, the “Wall Street Consensus,” and more. Link.
• “Housing IS the Business Cycle.” Edward Leamer on residential investment and predicting recessions. Link.
• Cornel Ban on the shifts in central banking during Covid-19. Link.
• Dean Birch, DT Cochrane, and Callum Ward on big tech and data as an asset. Link. And see Salomé Viljoen’s PW essay on data as labor or property. Link.
• “Drawing on findings from an analysis of nearly 10,000 postwar property records in the South Side Chicago neighborhood of Englewood, this article demonstrates that vacancy stems not from disinvestment but from predatory investments in housing.” By Rea Zaimi. Link.
• Edoardo Saravalle on global financial regulation and the US dollar. Link.
• “After a quarter century of sharp and sustained increase, Chinese inequality is now plateauing and, according to some measures, even declining.” Ravi Kanbur, Yue Wang, and Xiaobo Zhang on China’s inequality turnaround. Link.
• Michael A. McCarthy, Ville-Pekka Sorsa, and Natascha van der Zwan on investment and patient capital in pension fund capitalism. Link.
• “Most [manufacturers] continue to overstate the power of robots in order to receive material and symbolic benefits from local states.” Ya-Wen Lei on attitudes towards automation in China. Link.
• “This essay provides comparative evidence that an at least incipient public sphere emerged within colonial Spanish America’s civil societies in the late colonial period. This argument challenges the view that intellectual debate and critique took place in a mostly private space at that time. It also calls into question the recent idea that the development of a true public sphere in those days was hindered by the absence of printed news and propaganda and the lack of a literate population. Regardless of whether or not newspapers were widely read, radical, or active, the emergence of a public press in itself and the proliferation of literary, scientific, and economic associations were indicative of a new movement.” By Victor Uribe-Uran. Link.

Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org