Ideological Conditionality of Foreign Aid during the Cold War: Did Western Allies Follow the US?

Abstract

This paper investigates whether the aid allocation behavior of US Western allies during the Cold War reflected ideological motives. While there is extensive evidence on the ideological motivations underlying the US aid program during the Cold War, little is known about the behavior of western allies who often faced a trade-off between supporting the ideological struggle against the Eastern Bloc and penalizing authoritarian and corrupt regimes through their foreign aid policy. To this end, I extend the analysis of Berger et al (2013) by examining the impact of US and Soviet political influence in recipient countries on the aid allocation behavior of important Western donors over the period 1966-1989. The results suggest a great deal of variation in the extent to which aid allocation reflects ideological motives across Western allies: while Great Britain followed the US and fully embraced the ideological conditionality of foreign aid dictated by the logic of the Cold War, several other Western donors did not support developing countries on ideological grounds.

Keywords: Ideological Conditionality, Foreign Aid, Cold War

JEL Classification: F35, F54, O1