Development and Strategy: Aid Allocation in an Interdependent World
46 Pages Posted: 23 Sep 2010
Date Written: September 22, 2010
This paper develops and tests the argument that industrialized countries pursue an agenda of strategic development in their relations with developing countries. In an increasingly interdependent world, wealthy states have an interest in promoting development abroad. This leads them to focus on development, but disproportionately in the poorer states where the benefit from development to the wealthy states is higher. Hypotheses are tested in the area of foreign aid, where evidence is found that donors alter the composition of aid across recipients to account for different levels of government capacity to use aid for development, but also increase the volume of aid flows to developing countries with which they have strong existing connections. The attention to government capacity is new, suggesting that in an interdependent world relations between industrialized and developing countries have evolved, with development promotion becoming an important, strategic goal for industrialized states.
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