Interest Coalitions and Multilateral Aid Allocation in the European Union

Abstract

This paper analyzes multilateral aid allocation in the European Union (EU). We argue that EU members can influence the aid allocation process towards their national interests if they form powerful coalitions that bias the European Commission's development policies. When EU members’ preferences over aid allocation are heterogeneous, the Commission can implement multilateral aid according to its programmatic goals. Greater homogeneity of EU members’ goals, however, increases the likelihood that members can form powerful interest coalitions, and induce the Commission to allocate aid according to their own national interests. The empirical analysis provides robust support for our theoretical argument and the findings generally indicate that interest coalitions play an important role in multilateral aid allocation.