The Political Economy of Bilateral Foreign Aid

24 Pages Posted: 5 Sep 2012 Last revised: 15 Sep 2012

See all articles by Eric Werker

Eric Werker

Harvard University - Business School (HBS)

Date Written: September 5, 2012


Despite its developmental justification, aid is deeply political. This paper examines the political economy of aid allocation first from the perspective of the donor country, and then the political economy of aid receipt and implementation from the perspective of the recipient country. When helpful, it draws from studies of multilateral aid. Following those discussions, the paper explores solutions, employed by the development community, to the distortions brought about by the political economy of bilateral aid - distortions that steer aid away from achieving economic development in the recipient country. As it turns out, none of these solutions can shield foreign aid from the heavy hand of politics. Developing countries heavily influenced by foreign aid end up with a different, and novel, governing apparatus.

Suggested Citation

Werker, Eric, The Political Economy of Bilateral Foreign Aid (September 5, 2012). Harvard Business School BGIE Unit Working Paper No. 13-026. Available at SSRN: or

Eric Werker (Contact Author)

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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