The Review of International Organizations

, Volume 12, Issue 2, pp 307–334 | Cite as

The choice among aid donors: The effects of multilateral vs. bilateral aid on recipient behavioral support

  • Michael G. Findley
  • Helen V. Milner
  • Daniel L. Nielson
Article

Abstract

Scholars studying foreign assistance differ over whether multilateral aid is preferable to bilateral aid for promoting development, but nearly all build their cases primarily on highly aggregated cross-national time-series data. We investigate this topic experimentally from the perspective of those whom the foreign aid directly affects: recipient citizens and elites. We thus report results of a survey experiment with behavioral outcomes on more than 3000 Ugandan citizens and over 300 members of Uganda’s Parliament. In spite of a large literature suggesting differences, the findings generally reveal few substantive differences in citizens’ and elites’ preferences and behavior toward the two types of aid. While no strong pattern of differences emerges, limited evidence suggests that the public evinces greater trust in multilateral institutions, and both masses and elites feel that multilateral aid is more transparent. Overall, these null results inform an ever-expanding literature, which is increasingly articulating distinctions between multilateral and bilateral aid. At least in the minds of the recipients, however, multilateral and bilateral aid may not in fact be all that different. This accords with the literature noting the strong overlap in aid organizations and bemoaning the fact that they do not specialize more. Our results raise the question about why have both multilateral and bilateral aid donors if they in effect do the same thing.

Keywords

Foreign aid Experiments Foreign donors International organizations 

JEL classifications

F35 F53 C93 C83 

Supplementary material

11558_2017_9275_MOESM1_ESM.zip (105 kb)
ESM 1(ZIP 105 kb)

References

  1. Acharya, A., De Lima, A. T. F., & Moore, M. (2006). Proliferation and fragmentation: Transactions costs and the value of aid. The Journal of Development Studies, 42(1), 1–21.CrossRefGoogle Scholar
  2. Aldasoro, I., Nunnenkamp, P., & Thiele, R. (2010). Less aid proliferation and more donor coordination? The wide gap between words and deeds. Journal of International Development, 22(7), 920–940.CrossRefGoogle Scholar
  3. Alesina, A., & Weder, B. (2002). Do corrupt governments receive less foreign aid? The American Economic Review, 92(4), 1126–1137.CrossRefGoogle Scholar
  4. Alvi, E., & Senbeta, A. (2012). Does foreign aid reduce poverty? Journal of International Development, 24(8), 955–976. doi:10.1002/jid.1790.CrossRefGoogle Scholar
  5. Annen, K., & Moers, L. (2016). Donor competition for aid impact, and aid fragmentation. The World Bank Economic Review lhw019, 1–29. doi:10.1093/wber/lhw019
  6. Autesserre, S. V. (2010). The trouble with the Congo: local violence and the failure of international peacebuilding (Cambridge studies in international relations, Vol. 115). Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  7. Bates, R. H. (1981). Markets and states in tropical Africa. Berkeley: University of California Press.Google Scholar
  8. Bermeo, S. B. (2010). Development and strategy: Aid allocation in an interdependent world. Durham: Duke University.Google Scholar
  9. Bermeo, S. B. (2011). Foreign aid and regime change: A role for donor intent. World Development, 39(11), 2021–2031. doi:10.1016/j.worlddev.2011.07.019.CrossRefGoogle Scholar
  10. Bermeo, S. B. (2016). Aid is not oil: Donor utility, heterogeneous aid, and the aid-democratization relationship. International Organization, 70(1), 1–32.CrossRefGoogle Scholar
  11. Bigsten, A., & Tengstam, S. (2015). International coordination and the effectiveness of aid. World Development, 69, 75–85. doi:10.1016/j.worlddev.2013.12.021.CrossRefGoogle Scholar
  12. Bourguignon, F., & Platteau, J.-P. (2015). The hard challenge of aid coordination. World Development, 69, 86–97. doi:10.1016/j.worlddev.2013.12.011.CrossRefGoogle Scholar
  13. Bräutigam, D. (2009). The dragon's gift: The real story of China in Africa. Oxford: Oxford University Press.Google Scholar
  14. Bräutigam, D. (2011). Aid ‘with Chinese characteristics’: Chinese foreign aid and development finance meet the OECD-DAC aid regime. Journal of International Development, 23(5), 752–764. doi:10.1002/jid.1798.CrossRefGoogle Scholar
  15. Bueno de Mesquita, B., & Smith, A. (2007). Foreign aid and policy concessions. Journal of Conflict Resolution, 51(2), 251–284. doi:10.1177/0022002706297696.CrossRefGoogle Scholar
  16. Bueno de Mesquita, B., & Smith, A. (2009). A political economy of aid. International Organization, 63(2), 309–340. doi:10.1017/S0020818309090109.CrossRefGoogle Scholar
  17. Burnside, C., & Dollar, D. (2000). Aid, policies and growth. American Economic Review, 90(4), 847–868.CrossRefGoogle Scholar
  18. Christensen, Z., Homer, D., & Nielson, D. L. (2011). Dodging adverse selection: How donor type and governance condition Aid’s effects on school enrollment. World Development, 39(11), 2044–2053. doi:10.1016/j.worlddev.2011.07.018.CrossRefGoogle Scholar
  19. Dietrich, S. (2016). Donor political economies and the pursuit of aid effectiveness. International Organization, 70(1), 65–102.CrossRefGoogle Scholar
  20. Djankov, S., Montalvo, J. G., & Reynal-Querol, M. (2009). Aid with multiple personalities. Journal of Comparative Economics, 37(2), 217–229.CrossRefGoogle Scholar
  21. Dreher, A., & Fuchs, A. (2015). Rogue aid? An empirical analysis of China's aid allocation. Canadian Journal of Economics/Revue canadienne d'économique, 48(3), 988–1023.CrossRefGoogle Scholar
  22. Dreher, A., & Sturm, J.-E. (2012). Do the IMF and the World Bank influence voting in the UN General Assembly? Public Choice, 151(1–2), 363–397.Google Scholar
  23. Dreher, A., Sturm, J.-E., & Vreeland, J. R. (2009). Development aid and international politics: Does membership on the UN Security Council influence World Bank decisions? Journal of Development Economics, 88(1), 1–18.Google Scholar
  24. Dreher, A., Fuchs, A., Hodler, R., Parks, B., Raschky, P. A., & Tierney, M. J. (2015). Aid on Demand: African Leaders and the Geography of China's Foreign Assistance. CESifo Working Paper No. 5439. Munich: Center for Economic Studies, Ifo Institute.Google Scholar
  25. Dreher, A., Fuchs, A., Hodler, R., Parks, B., Raschky, P. A., & Tierney, M. J. (2016). Aid on demand: African leaders and the geography of China's foreign assistance. AidData working paper #3 revised. Williamsburg: AidData.Google Scholar
  26. Easterly, W. (2007). Are aid agencies improving? Economic Policy, 22(52), 633–678. doi:10.1111/j.1468-0327.2007.00187.x.CrossRefGoogle Scholar
  27. Easterly, W., & Pfutze, T. (2008). Where does the money go? Best and worst practices in foreign aid. Journal of Economic Perspectives, 22(2), 29–52.CrossRefGoogle Scholar
  28. Easterly, W., & Williamson, C. R. (2011). Rhetoric versus reality: The best and worst of aid agency practices. World Development, 39(11), 1930–1949. doi:10.1016/j.worlddev.2011.07.027.CrossRefGoogle Scholar
  29. Findley, M. G., Harris, A., Milner, H., & Nielson, D. L. (2016). Who Controls Foreign Aid? Elite versus Public Perceptions of ​Donor Influence in Aid-Dependent Uganda. International Organization. Google Scholar
  30. Frey, B. S., & Schneider, F. (1986). Competing models of international lending activity. Journal of Development Economics, 20(2), 225–245. doi:10.1016/0304-3878(86)90022-2.CrossRefGoogle Scholar
  31. Frot, E., & Santiso, J. (2009). Crushed aid: Fragmentation in Sectoral aid. SITE Working Paper No. 6, 2009.Google Scholar
  32. Fuchs, A., Nunnenkamp, P., & Öhler, H. (2015). Why donors of foreign aid do not coordinate: The role of competition for export markets and political support. The World Economy, 38(2), 255–285.CrossRefGoogle Scholar
  33. Gartzke, E., & Naoi, M. (2011). Multilateralism and democracy: A dissent regarding Keohane, Macedo, and Moravcsik. International Organization, 65(03), 589–598.CrossRefGoogle Scholar
  34. Gerber, A. S., & Green, D. P. (2012). Field experiments: Design, analysis, and interpretation. New York: W.W. Norton.Google Scholar
  35. Girod, D. M. (2008). Cut from the Same Cloth? Multilateral vs. Bilateral Aid. Paper presented at the Annual Conference of International Political Economy Society, Philadelphia, November 2008.Google Scholar
  36. Green, E. D. (2010). Patronage, district creation, and reform in Uganda. Studies in Comparative International Development (SCID), 45(1), 83–103. doi:10.1007/s12116-009-9058-8.CrossRefGoogle Scholar
  37. Headey, D. (2008). Geopolitics and the effect of foreign aid on economic growth: 1970–2001. Journal of International Development, 20(2), 161–180. doi:10.1002/jid.1395.CrossRefGoogle Scholar
  38. Isaksson, A.-S., & Kotsadam, A. (2016). Chinese aid and local corruption. In AidData working paper #33. Williamsburg: AidData.Google Scholar
  39. Jablonski, R. S. (2014). How aid targets votes: The impact of electoral incentives on foreign aid distribution. World Politics, 66(2), 293–330.CrossRefGoogle Scholar
  40. Kilby, C. (2006). Donor influence in multilateral development banks: The case of the Asian Development Bank. The Review of International Organizations, 1(2), 173–195. doi:10.1007/s11558-006-8343-9.CrossRefGoogle Scholar
  41. Kilby, C. (2013). The political economy of project preparation: An empirical analysis of World Bank projects. Journal of Development Economics, 105(0), 211–225. doi:10.1016/j.jdeveco.2013.07.011.CrossRefGoogle Scholar
  42. Kilby, C., & Dreher, A. (2010). The impact of aid on growth revisited: Do donor motives matter? Economics Letters, 107(3), 338–340. doi:10.1016/j.econlet.2010.02.015.CrossRefGoogle Scholar
  43. Kiwanuka, M. (2012). Priorities for Renewed Economic Growth & Development. Budget Address delivered by the Minister of Finance, Planning & Economic Development Delivered at the Meeting of the 2nd Session of the 9th Parliament of Uganda.Google Scholar
  44. Kizhakethalackal, E. T., Mukherjee, D., & Alvi, E. (2013). Quantile regression analysis of health-aid and infant mortality: a note. Applied Economics Letters, 20(13), 1197–1201. doi:10.1080/13504851.2013.799744.CrossRefGoogle Scholar
  45. Knack, S., & Rahman, A. (2007). Donor fragmentation and bureaucratic quality in aid recipients. Journal of Development Economics, 83(1), 176–197.CrossRefGoogle Scholar
  46. Knack, S., & Smets, L. (2013). Aid tying and donor fragmentation. World Development, 44(0), 63–76. doi:10.1016/j.worlddev.2012.09.006.CrossRefGoogle Scholar
  47. Lyne, M. M., Nielson, D. L., & Tierney, M. J. (2006). Who delegates? Alternative models of principles in development aid. In D. G. Hawkins, D. A. Lake, D. L. Nielson, & M. J. Tierney (Eds.), Delegation and Agency in International Organizations (pp. 41–76). New York: Cambridge University Press.CrossRefGoogle Scholar
  48. Lyne, M. M., Nielson, D. L., & Tierney, M. J. (2009). Controlling coalitions: Social lending at the multilateral development banks. The Review of International Organizations, 4(4), 407–433.CrossRefGoogle Scholar
  49. Maizels, A., & Nissanke, M. K. (1984). Motivations for aid to developing countries. World Development, 12(9), 879–900. doi:10.1016/0305-750x(84)90046-9.CrossRefGoogle Scholar
  50. Martens, B., Mummert, U., Murrell, P., Seabright, P., & Ostrom, E. (2002). The institutional economics of foreign aid. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  51. Milner, H. V. (2006). Why multilateralism? Foreign aid and domestic principal-agent problems. In D. G. Hawkins, D. A. Lake, D. L. Nielson, & M. J. Tierney (Eds.), Delegation and Agency in International Organizations (pp. 107–139). New York: Cambridge University Press.CrossRefGoogle Scholar
  52. Milner, H. V., Nielson, D. L., & Findley, M. G. (2016). Citizen preferences and public goods: comparing preferences for foreign aid and government programs in Uganda. The Review of International Organizations, 11(2), 219–245. doi:10.1007/s11558-016-9243-2
  53. Minoiu, C., & Reddy, S. G. (2007). Aid does matter, after all: Revisiting the relationship between aid and growth. Challenge, 50(2), 39–58. doi:10.2753/0577-5132500203.CrossRefGoogle Scholar
  54. Minoiu, C., & Reddy, S. G. (2010). Development aid and economic growth: A positive long-run relation. The Quarterly Review of Economics and Finance, 50(1), 27–39. doi:10.1016/j.qref.2009.10.004.CrossRefGoogle Scholar
  55. Morrison, K. M. (2009). Oil, nontax revenue, and the Redistributional foundations of regime stability. International Organization, 63(1), 107–138. doi:10.1017/S0020818309090043.CrossRefGoogle Scholar
  56. Neumayer, E. (2003). The determinants of aid allocation by regional multilateral development banks and United Nations agencies. International Studies Quarterly, 47(1), 101–122.CrossRefGoogle Scholar
  57. Nunnenkamp, P., Rank, M., & Thiele, R. (2015). Aid fragmentation and donor coordination in Uganda: A district-level analysis. Kiel: Kiel Institute for the World Economy (IfW).Google Scholar
  58. Parks, B. C., Masaki, T., Faust, J., Leiderer, S. (2016). Aid management, trust, and development policy influence: New evidence from a survey of public sector officials in low-income and middle-income countries. AidData Working Paper #30. Williamsburg, VA: AidData.Google Scholar
  59. Pepinsky, T. B. (2008). Capital mobility and coalitional politics: Authoritarian regimes and economic adjustment in Southeast Asia. World Politics, 60(3), 438–474.CrossRefGoogle Scholar
  60. Ram, R. (2003). Roles of bilateral and multilateral aid in economic growth of developing countries. Kyklos, 56(1), 95–110. doi:10.1111/1467-6435.00211.CrossRefGoogle Scholar
  61. Ram, R. (2004). Recipient country's ‘policies’ and the effect of foreign aid on economic growth in developing countries: Additional evidence. Journal of International Development, 16(2), 201–211. doi:10.1002/jid.1071.CrossRefGoogle Scholar
  62. Rodrik, D. (1996). Why is there multilateral lending? In M. Bruno & B. Pleskovic (Eds.), Annual World Bank conference on development economics, 1995 (pp. 167–193). Washington, DC: International Monetary Fund.Google Scholar
  63. Seiler, N., & Madir, J. (2012). Fight against corruption: Sanctions regimes of multilateral development banks. Journal of International Economic Law, 15(1), 5–28. doi:10.1093/jiel/jgr037.CrossRefGoogle Scholar
  64. Steinwand, M. C. (2015). Compete or coordinate? Aid fragmentation and lead Donorship. International Organization, 69(02), 443–472. doi:10.1017/S0020818314000381.CrossRefGoogle Scholar
  65. Stone, R. W. (2002). Lending credibility: The International Monetary Fund and the post-communist transition. Princeton: Princeton University Press.CrossRefGoogle Scholar
  66. Stone, R. W. (2004). The political economy of IMF lending in Africa. American Political Science Review, 98(4), 577–591.CrossRefGoogle Scholar
  67. Strange, A. M., Dreher, A., Fuchs, A., Parks, B., & Tierney, M. J. (2015). Tracking underreported financial Flows: China’s Development Finance and the Aid–Conflict Nexus Revisited. Journal of Conflict Resolution. doi:10.1177/0022002715604363.Google Scholar
  68. Tierney, M. J., Nielson, D. L., Hawkins, D. G., Roberts, J. T., Findley, M. G., Powers, R. M., et al. (2011). More dollars than sense: Refining our knowledge of development finance using AidData. World Development, 39(11), 1891–1906. doi:10.1016/j.worlddev.2011.07.029.CrossRefGoogle Scholar
  69. Tsoutsoplides, C. (1991). The determinants of the geographical allocation of EC aid to the developing countries. Applied Economics, 23(4A), 647–658.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media New York 2017

Authors and Affiliations

  • Michael G. Findley
    • 1
  • Helen V. Milner
    • 2
  • Daniel L. Nielson
    • 3
  1. 1.Department of GovernmentUniversity of Texas at AustinAustinUSA
  2. 2.Department of PoliticsPrinceton UniversityPrincetonUSA
  3. 3.Department of Political ScienceBrigham Young UniversityProvoUSA

Personalised recommendations