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Foreign Aid and State-Society Relations: Theory, Evidence, and New Directions for Research

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Abstract

A prominent body of scholarship views revenue extraction by the state as a catalyst for the creation of representative institutions. States in the developing world, however, extract less revenue from their citizens than states in wealthy countries. One reason for this discrepancy is the presence of foreign aid. This special issue explores both theoretically and empirically how foreign aid flows affect citizens’ perceptions of and interactions with the state, and what this might imply for the development of state capacity and state-society linkages. Until recently, the conventional wisdom held that foreign aid would undermine these linkages, eroding state legitimacy and impeding the development of state capacity. The contributions in this special issue find limited evidence for such adverse effects. Citizen awareness of aid does not directly undermine state legitimacy or decrease citizen engagement with the state. Aid may, however, reduce state investment in institutions, producing inferior institutional outcomes that challenge citizen confidence and therefore indirectly hinder the growth of state-society linkages. If aid is weakening state-society relations, it is largely because of its effects on state institutions rather than its effects on citizen attitudes or behaviors. The contributions to the special issue use a variety of methods to generate these findings, including single-country surveys, informational experiments, donation games, in-depth interviews, and cross-country analyses. Together they address multiple ongoing debates in the literature on aid and state-society relations, while also pointing to promising avenues for future research.

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Notes

  1. Net ODA received (% of GNI), series DT.ODA.ODAT.GN.ZS from the World Development Indicators for country category IDX (i.e., IDA-eligible countries) (accessed 4 January 2019). As per the definition of ODA, this statistic does not include military assistance or emergency humanitarian relief; such flows also might take the place of government spending that otherwise would be tax-financed.

  2. Because of the lack of government budget data from many countries, it is hard to describe the average proportion of government expenditures financed by foreign assistance, but in heavily aid-dependent countries, it is likely substantial. In Uganda, for instance, one-quarter of available financing in the country’s national budget—and almost three-quarters of its development budget—in recent years has come from foreign development assistance (Swedlund 2017, 43).

  3. Suchman (1995, 574) defines legitimacy as “a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions.” For considerations of how to define legitimacy vis-à-vis the political entity of the state, see the entries in Knight and Schwartzberg (2019). Suchman (1995) outlines how organizations might gain, maintain, or repair legitimacy through pragmatic, moral, or cognitive strategies. In what follows, we think primarily in terms of a pragmatic strategy of the state responding to citizens’ needs and a cognitive strategy of a state mimicking the behaviors of other states.

  4. In several important interventions, Claire Mcloughlin has highlighted the need for government service provision to be impartial and otherwise in line with the expectations of the citizens in order for service provision to lead to increased state legitimacy (Mcloughlin 2015). In Sri Lanka, for instance, improved service provision that was limited to the majority Sinhalese led to delegitimization of the state among the minority Tamils (Mcloughlin 2018).

  5. This argument is parallel to the “financing gap” logic that has long served as a justification for foreign aid (Easterly 1999), except that, under this logic, aid helps to resolve an institutional gap that exists in poor countries rather than a simple savings/financing gap.

  6. Not all (or even most) non-state service provision is funded by foreign aid.

  7. Harding (2015) makes a similar point, arguing that foreign aid in service provision may make it harder for citizens to attribute performance outcomes to their government, thus reducing the ability of citizens to hold an incumbent government accountable.

  8. The following summary is indebted to Dijkstra’s (2018) recent review article; see also Dietrich and Winters (Forthcoming).

  9. Gervasoni (2010) makes a similar argument about intrastate assistance (i.e., central government transfers to local governments), saying that such transfers allow local governments to act in less democratic ways by restricting political competition and loosening institutional constraints.

  10. This may be attributable to Baldwin and Winters asking about specific projects and Dolan asking about overall resource flows.

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Acknowledgments

Thanks to Kate Baldwin, Naazneen Barma, Lindsay Dolan, Josiah Marineau, and an anonymous reviewer for comments on a previous draft.

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Authors and Affiliations

  1. Department of Political Science and Watson Institute for International and Public Affairs, Brown University, Providence, RI, 02912, USA

    Robert A. Blair

  2. Department of Political Science, University of Illinois at Urbana-Champaign, Urbana, IL, 61801, USA

    Matthew S. Winters

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Correspondence to Robert A. Blair or Matthew S. Winters.

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Blair, R.A., Winters, M.S. Foreign Aid and State-Society Relations: Theory, Evidence, and New Directions for Research. St Comp Int Dev 55, 123–142 (2020). https://doi.org/10.1007/s12116-020-09301-w

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