Taking Another Look at Multilateral Aid Flows: Reconsidering the Dynamics of the U.S.'s Strategic Use of Development Aid

Abstract

Previous studies in the development aid literature have concluded that bilateral aid flows have been dominated by strategic objectives of major donors. Similar analysis of multilateral aid flows has determined that these allocations are more sensitive to economic need and quality of institutions and policy of the recipient country. A consensus has emerged that all bilateral aid is strategically driven while multilateral aid is independent of these political pressures. This paper challenges these conventional notions of the different aid types by analyzing allocation decisions from U.S. bilateral and multilateral aid agencies. It finds that strategic considerations influence both bilateral and multilateral aid. Donor influence over multilateral aid allocations requires a rethinking of how strategic aid is pursued. Improvements to the models of aid flows are offered, and a preliminary empirical analysis is attempted. It is found that the dynamics of strategic uses of aid are more complex that previous studies have concluded. The impact of these findings on the flows and efficacy of aid is discussed.