Why understanding the history of Donor Governments changes the way we think about aid

Back in the day, when I was doing advocacy on trade and globalization, I was struck by the extent to which the underlying assumptions of International NGOs resembled those of their governments – the liberal Anglo-Saxons targeted European subsidies, or northern tariffs, both of which they argued damaged southern producers. The French and Germans often seemed more interested in protecting the rights of southern governments to regulate their economies. I used to joke that it was like owners who resemble their dogs (please note, I am not saying which is the dog, which is the owner in this comparison).

That seemed even more the case with aid ministries, which are, after all, part of their governments. Donors from laissez-faire governments feel more comfortable promoting the private sector or NGOs, while being suspicious of ‘the blob’ of the state; donors from statist governments are happier doing loads of technical assistance and capacity building of ministries and officials.

A new book by Simone Dietrich, an academic at the University of Geneva, delves into that question and sure enough, via an impressive combination of quantitative and qualitative research covering 23 OECD countries, finds that what she calls ‘neoliberal’ governments’’ aid programmes tend to bypass the state, while those of more statist governments are more likely to be channelled through developing country governments.

Her findings feel like another nail in the coffin of claims that donor policies and programmes can ever be based on pure ‘evidence-based policy making’. Turns out ‘history-based policy making’ is pretty prevalent too.

What’s more those institutional biases within donors have a (very) long shelf-life. She sees FCDO and USAID essentially still channelling Thatcher and Reagan’s world views on the evils of the state/wonders of the market. And public opinion doesn’t matter that much – Germans get just as annoyed as Americans when they hear about state corruption diverting their aid dollars, but the German aid programme still does a lot less bypassing of states than the US one.

Confirming what everyone in the aid business probably thought anyway is useful, but the book also leads to implications that I think are interesting.

Shaped by their own histories, Aid donor ‘priors’ will largely trump evidence of what works. There’s a bit of wiggle room, through which particularly successful programmes or determined leaders can depart from the norm, but in the end, they are highly likely to be dragged back. Statists gotta do what statists gotta do. Ditto the neolibs.

So if you have a particular innovation you want to push, work out whose biases it is aligned with, and go there first. Don’t try and swim against the tide/work against the grain – it’s exhausting and you’ll probably drown.

Coordination between donors within the same ideological camp is always a lot easier than anything that attempts to cross the divide. ‘Like-minded groups’ are probably the way to go, even though they don’t get everyone in the room.

Recognizing that, perhaps not all donors should be in all places. If state-building is deemed a priority then donors who are set up to do such work should shoulder the load/lead the effort. If goods delivery to individuals via NGOs or the private sector is a priority then go with the neolibs.

Alternatively, she thinks aid donors may all be converging on the neoliberal, more state-sceptic version of events (I disagree, but don’t know the French and German aid programmes well enough to judge – views?)

Which raises the obvious question, what to do when both the state and non-state actors struggle to turn aid dollars into sustained progress? That is, after all, where an increasing amount of aid has been heading in recent years, via the focus on ‘fragile states’ (which often have pretty fragile private sectors and civil societies as well). Does this add further fuel to the case for focussing on global public goods (climate change, vaccines) rather than trying to work against the grain of both camps? Or does a ‘pockets of effectiveness’ approach make more sense, finding pockets of state effectiveness for one set of donors; pockets of private sector/civil society effectiveness for the other?

Missing from all this is the rise of new donors, especially China. Are they showing the same pattern? A lot of them are very state-centric (not just China, but the Gulf states, maybe Turkey), which is presumably creating a boost for state-centric aid, and compensating for any drift towards the Anglo-Saxons from France and Germany.

I have a feeling that more implications for donors and others can be squeezed out from these findings, and would welcome suggestions – from Simone or anyone else. Over to you.

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4 Responses to “Why understanding the history of Donor Governments changes the way we think about aid”
  1. damir

    spot on….also useful when doing PEAs for specific clients…to me, it is always more difficult to find out ”what is beneath the surface” on donor/client side, i.e. what they ”really” want to achieve with certain programme, rather than anything else; this gives a nice bottom of page reference 🙂

  2. In Albania, donors fill our legislative system, central and local with irresponsible human resources and ineffective in implementing policies in favor of Albanian communities and society.
    I was a participant in the democratic developments of the ’90s in my country. Since the first wave of the movement for change, prior to becoming an artificial pose, I had hoped for support by global philanthropy in order to educate and provide a new sense of purpose in life to active youth. I expected a transformation of their role into chief architects of the new democracy era in order to promote responsive policy-making. Nevertheless, at my aghast they never addressed the root causes of poverty. Albania a country of natural sources of water, the communities suffer from lack of supply. The failure is evident when you notice that people are not encouraged to identify their own needs, problems and thus empowering them to make their own decisions. They are no longer active participants in local development planning.
    Here is a shocking case of the use of philanthropy by various donors, who bear responsibility for failing to provide efficient support to the poor community in the Durres region. Their investment to build a community center ended up in becoming a derelict non-functional object with no value for the community. https://www.youtube.com/watch?v=dSpcFXZHNBI

    • Duncan, thanks for the review! Let me quickly respond to your remark about China missing. The book explores the subset of donors that are democratic, where governments are held accountable by their citizens, and that have a long tradition of foreign aid giving – which has, over the years, been codified by international agreements and which has produced definitions of what qualifies as foreign aid. China is missing in my book because I don’t think it can be evaluated with my framework. China is a dictatorship, a different animal if you will. Nor am I sure that what China does often qualifies as foreign aid the way we think about it; or that it is statist in delivery. If you look at the belt and road initiative we see turnkey projects delivered by Chinese firms – which to me, is bypass “on steroids”. The Chinese may ask recipient governments what they need coming in but the delivery does little to strengthen country capacity. From what I understand (and there are more knowledgeable experts out there than me), Chinese aid is typically heavily tied aid that promotes influence abroad (e.g. access to resources) and benefits Chinese firms that implement the aid – although this may be changing more recently. That said, I am very interested in how the rise of China impacts how traditional donors deliver aid – to what extent traditional donors like, for example, the US or the UK, may deviate from their way of doing aid because they want to counter Chinese influence in the developing world. Or whether they become more willing to coordinate with statist donors that have structures that have built-in policy dialogue and government engagement. I talk about this and other things in a recent podcast with Dan Banik here: https://in-pursuit-of-development.simplecast.com/episodes/simone-dietrich-a25789b7

  3. This is a most interesting philosophical and administrative exchange!
    Regarding China and its perspective on foreign aid, I can go along with your impressions of why China does it and how it does so. However, whilst we may not like their approach, it unfortunately is not unique to a dictatorship. Several Western, democratic countries from different continents have been engaged in aid with similar intentions: e.g. “we’ll provide such and such improvements, but the related equipment and materials must be imported from us, and the administration must include x number of our compatriots at such and such levels”. Many Western supported major infrastructure developments—hydro, road, air, major institutional complexes etc.—have been/are also relatively “turnkey”, with subsequent complications in maintenance and repair.
    The one difference I have found in this respect is that even with “turnkey” projects, there has commonly been some collateral social development —e.g. health, education, water, governance–, as well as a certain amount of technical training.
    I would also argue that pleasant and substantive dialogue in any mutual development effort/project may nonetheless result in the same consequences noted by Mme. Pirdeni, if there be hidden agendas, non-transparency in any aspect of the conceptualisation, initiation, management and MonEv, ignorance of or insensitivity to local culture and—as one highly visible INGO insists–, certain final decisions would be restricted to the donor alone.
    So, while I do not support China’s approach, many other nations must also seriously adjust their principles and modus operandi.

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