The emerging landscape of aid

Helen Milner

Helen Milner,  Director of the Niehaus Center for Globalization and Governance at Princeton’s Woodrow Wilson School addressed foreign development aid from a geopolitical perspective in the fifth plenary of GDN’s 12^th Annual Conference. In contrast to the previous high-profiled participants who were economists, she comes from the Political Science world. Her presentation argued how aid is an integral part of countries’ foreign policy, and how changes in the international system are transforming aid.

Professor Milner started by sketching the history of aid and locating its origins in the Marshall Plan. She highlighted how an ‘international aid regime’ has been created by the ‘traditional donors’ (USA, Japan, Western Europe) during the last 20 years through agreements, such as: DAC principles, Paris Declaration, Monterrey Consensus, Millennium Development Goals and the Accra Agenda, among others. However, new donors such as China, Brazil and India do not seem to be following these guidelines.

Furthermore, Milner discussed how aid is part of a foreign policy agenda. She described how countries such as France and Japan remit the largest amount of aid to former African colonies and Asia, because these regions reflect their geopolitical interests. She posited that the foreign aid regime, in action since the end of the cold war, could drastically change with the emergence of new donors. The presentation examined the difficulties posed by the new donors not being interested in following traditional aid patterns and schemes.

She made a special mention to the Colombian case by explaining that the country received less aid than the average developing countries up until the late 1960s. Milner argued that ‘Colombia is similar to the average developing country’, receiving an average flow of FDI and foreign aid. However, the country has less trade than the average developing countries, which she believes reflects how Latin America is less integrated to the global economy than other developing regions such as Asia.

Milner also recognized the emergence of China and its international agenda, and the way in which conflict contention is approached by other donors as the main forces that will change foreign aid. She suggested aid amounts will continue to grow, yet not at high rates so as to double in years to come, as some commentators suggest.

Her refreshing intervention left participants with a geopolitical view on aid and reminded the contributions political science is making to issues that in the past were only addressed from an economic perspective.

Patrick Guillaumont, Professor at the Université d’Auvergne and President of the Fondation pour les Etudes et Recherches sur le Développement International (FERDI), argued that the new emerging aid landscape needs reassessment. He claimed that the structural vulnerability of recipient countries should be taken into account when allocating aid, and that the Country Policy and Institutional Assessment, CPIA, provided a feasible channel to achieve this. Finally, Guillaumont said that aid allocations should seek to equalize opportunities and capabilities between individuals and countries.

To conclude, Elizabeth Asiedu, Professor at the University of Kansas, shed light on the relationship between Foreign Direct Investment (FDI) and Aid. She discussed how FDI leads to poverty reduction and how aid can serve as a catalyst for FDI by reducing adverse risk. Finally, Asiedu argues that although completely eliminating risk would require unrealistic amounts of aid, increasing it will be beneficial to high-risk countries, especially in Sub Saharan Africa.

More:

• Watch the live recording  Plenary 5: Development Aid: The Emerging New Landscape Part I – Part II

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