Introduction to the Geopolitics of Foreign Aid

Introduction: Geopolitics and aid Foreign aid is an essential element of foreign policy for many countries. Since World War I, the richest states in the world have used transfers of goods, services, and funds as a means of interacting with other countries. Over time, increasing numbers of states have given increasing amounts of resources to other states. Aid has come in the form both of loans, often at reduced interest rates, and outright grants of resources. The latter form of aid, which has become an increasingly important one, is relatively new for states, beginning in mass after World War II. Furthermore, countries have employed aid to address a variety of different policy goals: some aid is military assistance, some provides humanitarian and disaster relief and some is geared toward economic development and long term change. Because aid resources are often fungible, it is hard to pinpoint which goals aid actually achieves. But aid has always had geopolitical ramifications. While foreign aid has never represented a significant expenditure for donor countries as a percent of their total government budget, it is often a substantial share of the government budget and even the GDP of some recipients. Most donor countries have not reached the Organization for Economic Cooperation and Development (OECD) goal of allocating 0.7% of their GDP for economic development aid. Indeed, in 2011 the members of the OECD gave only 0.31% of their cumulative GDP in foreign economic assistance. This amounted to roughly $135 billion. The US is the largest donor in absolute terms (about $31 billion in 2011), but it is small in percentage terms (0.2% of GDP). The 27 member states of the European Union combined give a larger share: roughly $75 billion in 2011, which was 0.42% of the EU's GDP. New donors have entered the field over the past two decades, including Arab countries and emerging market states like China, India, and Brazil. These new donors accounted for roughly 10% of total aid as of 2008, or about $15 billion (UNDP, 2011, pg. 147) For recipients, aid can be a critical source of funds, however. In 2008, for example, close to 30 developing countries received more than 10% of their GDP from foreign assistance (UNDP, 2011, pg. 146), a statistic that would have startled world leaders in 1950. In the past sixty years, foreign aid has emerged as an important form of foreign policy. 2 The …