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The politics of aid revisited: a review of evidence on state capacity and elite commitment

Working paper 7

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Arjan de Haan, Ward Warmerdam

Abstract

Based on a systematic review of the impacts of aid on both state capacity for, and elite commitment to, sustainable development,we conclude that a better understanding of the impact of aid has the potential to directly inform practices of international development. This requires better empirical insight into how donors interact with formal and informal institutions in the countries where they work, particularly in aid-dependent countries. Furthermore, it is critical to see aid as part of a spectrum of international exchange, rather than in isolation. This implies a significant research agenda, combining quantitative and in-depth qualitative analysis, as there are barriers for more informed political analysis to inform practice; and little analysis exists of how donors, even where they do start adopting a political perspective, do influence local institutions and the people they work with. The paper develops this conclusion through a review of existing large research programmes on politics of international development, the role and impact of donors political economy approaches, a scan of the literature on aid modalities, and a brief review of the practices of emerging donors, particularly China.