The Benefits of Multilateral Aid: How Agency Motivation, Specialization, and Autonomy Promote Development
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The question of how to enhance the effectiveness of foreign aid has plagued researchers for over six decades. Although in some cases scholars have positive support regarding aid’s impact on economic growth in recipient countries, others have questioned these findings, and some have even demonstrated that aid has a negative impact on growth. I address this question from a new perspective by analyzing how the organizational characteristics of aid agencies lead to differences in development policies. Specifically, I highlight how the characteristics of an understudied group of agencies, multilateral aid agencies, impact their effectiveness. I demonstrate my argument by collecting original qualitative and quantitative data on three variables related to organizational performance. I then empirically test my expectations through a series of panel analyses of aid and economic growth from 1973-2012. The results support my theoretical expectations that organizational differences matter in terms of the outcomes they produce. I argue that three specific organizational characteristics enhance multilateral aid effectiveness: motivation, specialization, and autonomy. Agency motivations matter because they impact aid allocation patterns, which are critical for distributing effective aid. Specialization allows the agency to provide more funding to each of their targets, reduce transaction costs, and implement knowledgeable and effective policies. Autonomy determines the ability of the agency to resist attempts to pressure them to distribute politically driven aid. In order to test these arguments, I present original data documenting the motivations, specialization, and autonomy of forty multilateral agencies. I test my arguments using estimation techniques robust to issues of endogeneity and instrumentation that have hampered past research. My results support my argument. Generally, bilateral aid is found to be less effective than multilateral aid. Furthermore, I demonstrate that differences within multilateral aid agencies exist as well, and show how more autonomous agencies are comparatively more effective. I find little support, however, for my expectation regarding agency specialization, suggesting a fruitful avenue for future research. My results are able to account for past discrepancies within the aid literature, provide strong policy prescriptions for the aid community, and lend support for the salience of international organizations.
Bryant, Katherine Vera (2015). The Benefits of Multilateral Aid: How Agency Motivation, Specialization, and Autonomy Promote Development. Doctoral dissertation, Texas A & M University. Available electronically from