Do Countries Use Foreign Aid to Buy Geopolitical Influence? Evidence from Donor Campaigns for Temporary UN Security Council Seats

Abstract

In recent years, donor countries have increasingly used different aid allocation channels to boost aid effectiveness. One delivery channel that has grown tremendously is ‘multi-bi aid’—contributions to multilateral organizations earmarked for specific development purposes. This article examines whether donors use multi-bi aid to further their selfish goals—specifically, to garner political support for their ambition to become a temporary member of the UN Security Council. In this context, multi-bi aid is particularly beneficial to countries with limited experience as foreign aid donors; whose governance quality is weak; and which are more internationalized. Using a sample of OECD/DAC donor countries in 1995–2016, time-series cross-section analysis corroborates these arguments. The analysis draws on a new dataset of media reports proxying for donor interest in winning a temporary seat in the UN Security Council and extended data on multi-bi aid flows. The findings demonstrate that multi-bi aid may be a tool for geopolitical influence, with yet unexplored consequences for aid effectiveness.

Do Multilateral Development Bank Trust Funds Allocate Climate Finance Efficiently?

“…DAC bilateral aid is a useful reference point, as it represents the alternative financing tool that donors can use, and through which they also provide significant funding for climate-related purposes [36]. At the same time, we would not expect bilateral aid to be allocated in accordance with efficiency criteria, given the available evidence on strategic uses of aid [14,15,37,38]. Furthermore, channeling aid through MDB trust funds could allow donors to escape the public pressure mentioned above, and to spend mitigation resources more efficiently.…”

UN Security Council Elections as an Incentive for Compliance

“…One could possibly study more cynical equilibria influencing the outcomes of election in the SC. Reinsberg (2019) argues that countries interested in joining the SC are more likely to increase foreign aid during their campaign. Although the subset of such countries is relatively small, providing aid is a variable that we did not include in our study.…”

“…The three studies just discussed take an optimistic approach: while countries analyze the costs and benefits of compliance in making their decision, they assume that nations ‘play by the rules.’ One could possibly study more cynical equilibria influencing the outcomes of election in the SC. Reinsberg (2019) argues that countries interested in joining the SC are more likely to increase foreign aid during their campaign. Although the subset of such countries is relatively small, providing aid is a variable that we did not include in our study.…”

Aid Impact and Effectiveness: Introduction and Overview

“…A particular strand is focused on how aid is used to buy influence through aid allocation to the Bretton Woods institutions and the United Nations (see e.g., Andersen, Harr, & Tarp, 2006). Reinsberg (2019) examines whether multi-bilateral aid is used to promote countries' interest in becoming a temporary member of the UN Security Council (see also Dreher, Lang, Rosendorff, & Vreeland, 2018). His analysis draws on new data using media reports to assess donor interest in winning seats in the UN security council, along with data on multi-bilateral aid flows.…”