Portfolio Similarity and International Development Aid
Christina J. Schneider, Jennifer L. Tobin
International Studies Quarterly (Forthcoming, 2015).
Abstract
How do governments distribute their foreign aid resources across international development organizations (IDO)? We argue that governments’ distributional choices across IDOs are a consequence of their attempt to minimize the costs of delegation and to pursue their own interests (strategic or non-strategic) in foreign aid policy. Governments make decisions about the allocation of resources across a large number of IDOs, and they delegate their scarce aid resources to IDOs that pursue development policies in line with their own foreign development interests. We use data on the financial contributions of 22 OECD governments to 12 IDOs from 1970 to 2008 to test our theoretical hypothesis about governments’ allocation decisions. The empirical analysis robustly supports our theoretical claims. Governments regularly contribute to a large number of IDOs, and they tend to delegate more resources to IDOs that provide higher levels of portfolio similarity. Our analysis provides a first attempt to analyze the consequences of the existence of multiple IDOs on the ability of governments to minimize the loss of control that they experience when delegating foreign aid resources to IDOs.Keywords:
multilateral aid institutions, delegation, institutional choice