Jörg Faust

Policy Experiments, Democratic Ownership and Development Assistance

In an effort to enhance the impact of development aid, recipients are called on to provide democratically sustained ‘ownership’ for development policies, and donors to align their interventions with these ownership-dictated strategies of their partners. This article illustrates the weaknesses of such an approach. From a political-economy perspective, severe tensions exist between concepts of democratic ownership, on the one hand, and the experimental and iterative organisation of a societys encompassing interests in democratic settings, on the other. These tensions are even more pronounced in emerging democracies, making democratic ownership as a prerequisite for aid effectiveness an illusion, and provoking the re-emergence of traditional donor-recipient problems.

Foreign aid and the fragile consensus on state fragility

Most actors in the field of foreign aid agree with the call for coordinated engagement in fragile states in order to more effectively counter the consequences and origins of state failure. However, despite such demands, governments from OECD countries as well as multilateral agencies that are engaged in fragile states often continue to act in an uncoordinated manner and fail to reach higher levels of harmonisation. Why is effective coordination so hard to achieve? This article argues that three major challenges explain the persistent problems of donor harmonisation in fragile states: (1) the cognitive challenge of explaining the origins of state fragility and deducing effective instruments and interventions; (2) the political challenge of reconciling divergent political motives for engagement; as well as (3) the bureaucratic challenge related to the organisational logic of competing aid agencies.

Foreign Aid and the Domestic Politics of European Budget Support

We analyse domestic factors within European donor countries that have influenced their provision of budget support. Budget support has been one of the most promising, and at the same time, controversial aid instruments aimed at improving aid effectiveness as well as donor harmonisation. Based on theoretical considerations, our econometric analysis for the 2002-2012 period shows that government ideology, the economic context in donor countries, as well as the structure of their aid systems have been important determinants of budget support provision. A comparison of Germany and the United Kingdom sustains these findings with qualitative evidence. Our findings also indicate that these ideological, economic and bureaucratic factors have worked as important barriers to improved donor harmonisation within Europe.

European Union Development Policy: Collective Action in Times of Global Transformation and Domestic Crisis

This special issue of Development Policy Review reflects on European Union (EU) efforts to build a more effective global development policy amid a rapidly changing international context. As 2030 Agenda and the Sustainable Development Goals have made clear, global development challenges require collective action if they are to be resolved. Contributions to the special issue explore the ways in which the EU approaches collective action challenges in different development cooperation frameworks and policy settings. Themes explored include strategies for overcoming collective action problems, the impacts of these interactions on EU and member state aid policies, coherence between development and other policy fields, relations between European and other development actors, and the reception of the EUs efforts in developing countries.

Latin America, Chile and East Asia: Policy-Networks and Successful Diversification

Latin American countries have a long tradition of attempting to diversify their external relations. In this context, since the end of the Cold War East Asia has gained increasing importance. However, despite the rising interest in improved political and economic links, these attempts at diversification showed only modest results, Chile being a noteworthy exception within this overall trend. The following analysis presents an empirical overview of the development of relations between Latin America and East Asia with special emphasis on Chile, demonstrating how domestic transformation has affected the Asia-Pacific policies of Latin American countries. The main conclusion is that while in most countries domestic conflicts over the future course of political and economic development have hampered the creation of a consistent Asia-Pacific policy, the elite settlement in Chile has enabled strategic actors to create a policy network which provides the institutional basis for successfully diversifying external relations to East Asia.

Donor Transparency and Aid Allocation

In recent years, the transparency of foreign aid has received substantial attention among aid practitioners. This analysis shows the impact of political transparency in donor countries on those countries’ formal promotion of aid transparency and on their concrete aid allocation patterns. Political transparency as measured by standard corruption indices not only impacts on the engagement of bilateral donors in the International Aid Transparency Initiative. Differences in political transparency in donor countries also explain a large part of their varying aid selectivity patterns. Donors with higher levels of political transparency allocate aid more according to recipients’ neediness and institutional performance.This paper formerly appeared under the title: Do Less Transparent Donors Allocate Aid Differently?

The rise and demise of European budget support: political economy of collective European Union donor action

This article uses the example of European budget support to show the differences in applying principal–agent and collective action analysis to the donor–recipient relationship and the incentives of European donors. Our results show that the Paris Declaration, while formulating the ‘right’ principles, carries a number of assumptions regarding the (cap)ability of donors to act collectively. This assumption, however, fails to include the political economy of European donors and their own political, institutional and individual incentives that undermined this capability substantially. In other words, the domestic political costs and incentives for European donors to implement the Paris agenda, and in particular aid modalities such as budget support, were not given enough consideration when the aid effectiveness agenda was formulated.

Country Selection and Resource Allocation of German Aid: Development-Orientation, Self-Interests and Path Dependency

This paper examines official country selection as well as resource allocation of German aid after the end of the Cold War and embeds the analysis into the broader debate about German foreign policy. Based on new data, we take into account several peculiarities of the German aid system. We find that neediness and democracy levels of recipients have been guiding principles in both, country selection and resource allocation. Nevertheless, geo-strategic considerations and the avoidance of conflict-affected countries also impacted on country selection but less on resource allocation. Moreover, non-linear estimation techniques identify a relatively high threshold of income levels below which the poverty orientation disappears. Finally, official selection decisions to concentrate aid on a reduced number of countries did not have the intended concentration effect. This strong path dependency and development-orientation is compatible with research that sees German foreign policy after re-unification as being subject only to gradual changes and led by the role model of a Civilian power.

Poverty, Politics and Local Diffusion - Resource Allocation in Bolivia’s Decentralized Social Fund

Social investment funds are prominent instruments in developing countries that aim at providing financial resources for social infrastructure projects to poor municipalities. In contrast to traditional, more centralised distribution mechanisms of such funds, the Bolivian Fondo de Inversion Productiva y Social was among the first that employed a selfselection mechanism: municipalities had to apply for funds through a decentralised allocation scheme embedded in the country’s overall fiscal decentralisation process. This study tests several hypotheses regarding potential factors at the local level that might have shaped the distribution pattern among municipalities. It finds positive non-linear relations with diminishing returns between a municipality’s level of poverty and alternative fiscal transfers that could be used for co-financing FPS projects, on the one hand, and the resources it received from the social fund, on the other. Moreover, local neighbourhood effects of FPS funding depended on a municipality’s institutionalised cooperation with its neighbours and its proximity to provincial capitals, which hosted the regional offices of the FPS. Finally, there is no evidence that major traditional parties have overproportionally profited from the FPS, but municipalities governed by Evo Morales’ antisystem party were significantly disadvantaged.