The Political Utility Of Foreign Aid

Why the recipient would make a foreign policy decision not agreed with the donor’s preferences within certain international aid relationship? In spite a vast amount of research has been made on policy preferences, electoral coalition, moral hazard, and comparative cost which enlighten the agents’ interaction of international aid relationship, little is known about substantive characteristics of this relationship and their impacts on the interaction between donor and recipient, leading to a lack of objective knowledge theoretically and pragmatically. This dissertation provides a more objective explanation to the research question through constructing a theory of foreign policy concessions based on the objects of aid relationships: aid factors.The aid factors theory of foreign policy concessions takes the aid factors for independent variable and the foreign policy concession for dependent variable. By employing the methodology of two-level games, this theory models aid factors with mobility and fungibility as two research dimensions, of which the mobility of aid factors is the explaining variable determines whether the recipient would make foreign policy concessions and the fungibility of aid factors is the intervening variable adjusts the concession to certain extent. This research argues: 1. The mobility of aid factors refers to the degree of diverting aid factors to other sectors differed from donor’s original intention by recipient’s decision maker. The higher the factors’ mobility, the more likely of no concession by the recipient and vice versa; 2. The fungibility of aid factors refers to the supply-demand relationship on aid factors and policy concessions between donor and recipient. The higher the factors’ fungibility,the less positive feedback by the recipient and vice versa.This dissertation adopts the controlled comparative case study method to test the theory through U.S.-Greece, U.S.-Pakistan, and U.S.-Turkey aid relationships in the historical context of Kosovo war and the war in Afghanistan. These three cases constitute two comparative groups: 1. Using the method of agreement under the most different system design to explain why Greece and Pakistan made the same decisions of no concession to their donor in spite of the distinct differences between these two countries; 2. Using the method of difference under the most similar system design to explain why Turkey and Pakistan made the different decisions of concessions to their donor in spite of the many common conditions they shared. The framework of interpretation could be demonstrated coherently by the comparative studies: the reason why Greece and Pakistan adopted the foreign policy of no concession is the internal high mobility of aid factors, and the three countries’ extents of feedback are due to the distinct fungibility of aid factors.