Foreign Aid From The Perspective Of Prospect Theory

Foreign aid is an important behavior in international relations.The original intention of foreign aid is to help the recipient countries to develop their economies and promote bilateral relations.But in practice,we have observed a lot of abnormal phenomena.Foreign aid from good intentions leads to the deterioration of the relations between the two countries.In some extreme cases,even the armed conflict has been induced.Therefore,this paper raises the question of whether foreign aid promotes relations between the two countries or produces counterproductive effects.Which form of aid will be more successful?This article first summarizes the characteristics of foreign aid.Compared with international acts and international relations with clear rights and obligations,foreign aid has distinct characteristics.The characteristics of foreign aid include obscure,secrecy,lack of compulsion,long-term nature,reciprocity and profit seeking.Foreign aid is divided into two parts: the surface aid agreement and the secret agreement.The aid countries nominally provide development assistance or humanitarian assistance to developing countries.The aim is to help developing countries get rid of poverty and develop their economy.Some people think that donor countries give the aids because of their mercy.But in fact,aid is seek for the national interests of their respective countries and have an agreement on the basis of utility balance between the aid and the recipient countries.But in order to maintain the image of both sides in the international community,the substantive appeal of aid will not be clearly reflected in the open aid agreement.The two sides make up for the benefit difference in the open aid agreement through the undisclosed agreement or the tacit agreement,which is the origin of the "submersible rule" in international aid.Secondly,we will focus on the long-term foreign aid process.In the long-term foreign aid,it is inevitable that both sides will face a rebus sic stantibus situation,which affects the balance of interests between the donor and the recipient countries.In particular,there are three reasons for the imbalance of interests in the process of assistance: one is the redefinition of interests,the two is the plight of the Samaritan,and the three is the appearance of the change of the situation.Thirdly,due to the obscure and tacit nature of foreign aid itself,it lacks the necessary dispute settlement mechanism and relief measures.The aid agreement on the surface is not an equal agreement.Once the balance of interests is broken,the secret agreement that regulates the both sides loses the basis of the continued performance,and it is difficult to recover the loss of its own interests by the losing party.In addition,foreign aid has a political symbolic significance,so that the losing party will not easily terminate aid relations.At the same time,due to the endowment effect,the beneficiaries of the aid relationship are unwilling to easily transfer the proceeds already obtained.In this way,the aid relationship is a bilateral relationship that is difficult to stop and unequal.Finally,based on the loss aversion,the losing party will feel a greater sense of loss than the actual loss,and is willing to accept the risk in order to recover the loss.The losing party is trying to make up for its losses in areas other than aid,and that makes friction and conflict with the beneficiary.The result is that both sides believe that they are the losing one.In order to recover the loss,both sides are willing to accept the risk behavior,which eventually leads to a spiral deterioration of the relationship between the two countries.This paradox is not limited to the foreign aid in international relations,but also applies to international relations without clear rights and obligations.