LESSONS FROM THE MARSHALL PLAN FOR UKRAINE’S POST-WAR RECOVERY

Introduction More than a decade ago, the World Bank argued that “underlying the litany of Africa’s development problems is a crisis of governance.” Poor quality institutions, weak rule of law, an absence of accountability, tight controls over information, and high levels of corruption still characterize many African states today. Aid levels have been reduced in many parts of Africa during the past decade. Yet in many of the countries with poor governance records, aid continues to contribute a very high percentage of government budgets. This article explores the institutional impact of these high levels of aid and the way that large amounts of aid are delivered. There are many reasons why governance is poor in much of sub-Saharan Africa. Colonialism did little to develop strong, indigenously rooted institutions that could tackle the development demands of modern states. Economic crisis and unsustainable debt, civil wars, and political instability have all taken their toll over the past 2 decades and more. It is difficult to separate the impact of these problems from the possible impact of foreign aid, which is often high in countries that suffer from precisely these problems. Theory provides conflicting guidance here. On the one hand, aid can release governments from binding revenue constraints, enabling them to strengthen domestic institutions and pay higher salaries to civil servants. Aid can provide training and technical assistance to build legal systems and accounting offices. In many countries, aid personnel (sometimes expatriate) manage important government programs, and the infusion of resources and technical assistance can give an important boost to the efficiency and effectiveness of governance, if only in a partial sense. Yet despite these likely benefits, it is also possible that, continued over

Since the early 1990s, Japan has played an increasingly important and influential role in Africa. A primary mechanism that has furthered its influence has been through its foreign aid policies. Japan’s primacy, however, has been challenged by changing global conditions related to aid to Africa, including the consolidation of the poverty reduction agenda and China’s growing presence in Africa. This book analyzes contemporary political and economic relations in foreign aid policy between Japan and Africa. Primary questions focus on Japan’s influence in the African continent, reasons for spending its limited resources to further African development, and the way Japan’s foreign aid is invested in Africa. The context of examining Japan’s foreign aid policies highlights the fluctuation between its commitments in contributing to international development and its more narrow-minded pursuit of its national interests. The contributors examine Japan’s foreign aid policy within the theme of a globalized economy in which Japan and Africa are inextricably connected. Japan and many African countries have come to realize that both sides can obtain benefits through closely coordinated aid policies. Moreover, Japan sees itself to represent a distinct voice in the international donor community while Africa needs foreign aid from all sources.

Chapter 1: 
\nThis chapter studies the effects of bilateral foreign aid on conflict escalation and deescalation. We make three major contributions. First, we combine data on civil wars with data on low level conflicts in a new ordinal measure capturing the two-sided and multifaceted nature of conflict. Second, we develop a novel empirical framework. We propose a dynamic ordered probit estimator that allows for unobserved heterogeneity and corrects for endogeneity. Third, we identify the causal effect of foreign aid on conflict by predicting bilateral aid flows based on electoral outcomes of donor countries that are exogenous to recipients. We establish that the effect of foreign aid on the various transition probabilities is heterogeneous and can be substantial. Receiving bilateral aid raises the chances of escalating from small conflict to armed conflict, but we find little evidence that aid ignites conflict in truly peaceful countries.
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\nChapter 2:
\nWe use an excludable instrument to test the effect of bilateral foreign aid on economic growth in a sample of 96 recipient countries over the 1974-2009 period. We interact donor government fractionalization with a recipient country's probability of receiving aid. The results show that fractionalization increases donors' aid budgets, representing the over-time variation of our instrument, while the probability of receiving aid introduces variation across recipient countries. Controlling for country- and period-specific effects that capture the levels of the interacted variables, the interaction provides a powerful and excludable instrument. Making use of the instrument, our results show no significant effect of aid on growth in the overall sample. We also investigate the effect of aid on consumption, savings, and investments, and split the sample according to the quality of economic policy, democracy, and the Cold War period. With the exception of the post-Cold War period (where abundant aid reduces growth), we find no significant effect of aid on growth in any of these sub-samples. None of the other outcomes are affected by aid.
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\nChapter 3: We combine temporal variation in international drug prices with new data on spatial variation in opium suitability to examine the effect of opium profitability on conflict in Afghanistan. District level results indicate a conflict-reducing effect over the 2002-2014 period, both in a reduced-form setting and with three different instrumental variables. We provide evidence for two main mechanisms. First, the importance of contest effects depends on the degree of violent group competition over valuable resources. By using data on the drug production process, ethnic homelands, and Taliban versus pro-government influence, we show that on average group competition for suitable districts is relatively low in Afghanistan. Second, we highlight the role of opportunity costs by showing that opium profitability positively affects household living standards, and becomes more important after a sudden rise in unemployment due to the dissolution of large armed militias after an exogenous policy change.
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\nChapter 4: This chapter analyses how foreign military interventions relate to the internal cohesion of communities and the role of local institutions in times of conflict. I consider the case of Afghanistan where households have been exposed to conflict for decades. Given an environment where formal institutions are unstable or even lacking, the local community becomes more important. Relying on support from others in the community is thus a common strategy for households to cope with different types of shocks. At the same time, the success of security missions crucially depends on cohesion within communities as they are relevant partners in counterinsurgency and reconstruction activities. I address endogeneity by applying different estimation techniques, including a geographic regression discontinuity design. My findings suggest that households in districts where foreign military forces are present receive less help from others in their community, have less trust in community councils and participate less in those councils.

STRUGGLING FOR EFFECTIVENESS CID A and Canadian Foreign Aid Stephen Brown, ed. Montreal & Kingston: McGill-Queeris University Press, 2012. 384 pp, $32.95 (paper) ISBN 978-0-7735-4057-6Canadians - and scholars of Canada - have made a national pastime of assessing Canada's relative position in the world. Is Canada a power? Is Canada a major foreign policy (or development) actor? What is the future of Canada's place in the world? Struggling for Effectiveness: CIDA and Canadian Foreign Aid, edited by Stephen Brown, fits with this mode of questioning. Several of the volume's fifteen authors seek to understand Canada's relative ranking in the global foreign aid hierarchy through comparisons to donors such as Ireland, the Netherlands, and the United Kingdom. Surprisingly absent from the volume are comparisons to the United States or other donors, such as Japan, who deviate from some of the standards of the international aid donor community that this volume stresses.A less-than-complete understanding of Canada as a foreign aid donor emerges from the comparative approach thatmarks the book's early chapters. While these chapters highlight the positive aspects of other countries' aid programs, the reader learns that on many indicators Canada is simply a middle of the pack country. In multiple rankings in areas ranging from donor size to generosity, Canada sits squarely in the of developed country aid donors, if not ranking slightly above the average for donor performance (53, 89, and Chapter 1). While this situation is clearly a concern for those who see foreign aid as an integral part of Canada's humanitarian ethos and believe that this ethos should define our foreign relations, it may not be a concern for most Canadians: the book provides evidence that prior to the 2000 elections only a minority of Canadians favoured increased foreign aid spending (251). This volume therefore reflects a perpetual tension between how Canadians see themselves and their country and the policies they and their government support. The domestic political context for the recent changes in Canadian foreign aid policy that form the key interest of the volume is laid out well in the chapters by David Black and Adam Chapnick.The overarching message of Struggling for Effectiveness is that Canada's foreign aid policy has lacked a clear and inspiring vision for quite some time. The result of this absence of vision has been policy incoherence, which implies that Canada will remain a middle of the pack country in the area of foreign aid for the foreseeable future. The objective of the book is twofold: to identify precisely where Canada's shortcomings lie and to offer advice and potential solutions for raising Canada from its status. While the authors largely succeed in the former task, their ability to make progress on the latter is limited by the overly critical focus of much of the volume. Indeed, the vast majority of contributors focus on policy failings since Prime Minister Stephen Harper and the Conservative Party came to (minority) power. Rare exceptions to this focus on Harper's failings are found in Stephen Brown's critique of the contraction of Canada's aid budget under Prime Minister Jean Chretien (95) and David Black's acknowledgement in a chapter titled Between Indifference and Idiosyncrasy: The Conservatives and Canadian Foreign Aid to Africa that the Liberals presided over the deepest cuts in the history of the Canadian aid program (248). While this book may not have been edited according to a political agenda, it certainly reflects the contentious domestic politics of Canada of the past decade.Tensions also exist between the consensus of the international aid donor community (which many of the authors in this volume use as a foil to Canada's policies) and some of the prescriptions offered in the volume. The Harper government's focus on Latin America actually reflects the current aid donor consensus that Canada should have greater geographic or sectoral concentration in its foreign aid program (53 and 90). …

Nearly 30 years have passed since the government of Japan unveiled its first Official Development Assistance Charter. Although it sets forth fundamental guidelines for the government’s foreign aid policy, previous studies have downplayed the influence of the ODA Charter. By contrast, this study argues that the ODA Charter changed Japan’s aid allocation behavior in relation to a number of issues. First, regarding military matters: since the introduction of the 1992 ODA Charter, testing of weapons of mass destruction by developing nations, as well as military expenditures for conventional weaponry by developing nations outside of Asia, have had a negative effect on aid from Japan. Non-military cooperation with military personnel was newly introduced as a principle in the 2015 Development Cooperation Charter, and that type of cooperation increased from 2015 on, a clear indication of the influence of the Charter. Foreign aid designed to serve Japan’s own interests was first discussed in the 2003 Charter, and the proportion of that type of aid has since increased. The aims of avoiding military force and returning economic benefits to Japan, which have long had strong domestic support in postwar Japan, were seamlessly incorporated into the ODA Charter. By contrast, the aims of promoting democratization and protecting the vulnerable—international norms for foreign aid, imported from abroad—are duly set forth in the ODA Charter, which ostensibly guides Japan’s foreign aid policy, but they have had no impact on its actual aid allocation behavior.

The suspension of US foreign aid by President Trump in January 2025 marked a significant shock to the global aid ecosystem, raising critical questions about the behaviour of European official development assistance (ODA) donors as media coverage of the event and public opinion might affect political decision-making. Against this backdrop, we examine the German public’s opinion on the USAID shutdown and their preferences for Germany’s and the European Union’s aid policies. A rapid survey conducted in February–March 2025 (N = 1055) shows that while Germans broadly view the Trump administration’s decision to freeze US aid negatively, expressing particular concern about its impact on humanitarian issues, a substantial majority prefers no change to Germany’s foreign aid policy. Our analysis indicates that political ideology, populist attitudes and trust in the German federal government significantly shape whether individuals view the shutdown favourably and whether they support either mimicking US aid cuts or stepping in to fill the gap. By contrast, concerns about the German economy do not translate into support for foreign aid cuts.

Preface. I: Some Theoretical Aspects of Foreign Aid. 1. Foreign Aid and Employment Policies in LDCs P. Hatzipanayotou, M.S. Michael. 2. Altruism, Trade Policy, and the Optimality of Foreign Aid S. Lahiri, P. Raimondos-Moller. 3. Foreign Aid and the Welfare Cost of Inflation E. Asem, K.L. Gupta. II: Foreign Aid, Some General Policy Aspects. 4. Foreign Aid and Global Environmental Policies C. Jepma. 5. International Development Assistance and Food Security A. Matthews. 6. Is There a Link Between Aid and Trade Flows? An Econometric Investigation M. McGillivry, et al. 7. Politicising Development? The Role of Participation in the Activities of Aid Agencies H. White. 8. Technical Expertise and Indigenization L.S. Wilson. III: Case Studies: The Donor Experience. 9. Danish Aid Policy: Theory and Empirical Evidence F. Tarp, et al. IV: Case Studies: The Recipient Experience. 10. Can Aid Generate Growth in Africa? A. Bigsten. 11. Cost Benefit Analysis of Foreign Aid for a Highly Distorted Economy: The Case of Sudan K. Han, E. Tower. 12. Foreign Assistance and Development in Bangladesh A.M. Islam. 13. Main Phases and Salient Features of Turkish Foreign Aid Experience F. Senses. 14. The Macroeconomics of Foreign Aid in Sub-Saharan Africa: Dutch Disease Effects Reconsidered J. Rattso, R. Torvik. Index.

For decades, agriculture has been central to economic growth and development in Pakistan. However, endemic rural poverty hinders the performance of agricultural production, and thus deteriorates the sustainable development perspectives of the agricultural sector and the entire country. The need for agricultural reform emphasizes raising farmers’ incomes as a cornerstone of the sustainable development of rural areas, and this study attempts to reveal the effects of foreign aid and government policies on the level of rural poverty in Pakistan. In total, 384 farmers from major agricultural areas of Pakistan completed the survey-based questionnaire. The partial least square structural equation modelling technique tested the results. They, using sustainable agriculture practices, improved agricultural production positively and significantly. Agriculture production positively and significantly reduces or mitigates poverty. This study aimed to reveal the role of foreign aid in sustaining agricultural production and eradicating rural poverty. Foreign aid positively moderated the association between sustainable agriculture practices and agricultural production. In addition, government policies negatively, yet insignificantly, moderate the association between agriculture production and poverty reduction. Furthermore, the findings indicate that agriculture production positively and significantly mediates the association between sustainable agriculture practices and poverty reduction. The study contributes to the literature by improving the understanding of linkages within the poverty-policies-aid-sustainability framework.

Foreign Aid and Foreign Policy. By Edward S. Mason [The Elihu Root Lectures.] (New York: Harper and Row, Inc., for the Council on Foreign Relations, 1964. Pp. ix, 118. Index. $3.50.) - Volume 21 Issue 3

The econometric literature has been unable to establish a robust association between foreign aid and growth and poverty reduction. In this paper we argue that aid effectiveness must be assessed using methods that go beyond cross-country regressions. We calibrate a dynamic general equilibrium model that is capable of generating large income gaps between rich and poor countries. The model quantifies three sources of poverty: (i) lack of access to international capital, (ii) low schooling and high fertility (a poverty trap), and (iii) antigrowth domestic fiscal policy. We analyze policies designed to address each source of poverty and estimate and compare the aid cost of implementing the different policies. The policies differ dramatically in the extent and timing of their growth effects, and in the aid cost of their implementation.

Foreign Aid Policy and Sources of Poverty: A Quantitative Framework

The article defines the essence of the concept of "international aid" and its main components. A brief description of the types of international aid is given. The issue of the influence of international financial institutions on the economic development of the country is considered in the works of domestic and foreign scientists. However, there are still many unresolved questions regarding the impact of international aid on the country's economic development, in particular, there is no clear analysis of the impact of financial resources for countries that receive aid, as well as the advantages and disadvantages of this aid. Therefore, the topic of the influence of international aid on the economic development of the country is extremely relevant. The purpose of the article is to characterize the main types of international aid, the state of the country's economy, and assess the impact of international aid on economic development. Methodology. The study is based on the analysis of regulatory documents and statistical data related to international aid to Ukraine. Systematic and comparative analysis was used to identify the impact of international aid on economic development. Research results.The article analyzes the current state of the Ukrainian economy in the conditions of a full-scale Russian invasion. The role and significance of international aid as a powerful tool of external financial resources for economic development in the conditions of war are considered. Scientific approaches to the use of international financial aid for the economic development of the country are summarized. The need for a balanced approach to the evaluation of cooperation with international financial organizations was determined, as well as the need to clarify the advantages and disadvantages of attracting funds from these institutions to national economies. Practical implications. Understanding the impact of international aid on the economic development of the country, which is significant, plays a decisive role in the implementation of economic reforms in the state, making it possible to attract preferential financial resources and direct investments in the economy. Cooperation with international financial institutions will be more effective when domestic and foreign policies are aimed at achieving the goals of improving people's well-being, primarily the economic development of the country as a whole. Value/originality. However, it is worth taking into account a number of factors that we have highlighted, which limit the possibilities of effective use of aid, but they should not be considered as an irresistible force for economic development. Today, international aid helps to support the real sector of the economy and ensure all functional capabilities of the state. In the face of a full-scale invasion, Ukraine received international support, including financial support, from a number of financial institutions. Various types of international aid are aimed both at supporting the economy, population and infrastructure, and at ensuring the combat capability of the Armed Forces. Each type of aid currently has only a positive effect, but in the long term it is associated with a number of risks.The following anti-crisis measures are recommended to maintain the state's economy and ensure its security: the creation of a national structural fund for the reconstruction of the country, the fight against corruption, the modernization of infrastructure, the preservation of human capital and the solution of logistics problems.

Taiwan's foreign aid policy is largely a response to its China-imposed international isolation. Taiwan provides aid without stringent accountability conditions to countries in Africa, the Americas, and the South Pacific in order to maintain official diplomatic relations in the face of Chinese opposition. Often at odds with this is Taiwan's interest in seeking western support through being seen as a responsible aid donor. Domestic political constraints on Taiwan's aid budget accentuate the tension between these two interests. Taiwan's aid program can be seen as the product of these three competing and enduring pressures – maintaining the count of official diplomatic relationships, improving its international reputation, and containing aid spending.Taiwan President Ma Ying-jeou's tacit ‘diplomatic truce’ with China – part of a wider warming of intergovernmental relations across the Taiwan Strait – has reduced significantly the squeeze between these three pressures on Taiwan's foreign aid policy. It has allowed the Ma administration to improve Taiwan's reputation, while maintaining or even reducing its aid expenditure, and still retain the same number of official diplomatic relationships. Nevertheless, the Ma administration has not wanted to alienate recipient governments while the prospects for the diplomatic truce with China remain uncertain. There remains considerable continuity with past practices, and the government's handling of aid as a foreign policy tool is still largely opaque and unaccountable.

This chapter examines how the foreign aid policy should and should have supported families facing risks by using the case study of Myanmar. The chapter starts by addressing the issue of poverty, which continues to be the gravest risk in the developing countries, and how family could be the cause of poverty as well as the solution of poverty in foreign aid policy discussion. The situation of poverty and migration as a risk management tool are then examined in the second section of the chapter. Interviews with migrant workers in Thailand and Japan were conducted. Finally, there is a discussion about the developments of Myanmar and how the foreign aid and international community has inadequately responded to the democratization of Myanmar and to the needs of its people.

Recent studies and reports suggest that foreign aid/intervention has been somewhat futile in eradicating conflict. In this study, we develop a simultaneous donor/recipient model of foreign aid and terrorism. Thereafter, we extend our theoretical propositions through a machine learning algorithm of inductive causation. We find that terrorism increases foreign aid, however foreign assistance is futile in mitigating terrorism. Additionally, socio-economic factors influence foreign aid given by the donors. But foreign assistance is unsuccessful in enhancing the livelihoods of the underprivileged. We conclude that foreign aid policies need to be more efficient.