Aid, ideas and markets: Transnational politics
Foreign aid has long been the source of heated debates in the development community. The most fundamental question is whether it helps or hinders in the pursuit of inclusive development. Can it can act as a helpful temporary crutch towards self-sustaining growth, or does it merely generate a political economy of dependence?
The changing nature and requirements of global capital have significant implications for the development of state capacity and elite commitment. For example, increased capital mobility may hinder the emergence of ties between states and entrepreneurial elites around a shared project of national development. At the same time, the mobility of capital and skilled labour allows access to new forms of technology, human capital, and financial resources via the global diaspora, that may have a positive effect on accumulation strategies of developing countries.
In this context of transnational flows of resources and ideas, the effects of aid on political incentives are still unclear. The new ‘Rising Powers’ are busy reshaping this context, bringing in new resources and ideas around how development can be done, and potentially offering stronger support for elite development projects.
New donors like China are less concerned about policy reforms, and their approach calls into question the very role and aims of traditional (i.e. Northern) donor agencies. ESID is exploring whether China has a particular influence on the politics of natural resource governance by looking at oil in sub-Saharan Africa.
At an analytical level, ESID is interrogating the concepts and indicators that allow us to make claims about aid effectiveness and its repercussions for institutional capacity and pro-poor policy. More practically, we are working with DFID and the World Bank on a comparative study of how they use political-economy analysis (PEA) in their aid relations with Ghana, Uganda and Bangladesh. We aim to help donor agencies determine whether they have become more politically savvy over the last decade and, if so, whether this translates into greater aid effectiveness.
ESID researchers are also refining our understanding of public sector reform as a transnational agenda, and are testing these ideas in a comparative study.
Some of the questions we are asking:
- In what ways is the changing nature of global capitalism shaping possibilities for developmental forms of state capacity to emerge?
- What implications does the emergence of rising powers such as China have for state capacity and elite commitment in Africa?
- What has been the impact of international efforts to build capacity at the centre of government?
- Does the use of political economy analysis in aid agencies make any difference to the effectiveness of programme interventions and donor engagements in country?