Donor competition and cooperation in foreign aid allocation

Do donors react to other donor's aid allocation decisions? When do donor states compete or cooperate with each other? The answer to these questions can help explain both traditional Cold War politics as well as the reaction of Western donors to new powers entering the aid game. This dissertation posits that aid is a foreign policy tool used to move recipients' foreign policies closer to donors. Donors use their aid budgets to compete with each other when their policy preferences are further from each other than they are from the recipient. They will cooperate when they are on the same side of the recipient in policy space. This simple argument can predict different responses between the same set of donors. This adds a more nuanced view to traditional models of foreign aid and generates interesting predictions for the current era of emerging aid powers.;This argument was tested using large-N statistical analysis. Results indicate that the US increases its economic aid in response to increases in economic aid from competing donors. Contrary to expectations, the US does not react to cooperating donors' aid or arms or to competing donors' arms. Regional differences in the aid competition and cooperation process were found. In Latin America and Africa, the US increases arms transfers in response to increases in competitors' economic aid. In East Asia and Africa, the US actually increases its economic aid in response to cooperators' economic aid. This finding is counter to the hypotheses in this dissertation.;The argument that aid does in fact buy influence was tested using four different measures of influence. As expected, results suggest that US aid and arms transfers do buy influence in recipient states and that it is important to take into account the aid efforts of other donors. However, aid from other donors tends to reduce US influence in recipient states regardless of whether these donors are competitors or cooperators. Ultimately, very weak support is found for the arguments in this dissertation. The final chapters further explore possible explanations for these results as well as ideas for future research.