Democracy Dies in Darkness

Monkey Cage | Analysis

Why do nations invest in international aid? Ask Norway. And China.

By Dan Banik, Nikolai Hegertun

October 27, 2017 at 8:00 AM

In this 2013 file photo, South African President Jacob Zuma (R) receives China’s President Xi Jinping (L) in Pretoria, South Africa. (EPA/GCIS)

How much are acts of generosity worth in international relations? For affluent countries, foreign aid has helped spread power and influence. Donors give foreign aid in part because it will benefit them. For example, political scientist Carol Lancaster finds that domestic politics and international pressures combine to shape how and why donor governments give aid, and that aid was initially based on “hard-headed, diplomatic realism.”

The Trump administration’s proposal to slash foreign aid by more than one-third (including drastic cuts to global health and humanitarian aid) represents a major shift away from the goal of using aid to attain “smart power,” a strategy that supplements the ability to exercise brute force with efforts to win hearts and minds in far-off places. At the other end of the spectrum is Norway, a small but wealthy country, which has consistently tried to bolster its “soft power” ever since it helped broker a peace agreement between Israel and Palestine in the 1990s. Between these two extremes is China, which is using foreign aid to acquire greater soft power as it gears up for a more active role in world affairs.

Here’s how we did our research

We recently studied Norwegian and Chinese aid to two countries in sub-Saharan Africa — Malawi and Zambia. Our goal was to inform international policy debates on aid effectiveness, and to learn more about how aid influences national development and reduces poverty. The two countries pursue widely different strategies. While Norway provides substantial funding for budget support and funds civil society organizations, China offers a combination of grants and concessional loans and prioritizes infrastructure development in poor countries.

Adopting a mixed methods approach, we studied local contextual factors with the aim of identifying and examining the links between policy, concrete interventions and their impacts on poverty reduction.

Norway’s approach to international aid

Given its size and lack of military might, Norway has actively tried to promote the virtues of the Nordic model — a peaceful, rule-based, globalized and prosperous world. It has done this through offering a generous amount of aid, consistently giving away more than 1 percent of its Gross National Income. It does so following the 2005 Paris principles, which aim at achieving better impacts by formulating aid policies around five pillars — ownership, alignment, harmonization, managing for results, and mutual accountability.

Such acts of generosity give Norway a seat at the table usually reserved for the bigger players in peace processes or efforts to promote development and reduce poverty around the world. In building this soft power, Norway attracts the attention of the United States and consistently “punches above its weight.” It gains international recognition by demonstrating consistent support for promoting global development, thus enhancing its reputation, along with Sweden, as a humanitarian superpower.

While some right-wing parties in Norway have at times challenged that approach, scholars as well as the country’s own aid agency have highlighted the need to better document the long-term results of these efforts. Other experts argue that unless the country distinguishes better between “feeling good” through acts of generosity and “doing good” through a stronger focus on observation, evaluation and learning, the quality of aid will not improve.

With the size of the aid budget increasing every year, and without a corresponding increase in administrative capacity, generosity is trumping knowledge.

In recent years, Norway has been spending funds earmarked for aid and global public goods within its own borders; in 2015, it used almost one-fifth of the aid budget to cover the costs of settling an unusually large number of refugees and migrants. The conservative-led ruling coalition is also trying to integrate aid more closely with Norway’s national interests, and encouraging its businesses to be more involved in developing countries. Some parties in opposition like the Christian Democrats argue that the goal of aid should be to alleviate suffering, and that altruism cannot be replaced by commercial interests. Similarly, civil society organizations argue that aid should not include a profit-making incentive.

As it struggles to better integrate foreign aid and national interests, Norway has been falling in the Center for Global Development’s rankings of countries committed to development — one of the most cited indexes among aid advocates and civil society organizations. Such results directly undermine its carefully cultivated image of being a humanitarian superpower.

China’s approach to international aid

By contrast, China does not abide by the Paris principles. Rather, little distinction is made between grants and loans, and it does not offer detailed information about aid disbursements at country level. It expects poor countries to offer access to such natural resources as oil, minerals, and agricultural products, which China needs for its own development.

The strategy is to make recipient governments believe they can shape their own development strategies without outside interference. In doing so, China aims at expanding its global influence by emphasizing the benefits of what it calls South-South collaboration.

In studying the impact of aid and investments in agriculture and infrastructure, we find that China’s approach is characterized not by generosity, but pragmatism. It does not believe in offering aid conditioned on improving local governance or combating corruption. Unlike Western donors, China controls the implementation process by bypassing the public administration of recipient countries, and awards contracts to Chinese companies.

Such contracts benefit Chinese companies keen on expanding their businesses to newer markets. But as China does not have an aid agency, and local embassy staff are already overstretched, we find it is increasingly relying on these companies to provide background information and feasibility studies that help embassy officials better justify the need for specific aid projects for decision-makers in Beijing.

Despite accusations of “rogue aid” and the pursuit of neocolonialist ambitions, Africans generally look favorably on Chinese interventions. Many politicians and administrators believe they now have greater freedom to shape their own destinies by getting different donors to offer different types of assistance. Thus we find that while African governments welcome western aid directed at improving education, health and gender equality, they also desire more visible forms of development that result from Chinese expertise: roads and buildings.

What can we learn from these approaches?

Although altruism may increase a country’s soft power, global development requires much more than generosity. As aid recipient countries become more assertive, and as the national interests of donors become even more closely tied with aid, we see a possible synthesis between the Western and Chinese intervention strategies in Africa.

In recent years, Western donors have been interested in monitoring and evaluating the impact of their aid. However, measuring impact has often been a challenge as different donors pursue different goals and approaches, and may at times even compete for influence. The impact of Chinese aid is particularly difficult to measure in the absence of credible and readily available information.

Dan Banik is professor of political science and research director at the Center for Development and the Environment, University of Oslo. Find him on Twitter @danbanik.

Nikolai Hegertun is a PhD candidate in political science and research fellow at the Center for Development and the Environment, University of Oslo. Find him on Twitter @nikolaihe.

For further reading:

Related: [China’s ‘Belt and Road’ opens up new business in Africa — for both the U.S. and China]

Related: [Chinese aid is helping African economies, but not in the places that need it most]

Related: [Here’s what Africans think about China’s influence in their countries]

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