Formal and Informal Interests of Donors to Allocate Aid: Spending Patterns of USAID, GIZ, and EU Forest Development Policy in Bangladesh

• Published in: World development Vol. 94; pp. 250 - 267
• Main Authors: Rahman, Md Saifur, Giessen, Lukas
• Format: Journal Article
• Language: English
• Published: Oxford Elsevier Ltd 01-06-2017; Elsevier Science Publishers; Pergamon Press Inc
• Subjects: Analysis; Asia; Bangladesh; bilateral donors; Budgets; Bureaucracy; Case studies; Consultancy services; Consultants; Consulting services; Development aid; Development policy; Development programs; Development studies; Donors; Economics; Environmental policy; Expenditures; Experts; Forest management; forestry development; Forests; Forests and forestry; formal and informal interests; Geopolitics; Governance; International relief; Intervention; Investments; Land development; Markets; Networking; Political activity; Political aspects; Political power; Politics; Power; Qualitative analysis; Qualitative research; Quantitative analysis; Bangladesh; Bangladesh; formal and informal interests; development aid; forestry development; Asia; bilateral donors
• ISSN: 0305-750X; 1873-5991
• DOI: 10.1016/j.worlddev.2017.01.012

•International aid donors have both formal and informal interests.•Aid donors have economic, political, and strategic interests in the countries they fund.•Development aid serves to advance donors’ informal self-interests.•The interests may vary from donor to donor.
Whether aid serves the development needs of a recipient country rather than the interests of donors has been a topic of much debate and research in the field of development studies. Donor agencies have interests, as does any political actor, and bureaucratic politics theory states that any bureaucracy has a dual interest, consisting of delivering on its formal mandate as well as informally increasing its power by maximizing budgets, staff, and fields for political responsibility. This study aims to conceptualize the formal and informal interests of bilateral foreign donor bureaucracies in allocating aid, using Bangladesh forest development aid by USAID, GIZ, and the EU as a case study. Quantitative analysis of documents on actual spending in the context of forest development projects and qualitative analysis from detailed interviews with development aid experts are employed. Important informal interests of donor agencies were observed as follows: (1) drawing on consultants as well as products and services from the donor’s country; (2) expanding favorable markets for the donor’s economy; (3) increasing the donor’s geopolitical as well as policy influence in recipient countries; (4) obtaining information that is independent from the recipient government; and (5) shaping good governance as a prerequisite for investment from donor countries. Of the three donor organizations, USAID was found to have allocated extensive aid to two activities—consultancy, and collaboration and networking—that advance USAID’s informal economic and political interests. GIZ allocated major aid to recipient developmental interventions; it also advanced its informal economic and political interests (albeit to a smaller extent). The EU allocated the largest amount of aid to developmental interventions, though its informal economic and political interests were also served, even if only to a limited extent. This study concludes with key points regarding informal interests of donor bureaucracies as well as on future research fields.