Research

We review the literature on the political economy of foreign aid, examining the geopolitical returns generated by Official Development Assistance (ODA). Our paper identifies under which conditions donors are able to influence political and economic outcomes in recipient countries, shape their behavior in global affairs, and adjust to domestic and international challenges. First, we introduce our paper and outline the structure of our review. Second, we examine how the international system influences foreign aid motivations. Third, we discuss the literature on aid-giving practices and their geopolitical effects. Fourth, we explore the relationship between aid and international organizations. Fifth, we identify key challenges to the traditional aid architecture. Sixth, building on an emerging body of research in international development finance, we propose future directions for the study of ODA in a contested global landscape. Finally, we conclude by summarizing the main insights from our review.

Development finance institutions (DFIs), operated by donor governments to support private sector development in the Global South, often face informational barriers when deciding where to invest abroad. We argue that traditional Official Development Assistance (ODA), delivered through bilateral aid agencies, can play a catalytic role in guiding these investment decisions. Specifically, aid agencies generate valuable, location-specific, investment-relevant knowledge through their ODA-funded activities across regions of the Global South. When shared with DFIs, this information reduces uncertainty and increases the likelihood of DFI investment in those same regions. To test this expectation, we leverage an original geocoded dataset comprising investments by 12 DFIs from 12 OECD-DAC donor countries, matched with subnational ODA data from the GODAD dataset for the period 2000–2020. Our quantitative analyses reveal a robust and consistent association between ODA activity and DFI entry at the subnational level. To probe the mechanism, we conduct qualitative case studies of Germany, France, and the United States, illustrating how aid agencies and DFIs exchange information and coordinate investment decisions. Our findings con- tribute to a growing literature on the spatial allocation of development finance and provide new insight into how traditional ODA and national DFIs interact as part of an evolving development cooperation bureaucracy.

Debt transparency is essential for managing sovereign debt, but it is often hindered by political and technical constraints. This paper introduces the Princeton-NYU Debt Transparency (PNDT) measure, a standardized index of debt transparency over time and across countries. The PNDT leverages missing data from the World Bank’s Debtor Reporting System using a Bayesian item response theory model. Covering 113 countries from 1994 to 2022, the index is correlated with the domestic electoral cycle, openness, financial crises, and other international political dynamics. Debt transparency is not merely a matter of technical capacity but is also a political choice made by elected officials.

Populist leaders increasingly criticize global governance systems, portraying them as elitist and threatening national sovereignty. While research has explored how populism affects international organizations, less is known about how populist foreign aid donors engage with governance standards in international development cooperation. We argue that populist donors resist being seen as following IO directives, including those of the OECD Development Assistance Committee (DAC), which promotes standardized performance measurement through its Policy Marker System. This system encourages aid targeting in priority areas, which populists may frame as elitist and misaligned with national interests. Consequently, populist parties are more likely to oppose aid projects classified under the Policy Marker System during budget processes. Aid managers in bilateral agencies anticipate this opposition and are likely to design projects that exclude DAC markers. To test this, we analyze aid activities reported to the OECD’s Creditor Reporting System from 1998 to 2022, regressing the share of aid aligned with DAC classifications against anti-elitist sentiment expressed by donor political parties. We find that anti-elitism is negatively associated with policy targeting but does not significantly alter the sectoral distribution of aid. This suggests that populists primarily resist IO governance tools rather than attempting to reshape overall aid priorities.

The recent European Global Gateway Initiative pledged more than 300 billion euros in public and private investment in infrastructure to satisfy international demand while maximizing the economic interests of member countries. However, European development cooperation policy is traditionally far removed from the hard sectors, with an emphasis on promoting democracy and social well-being. How has the European development cooperation architecture evolved to support infrastructure investment in the Global South? We trace the way in which the European Commission has reformed the European development architecture to place national Development Finance Institutions (DFIs) center stage in the financing of the Global Gateway Initiative (GGI). The Commission opened up European guarantees to competition, to enable DFIs to benefit more from them relative to the European Investment Bank (EIB). Using an original database, we show that DFIs are at the core of the GGI initiative and that the projects funded support European economic interests.