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Foreign aid and the domestic politics of European budget support

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  • Faust, Jörg
  • Koch, Svea

Abstract

We analyse domestic factors within European donor countries that have influenced their provision of budget support. Budget support has been one of the most promising, and at the same time, controversial aid instruments aimed at improving aid effectiveness as well as donor harmonisation. Based on theoretical considerations, our econometric analysis for the 2002–2012 period shows that government ideology, the economic context in donor countries, as well as the structure of their aid systems have been important determinants of budget support provision. A comparison of Germany and the United Kingdom sustains these findings with qualitative evidence. Our findings also indicate that these ideological, economic and bureaucratic factors have worked as important barriers to improved donor harmonisation within Europe.

Suggested Citation

  • Faust, Jörg & Koch, Svea, 2014. "Foreign aid and the domestic politics of European budget support," IDOS Discussion Papers 21/2014, German Institute of Development and Sustainability (IDOS).
    • Handle: RePEc:zbw:diedps:212014
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    1. Haley J. Swedlund & Malte Lierl, 2020. "The rise and fall of budget support: Ownership, bargaining and donor commitment problems in foreign aid," Development Policy Review, Overseas Development Institute, vol. 38(S1), pages 50-69, May.
    2. Danny Cassimon & Dennis Essers & Karel Verbeke, 2016. "The changing face of Rwanda's public debt," BeFinD Working Papers 0114, University of Namur, Department of Economics.
    3. Beletskaya, M., 2019. "Bilateral International Assistance: Factors for Donor Countries," Journal of the New Economic Association, New Economic Association, vol. 43(3), pages 95-114.
    4. Thilo Bodenstein & Jörg Faust & Mark Furness, 2017. "European Union Development Policy: Collective Action in Times of Global Transformation and Domestic Crisis," Development Policy Review, Overseas Development Institute, vol. 35(4), pages 441-453, July.
    5. Koch, Svea & Friesen, Ina & Keijzer, Niels, 2021. "EU development policy as a crisis-response tool? Prospects and challenges for linking the EU's COVID-19 response to the green transition," IDOS Discussion Papers 27/2021, German Institute of Development and Sustainability (IDOS).
    6. Iannantuoni, Alice, 2025. "Foreign aid volatility and institutional development," World Development, Elsevier, vol. 189(C).
    7. Cheeseman, Nic & Swedlund, Haley J. & O'Brien-Udry, Cleo, 2024. "Foreign aid withdrawals and suspensions: Why, when and are they effective?," World Development, Elsevier, vol. 178(C).
    8. Svea Koch & Stefan Leiderer & Jörg Faust & Nadia Molenaers, 2017. "The rise and demise of European budget support: political economy of collective European Union donor action," Development Policy Review, Overseas Development Institute, vol. 35(4), pages 455-473, July.
    9. Petra Debusscher, 2020. "Budget Support Through a Gender Lens: The Case of EU Development Cooperation with Botswana," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 32(3), pages 718-737, July.
    10. Thilo Bodenstein & Jörg Faust, 2017. "Who Cares? European Public Opinion on Foreign Aid and Political Conditionality," Journal of Common Market Studies, Wiley Blackwell, vol. 55(5), pages 955-973, September.

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