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The Impact of Colonialism in the 20
th
Century
on Development Cooperation in the 21
st
Century
A Mixed Method Approach to the Development Cooperation Policies of the
Netherlands, the United Kingdom, Germany and Switzerland
Christian Lokhorst – 10785744 Supervisor: S. Lim Second reader: F. Boussaid
University of Amsterdam Department of Political Science
Master Thesis Political Science – Specialization International Relations June, 2016
Abstract
This thesis builds on to the previous found positive relationship between colonialism and the amount of Official Development Assistance. It focuses on the volatility of aid, the sectoral composition of aid and cooperation with the recipient government. These qualitative aspects of development cooperation partly confirm and partly reject the positive relationship between colonialism and development cooperation. The analyses of the volatility and sectoral composition of aid do not confirm and cooperation with the recipient government does confirm the previous found relationship between colonialism and development cooperation.
Keywords: Colonialism; Development Cooperation; Sectoral Composition of Aid; Volatility of Aid; Cooperation With the Recipient Government.
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CONTENT
1. INTRODUCTION ... 4
2. LITERATURE REVIEW ... 7
2.1 Colonial relationship as determinant of foreign aid ... 7
2.2 Colonial donors ... 8
2.3 Non-colonial donors ... 9
2.4 Three aspects of development cooperation ... 10
2.4.1 Volatility of aid ... 10
2.4.2 Sectoral composition of aid ... 10
2.4.3 Cooperation with the recipient government ... 11
3. THEORY ... 12
3.1 Volatility of aid ... 13
3.2 Sectoral composition of aid ... 14
3.3 Cooperation with recipient government ... 15
4. CASE SELECTION AND METHODOLOGY ... 16
4.1 Case selection ... 16
4.2 Volatility of aid ... 17
4.3 Sectoral composition of aid ... 17
4.4 Cooperation with recipient government ... 18
5. GOVERNMENTAL AID AGENCIES ... 19
5.1 The United Kingdom... 19
5.2 The Netherlands ... 20
5.3 Germany ... 20
5.4 Switzerland ... 21
5.5 Development cooperation objectives ... 22
6. RESULTS – SECTORAL COMPOSITION AND VOLATILITY OF ODA ... 23
6.1 Volatility of aid ... 24
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6.2.1 Findings H-II ... 26
6.2.2 Additional findings ... 29
7. RESULTS – COOPERATION WITH THE RECIPIENT GOVERNMENT ... 31
7.1 Development of political conditionalities in development cooperation policy ... 32
7.1.1 Germany ... 32
7.1.2 The Netherlands ... 33
7.1.3 Comparative conclusions for German and Dutch political conditionalities development ... 34
7.2 Development cooperation policy reports with a special emphasis on Indonesia ... 35
7.2.1 Germany ... 35
7.2.2 The Netherlands ... 36
7.2.3 Conclusion Dutch and German development cooperation with an emphasis on Indonesia ... 37
7.3 Country Programmable Aid ... 38
8. CONCLUSION ... 39
8.1 Implications ... 41
8.2 Limitations ... 42
8.3 Future research ... 43
4 1. INTRODUCTION
In the beginning of the 21st century, a reversed foreign aid spending trend is observable when compared to the 1990s. The amount of foreign aid increased in order to meet the United Nations Millennium Development Goals (Gupta et al., 2006). World leaders agreed upon these goals for several reasons and one of most important reasons is to eradicate poverty. Following these Millennium Goals, raising the amount of foreign aid is one of the latest developments in the long historical relationship between the ‘West’ and the developing countries. Some consider this to be positive and promising. For example, the United States president Barack Obama who claims that through collective action, hope is lifted to break the cycle of poverty (United Nations, 2015). However others stress that the ‘West’ should stop interfering and intervening in the developing world. The colonial activities of European countries impacted the past three centuries and might even impact the developing world nowadays. William Easterly is one of those criticasters and in his essay titled: The Trouble with Sustainable Development Goals, Easterly (2015) criticizes the agreed upon goals of the United Nations. He argues that the Sustainable Development Goals clearly demonstrate that plans do not lead to action and that the ‘West’ is not the right one to act.
It is evident that aid donors with a colonial history have a different relationship with their former colonies than non-colonial donors have with those countries. Previous research has shown that former colonial powers tend to give more aid to their former colonies (Alesina and Dollar, 2000). Yet the colonial relationship may also impact qualitative aspects of donor countries’ aid providing. Currently there is little systematic and comparative research concerning those aspects, therefore the research question that is central in this thesis is: Does and how does colonialism in the 20th century shape development cooperation in the 21st century? In order to answer this question I will focus on several aspects of development cooperation. Is there a difference observable concerning the effect of a colonial relationship on the volatility of Official Development Assistance (ODA) and is this effect desirable? Another interesting aspect concerns the sectoral composition of ODA. Does a colonial relationship differ from a non-colonial relationship? Subsequently, is there a difference observable in how colonial and non-colonial donors cooperate with governments of former colonies? And is this reflected in attaching political conditionalities to ODA?
By answering these questions, I seek to provide more knowledge of the relationship between colonialism in the 20th century and development cooperation in the 21st century. This
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thesis would also have important policy implications. First of all, taxpayers should be better informed about how their money is spent. Currently there is knowledge about the amount of aid that flows to recipient countries, however taxpayers should also have access to information concerning the qualitative aspects of aid. Second, my findings can generate a new dimension for a current debate. Is it desirable that colonialism has certain effects on development cooperation nowadays? Easterly and Pfutze (2008) argue that aid donors tend to provide aid in every country and in every sector. This prevents the provided aid to be effective and to generate positive effects for the recipients. According to Easterly and Pfutze (2008), donor countries should specialize in certain sectors in certain countries in order to minimize bureaucracy costs and to improve the cooperative relationship between the donor and the recipient country. In addition do Easterly and Pfutze (2008) advice to spend more money on a few countries instead of spending a lot of money on a lot of countries. This research may therefore contribute to this discussion and lead to policy implications because colonialism could be a crucial factor in this discussion. If a colonial relationship in the 20th century increased the familiarity between those countries and improved cooperation between them, than this might be a good reason to further develop the relationship. Then colonialism could even be a comparative advantage and a reason for donor countries to further expand the current development cooperation relationship. However, such hypotheses and expectations are sensitive in this discussion. Especially from the recipient countries’ perspective this is an ambiguous perspective. Western powers have played an enormous role in the development of developing countries in the past three hundred years. Schraeder et al. (1998) find that strategic self-interest is one of the most important motivations for states to provide ODA. These strategic and self-interested motivations are comparable to the selfish motivations of Western European powers that led to colonizing other countries in the 18th, 19th and 20th century. Easterly (2006) gives several examples of colonial powers who invested in education, infrastructural improvements, hygiene and health interventions. These interventions are similar to current foreign aid projects. Easterly (2006) argues that the problems that evolve from these projects are similar to colonialism, they involve excessive self-confidence of foreign bureaucrats, coercive top-down planning, desultory knowledge of local conditions and little feedback from the locals on what worked. Easterly (2006) draws the conclusion that the West should learn from its colonial and imperialistic past and they should stop interfering in developing states. According to Nkrumah (1965), the lack of direct responsibility for the aid donors is one of the most important threats for developing countries. Hence it is debated if colonialism in the 20th century could be an advantage for development cooperation in the 21st century.
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Development cooperation is a broad concept and in this research it refers to the aid providing of aid donors to recipient countries. This thesis tries to research the effect of foreign aid donors that were a colonial power in the 20th century on 1) the volatility of aid, 2) the sectoral
composition of aid and 3) the level of cooperation with the recipient government. In order to research this, four European donor countries are selected. The Netherlands and the United Kingdom are the selected colonial donors and Germany and Switzerland are the selected non-colonial donors. In this research, the focus will be on the donor countries and not on the recipient countries. Therefore specific characteristics of the recipient country, such as the openness and democracy level, will not be incorporated in the analysis. The recipient countries that will be focused on, are all recipient countries of the colonial donors that receive at least .8% of the aid disbursements in the period of 2000-2014. For the sub question that concerns the level of cooperation with the recipient government, the relationships between the Netherlands and Germany with Indonesia will be analyzed. The methodology section will discuss grounds for these case selections more extensively. The results show that colonialism in the 20th century has an ambiguous effect on development cooperation in the 21st century. It is found that in the case of a colonial relationship, ODA volatility is higher than in the case of a non-colonial relationship. Subsequently, colonialism only significantly affects the sectors debt relief and program assistance. Debt relief is negatively associated with colonialism and program assistance is positively associated with colonialism. The final finding shows that in the case of a colonial relationship, less political conditionalities are attached to development cooperation and more independency is given to the recipient government than in a non-colonial relationship. Even though the results are ambiguous, the findings do generate enough grounds to argue that colonialism in the 20th century could positively impact and lead to benefits for both the donor
and the recipient country in development cooperation in the 21st century.
This thesis proceeds as follows. In the second section, I review the literature concerning colonialism as a determinant of foreign aid as well as other qualitative aspects of aid provision among the colonial and non-colonial donors. In section III, I develop my theoretical argument and derive empirically testable hypotheses. Section IV discusses the choice of methodology and case selections. Section V discusses how the donor countries have organized and run their development cooperation agencies. The sections VI and VII report my findings. Finally, section VIII concludes.
7 2. LITERATURE REVIEW
This section reviews the existing literature concerning the effect of a colonial relationship in the 20th century on development cooperation in the 21st century. At first the research concerning the role of a colonial relationship as a determinant of foreign aid will be discussed. Subsequently the main findings in the literature concerning the aid behavior of the four donor countries will be summarized. Finally the existing research concerning the three different aspects of development cooperation will be discussed. This involves the volatility of aid, the sectoral composition of aid and the level of cooperation with the recipient government. According to the OECD (2016), ODA concerns “the flows to states and to multilateral institutions which are provided by official governmental agencies. In addition it concerns each transaction which is administered with the promotion of economic development and welfare of developing states as its main objective, which is concessional in character and conveys a grant element of at least 25 percent”.
2.1 Colonial relationship as determinant of foreign aid
The determinants of ODA have been extensively researched. In this thesis the main focus is on the colonial relationship between the aid donor and the aid recipient and therefore other determinants of ODA will not be discussed in this literature review. Despite the fact that it has been extensively researched, scholars are still debating what determines foreign aid flows. Lumsdaine (1993) argues that there are several important determinants for foreign aid, such as the colonial history, the democracy level and the income level of recipient countries. Lumsdaine’s main argument is that the moral vision of states is more important than the self-interests of states. He argues that one third of provided ODA, classed as economic aid, served commercial interests and the maintenance of colonial ties. Lumsdaine (1993) elaborates on this point and observes that the strong aid donors tended to be states with strong welfare programs and that the countries with strong colonial connections to developing countries were middling in their aid spending. In addition he cannot explain why colonial powers did not retain their traditional relationships and move towards freely giving money. The only explanation he sees, is the moral vision of states that contribute to the humanitarian welfare of developing countries. Lumsdaine therefore weakens the strength of the relationship between colonialism and the amount of ODA that flows to former colonies.
On the contrary, Alesina and Dollar (2000) find a strong relationship between the years of being a colony and the received amount of ODA. If a country had a relatively long colonial
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history, it received 87 percent more aid than if a country did not have this colonial past. They find that the donor’s political-strategic interests have more explanatory power than the measures of the recipient’s poverty, democracy and policies. It is remarkable that Western powers, such as France and the United Kingdom, who claim to value open economic policies and sound democratic institutions, tend to significantly give more aid to former colonies, than to open countries with democratic institutions. Alesina and Dollar’s research was the first that significantly finds the relationship between colonialism and development cooperation. Clist (2011) as well finds that colonial ties in the past lead to an increasing amount of aid that flows to former colonies. Clist therefore confirms the previous found relationship between colonialism and the amount of ODA.
Berthélemy and Tichit (2004) find in a large study of determinants of foreign aid that postcolonial traditional links still have a strong influence on the aid allocation policies of colonial donor countries. However they observe a declining tendency in the period of 1980-1999. Despite this tendency, the observed relationship is still strong. Schraeder et al. (1998) argue that colonialism in Africa led to an increasing cultural similarity between the colonizer and colony. They find that cultural similarity plays an important role in the aid allocations of colonial donors. Berthélemy (2006) adds to this that aid allocation from a colonial donor to recipient is positively correlated with the bilateral export intensity from the donor country to the recipient country. These findings show that colonial donors maintain intense relationships with their former colonies.
2.2 Colonial donors
The colonial donors, the United Kingdom and the Netherlands, are both among the global ten most generous relative aid donors. Clist (2011) finds that both countries provide aid to the countries with the highest poverty rates. In addition do Alesina and Dollar (2000) find that both countries tend to give more aid to open and democratic countries. Despite these similarities, there is also variation observable between the United Kingdom and the Netherlands. First of all in the amount of colonies that are under their rule. The United Kingdom had more colonies in the 20th century than the Netherlands and therefore the probability that the United Kingdom gives aid to a former colony is greater (Alesina and Dollar, 2000). Despite this explanation, Berthélemy and Tichit (2004) argue that the colonial relationship with the recipient country is a strong determinant of the United Kingdom’s foreign aid flows. On the contrary, the Netherlands does not give most of their aid to former colonies. Again this can be explained by the amount of colonies that the Netherlands had in the 20th century.
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The second important difference concerns the level of altruism of both donor countries. Berthélemy and Tichit (2004) and Berthélemy (2006) argue that the United Kingdom is considered to be a moderate altruistic aid donor who chases its own interests, but is altruistic in their aid providing as well. De Felice (2015) elaborates on this point that the United Kingdom’s main focus is on gaining a good reputation in the international community. Their steadfast pursuing of human rights globally may therefore be seen as a selfish act rather than an altruistic act. In the literature, The Netherlands however is considered to be altruistic and does not tend to pursue its own interests by their aid providing. This conclusion is drawn by Berthélemy (2006) and Cooper and Verlooren van Themaat (1989). The Netherlands consistently performs according to the .7% of the General National Income norm that should be spend on foreign aid according to the United Nations. This reflects the generosity and altruism of the Netherlands. Cooper and Verloren van Themaat (1989) also find that this altruistic donor behavior is mainly determined by domestic factors. The political coalition and the public opinion are the most important factors that shape the providing of Dutch foreign aid. However Van Dam and Van Dis (2014) argue that the dichotomy of selfishness and altruism is misplaced and that every decision that is made is much more complicated. Baehr (1997) confirms this complicity and argues that the Netherlands pursues the adherence of human rights selectively. He discusses the Dutch-Indonesian case in which Dutch domestic played a huge role in enforcing Indonesia to adhere human rights. Van Dam and Van Dis (2014) finally conclude that decisions concerning Dutch foreign aid providing are shaped by a transnational set of ideas, interests and expectations and not solely by altruism or selfish interests. Concluding, it is argued that both the Netherlands and the United Kingdom are countries with similarities and significant differences and that both countries have selfish and altruistic characteristics.
2.3 Non-colonial donors
The non-colonial donors, Switzerland and Germany, are similar to the Netherlands and the United Kingdom in several aspects. Due to their lack of significant colonies in the 20th century, they are labeled as non-colonial donors which will be further elaborated in the next section. Berthélemy (2006) considers Germany to be a moderate generous aid donor who, similar to the United Kingdom, seeks to pursue its own interests but is altruistic as well. Alesina and Dollar (2000) confirm this pursuing of own interest and they find that Germany tends to give more foreign aid to countries that are their political allies. Political allies are defined as the countries that vote together with them inside the organ of the United Nations. Easterly and Pfutze (2008) find that Germany tends to allocate more aid to poor corrupt and autocratic regimes than to poor democracies. Martínez-Zarzoso et al. (2009) find that German foreign aid has a positive impact
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on German exports and this effect is even greater for developing countries that have a real long-term aid relationship with the German government. This finding complements the political allies conclusion that is drawn by Alesina and Dollar (2000). Hence the German foreign aid providing can be summarized that they tend to relatively pursue their political and economic interests more than it pursues altruism.
Switzerland on the other hand is found to be the most altruistic donor by Berthélemy (2006). They tend to give most unconditional aid to their recipients compared to any other aid donor and they do not provide most aid to their economic trading partners. On the contrary, Vreeland (2011) argues that Switzerland is not that altruistic but that it uses its foreign aid policy to buy votes to gain important positions in the World Bank and the International Monetary Fund. He argues that the switch from neutrality and isolationism to participating in the Bretton Woods institutions was a strategic one to gain influence in these institutions. This strong case contradicts Berthélemy’s finding and Vreeland thus argues that Switzerland acts according to its own interests instead of being altruistic.
2.4 Three aspects of development cooperation
In this research the focus is on the following aspects of aid. Namely the volatility of aid, the sectoral composition of aid and the level of cooperation with the recipient government.
2.4.1 Volatility of aid
The first aspect of development cooperation that will be researched in this thesis is the volatility of aid. This is defined as the absence of constant aid flows. Bulír and Hamann (2003) find that aid volatility causes uncertainty for recipient countries and therefore has a negative effect on their economic growth and development. In a paper that builds on their previous analysis, Bulír and Hamann (2008) find that poor aid dependent countries experience much trouble managing aid volatility and this is confirmed by Arellano et al. (2009). Based on these conclusions they advise donor countries to be more flexible in their political conditionalities that target recipient countries and to provide constant ODA. Lensink and Morrissey (2000) even extend these argument by concluding that it is not the amount of foreign aid that per se that determines the impact of aid on economic growth, but the stability of foreign aid.
2.4.2 Sectoral composition of aid
The second aspect of development cooperation that is discussed, is the sectoral composition of foreign aid. The OECD (2016a) provides data concerning eight sectors and these are summarized in table 1. The sectoral composition of aid provides an insight of how aid donors aim to spend their money. The examples that are provided in table 1 are not exhaustive, however
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they do indicate how ODA in several sectors is spent. As far as the author knows there is currently no available research concerning the sectoral composition of aid. Gupta et al. (2003) only research the difference between grants and loans and find that loans are associated with higher domestic revenue mobilization than it is the case with grants.
Table 1: The sectoral composition of ODA (OECD, 2016a)
2.4.3 Cooperation with the recipient government
The third aspect of development cooperation that will be researched in this thesis, concerns the extent to which the donor’s government cooperates with the recipient’s government. As will be further elaborated in section four, the level of cooperation will be measured by analyzing political conditionalities and country programmable aid. Booth (2012) argues that the recipient’s government needs more independence and freedom to execute their
Sector Objective Examples
1 Social Infrastructure and Services
Develop the human resource potential, improve living conditions and ensure political stability.
Projects related to education, health, government and civil society.
2 Economic Infrastructure and Services
Assist networks, utilities and services that facilitate economic activity.
Projects related to transport and communications, energy, banking and business.
3 Production Contribute to all productive sectors. Projects related to agriculture, fishing, forestry, industry, construction and tourism.
4 Multi-sector Support projects which straddle several sectors.
Projects that involve several sectors with a concentration on the environment, gender projects and urban and rural development.
5 Program Assistance and Commodity Aid
Support countries with commodities.
Projects such as food aid and food security assistance.
6 Action Relating to Debt
Aims to relieve the debt pressure of the recipient country.
Actions such as debt forgiveness, rescheduling of debts and refinancing.
7 Humanitarian Aid
Relief emergency situations. Emergency response, short-term
reconstruction and rehabilitation, disaster prevention and disaster preparedness.
8 Unallocated Aid Aid which cannot be assigned to another part of the table.
Includes aid to non-governmental organizations and administrative costs.
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own policies and that they do not need technical advice from external actors in order to develop. Political conditionalities are important measures of aid donors to have direct impact on the recipient country and thus these limit their independence. Molenaers et al. (2015) observe a shift from negative political conditionalities, which are sanctions by aid donors in their existing aid relations, to positive political conditionalities, which are conditions that the recipient country should meet in order to receive the aid. Both will be incorporated in this research.
The OECD measures the amount of country programmable aid (CPA), which is the proportion of aid that is subjected to multiyear programming at country level in which the recipient country has a significant say (OECD, 2016b). The CPA is calculated by subtracting unpredictable aid, by excluding flows that the recipient country does not actually receive, by leaving out aid that usually does not require discussion between the donor and the recipient and it does not net out loan repayments. The relative amount of CPA when compared to the actual disbursements generates a clear view of the possibility for the recipient government to participate in allocating the aid. Despite the usefulness of this data, the OECD argues that the total CPA per year may be overestimated due to a lack of detailed reports that are provided by the donor countries. Another cause for overestimation is that the CPA often concerns multiyear projects. The CPA and the political conditionalities reflect the interference level of the donor government with the recipient government.
3. THEORY
The Netherlands, the United Kingdom, Germany and Switzerland are the four donor countries which are central in this thesis and for these countries the relationship with their recipients will be researched. When measuring the relationship between colonialism and development cooperation, the following variations can be distinguished.
1). The variation of the aid providing from colonial donors to former colonies and non-former colonies.
2). The variation of the aid providing of colonial and non-colonial donors to former colonies. This generates four flow types which are shown in table 2. These four flow types will be referred to in the hypotheses. The analysis, and therefore the hypotheses as well, focus on flow type 1, 2 and 3. Flow type 4 is excluded from the analysis in this thesis due to the focus on the colonial donor countries.
13 Table 2: Overview of ODA flows
Cases
Donor country (colonial)
Donor country (non-colonial)
United Kingdom and the Netherlands
Germany and Switzerland
Recipient country
(former colony) Flow type 1 Flow type 2 Recipient country
(non-former colony)
Flow type 3 Flow type 4
3.1 Volatility of aid
The volatility of aid is an important aspect of the aid relationship between the aid donor and the aid recipient. It measures whether aid donors provide aid constantly. Constant aid is important for the recipient government, they need to prepare their state budget and therefore they benefit from constant flows. When their incoming aid flows are highly volatile, they need to cut back on certain policy terrains, or they have an enormous surplus. The latter will not be perceived as a big problem from the government’s perspective, however from the civilian’s perspective, this can be problematic due to the increasing possibilities of corruption. As already discussed in the literature review, Bulír and Hamann (2003; 2008) find that developing countries experience problems in coping with aid volatility and Lensink and Morrissey (2000) find that constant aid flows have a stronger impact on economic growth than the amount of aid flows.
Colonial aid donors have a strong relationship with their former colonies. This conclusion is drawn by Alesina and Dollar (2000) and confirmed by several other researches which are summarized at section 2.1 in this thesis. Alesina and Dollar (2000) find that non-democratic former colonies receive more aid from former colonizers than non-democratic countries. This strong relationship between former colonies and their colonial donors raises the expectation that this will be reflected in aid volatility as well. Colonial donors will be more constant providers of aid to their former colonies than compared to non-former colonies in order to meet the needs of the recipients. In addition does this raise the expectation that colonial donors will provide aid more constant than non-colonial donors. Based on these conclusions the following hypotheses are developed:
H-IA: Flow type 1 is more constant than flow type 3. H-IB: Flow type 1 is more constant than flow type 2.
14 3.2 Sectoral composition of aid
The second aspect of development cooperation involves the sectoral composition of aid. The colonial donor has been present in the former colony for at least 40 years in the 20th century. Through institutional and cultural influences, the familiarity between the two countries increased and this makes it easier for an immigrant to integrate in the receiving country (Portes and Rumbaut, 2001). States are perceived to be rational actors who pursue their self-interest and seek to minimize costs. Thus aid is not altruistic, but serves the strategic and selfish interests of donor countries (Schraeder et al., 1998; Alesina and Dollar, 2000; Berthélemy, 2006). Due to the familiarity between the former colonizer and colony, refugees will flee to the colonial donor country. The donor country wants to minimize the costs associated with sheltering refugees and therefore will provide aid in order to prevent migrants to flee to their country. Colonial donors can actively guard their borders to prevent migrants from entering their country, however they can also try to improve the political stability and living conditions in the former colony. If they succeed in guaranteeing improvement on these terrains, people have less reasons to migrate.
As discussed in the literature review, the OECD distinguishes several sectors of aid. The sector social infrastructure and services aims to improve the living conditions in the recipient country and to increase the human capital of the residents of the recipient country. When human capital increases, this directly influences the rate of domestically produced innovations and affects the speed of adoption of technology from abroad (Benhabib and Spiegel, 1994). This finding shows that investments in human capital has a positive influence on technology in the domestic realm and therefore positively affects economic growth. Becker et al. (1994) confirm this finding and add that countries should stimulate the development of human capital of children on an early age and that an increase of human capital will stimulate economic growth. This will stimulate less people to leave their country and this is positive for the colonial donors. In addition to the improving of living conditionalities, aid that flows to this sector also aims to improve political stability. Blanton et al. (2001) find that former colonies suffer from a high amount of political instability which leads to an increase of refugees. Colonial donors will be more likely to spend their aid to this sector due to the strong relationship with the former colony. Thus the colonial relationship between the aid donor and the recipient should be reflected in the share of ODA that is spent on the social infrastructure and services sector.
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This should be observable by measuring the impact of colonialism on the share of social infrastructure from a total of social, economic and production sectors. As discussed in the literature review, the sectors economic infrastructure and production target several businesses in the recipient countries. Donor countries that do not have the special relationship with a recipient due to colonialism, tend to focus more on these sectors than on other sectors. These non-colonial donors are rational states and therefore they promote their self-interests as well. This is confirmed by Schraeder et al. (1998), Alesina and Dollar (2000) and Berthélemy (2006), who find that there are no pure altruistic donor countries. Donor countries act according to their own strategic interests. However, these researches only focused on the amount of the total aid and not on the sectoral composition of this aid. It is expected that donor countries that are free from a colonial history and thus a colonial relationship, will pursue their own economic interests in their aid providing. By providing support for the economic and production sectors, they create opportunities for their own economy and businesses to benefit from a stronger recipient’s economy. Colonial donors spend aid on the economic and production sector as well, however it is expected that colonial donors spend relatively more ODA on social than to economic and production aid. This leads to the following hypothesis:
H-II: A colonial relationship in the 20th century is stronger positively related to the share of social infrastructural aid than a non-colonial relationship.
3.3 Cooperation with recipient government
Radelet (2006) observes the so-called principal-agent problem in the foreign aid industry. This means that there is an indirect and distant relationship between the providers of the money, taxpayers in donor countries, and the beneficiaries, poor people in recipient countries. There are several actors involved in this relationship who all have their own objectives. Martens et al. (2002) explain that the functioning of the aid mechanism is constrained due to the geographical and political separation between the donor and the recipient country. This problem makes it hard for recipient countries to cooperate with the donor countries on equal foot. Donor countries may therefore attach political conditionalities to their ODA in order to enforce the recipient countries to reform or adjust their current policies. These conditionalities can give the donor government the feeling that they make sure that their money is not wasted, but spend wisely.
However I expect that this will be different in a colonial relationship. Colonial donors developed a long-term relationship with their recipient former colony which leads to an increased familiarity between the two countries. This causes colonial donors to more closely cooperate with former colonies than with other recipient countries. This is reflected in less
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political conditionalities towards former colonies and to a higher relative amount of country programmable aid. Non-colonial donors do not have this history and this will result in a different relationship with their recipient governments. This relationship will involve more political conditionalities that aim to reform the policies of recipient countries. This leads to the following hypothesis:
H-III: Flow type 1 contains less political conditionalities that are attached to development cooperation and more programmable aid than flow type 2.
4. CASE SELECTION AND METHODOLOGY
This section first discusses the criteria for the case selection and afterwards elaborates on the selected donor countries. Subsequently it discusses the applied methodology in order to answer the research question. In order to answer the hypotheses, several methods will be used. The combination of these approaches will generate useful information and conclusions that increases the available knowledge of the relationship between colonialism in the 20th century and development cooperation in the 21st century.
4.1 Case selection
In this thesis four donor countries are selected to research the relationship between colonialism in the 20th century and development cooperation in the 21st century. First of all, these aid donors should be comparable in political system, economy and aid generosity in order to control for these factors. The second criteria, which requires further explanation, is that colonial donors should have a significant colonial legacy and that non-colonial donors should lack this significant colonial legacy. The definition of a significant colonial legacy contains that the donor country should have at least one colony and that this colonial relationship should have lasted at least forty years in the 20th century. Strang (1991) argues that the 20th century was the
most important century for colonialism. Due to World War I, important colonial powers lost their dominion over their colonies. This caused their influence in those countries to decrease, hence their influence in those countries was little when compared to the colonial powers that maintained, or even expanded their colonial empire in the 20th century. After World War II, many colonies gained their independence and therefore the colonial relationship should have lasted at least forty years in this century in order to label the aid donor as a colonial aid donor. As mentioned in the introduction, the colonial donors in this thesis are the United Kingdom and the Netherlands and the non-colonial donors are Germany and Switzerland. These
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four countries are among the top 10 most generous foreign aid donors. In addition they are all liberal democracies that are located in Western Europe. Both colonial aid donors had colonies in the 20th century for at least 40 years. In 2014 the Netherlands spent .64% of their gross
national income (GNI) on foreign aid and the United Kingdom spent .7% (OECD, 2016). Taken this measure of aid, both countries are the two most generous colonial donor countries and are therefore selected for this research. This criteria excludes other colonial donors from this research, such as France (.37%), Portugal (.19%) and Belgium (.46%). The colonial donors will be compared with Switzerland and Germany, both countries did not have colonies in the 20th century matching the criteria. In 2014 Switzerland spent .51 % of their GNI on foreign aid and Germany spent .42% (OECD, 2016). Other non-colonial donors such as Sweden, Norway, Finland and Denmark are more generous than Germany and Switzerland. However previous research finds that these countries share unique ‘Scandinavian’ characteristics and therefore they are not suitable to analyze the impact of colonialism. Possible differences could be caused by the unique Scandinavian welfare system.
4.2 Volatility of aid
The first aspect of aid that will be researched is the volatility of aid. For the four donor countries this will be analyzed for the years 2000-2014. The yearly actual disbursements in current US dollars will be measured and the average relative fluctuation per aid relationship will be calculated. This will lead to an average for the flow types 1, 2 and 3. In some cases the net ODA is negative due to the incorporation of repayments by the recipient government. If the repayments exceed the received ODA, net ODA is negative. After calculating the average relative fluctuations of aid, these will be compared and conclusions will be drawn from the presented data. Data is gathered from the OECD for the actual aid disbursements (2016c). The OECD data is preferred to data that can be gathered from the several national bureau of statistics due to the richer availability of data that the OECD provides. In addition does this improve the comparability of the data concerning the four donor countries.
4.3 Sectoral composition of aid
The second aspect concerns the sectoral composition of aid. For the four donor countries, the relative amount of sectoral aid flows to their recipients is calculated. An overview of the sectors that are included in this analysis are given in table 1. In order to measure the difference between a colonial and a non-colonial relationship concerning the relative amount of aid that is spent on social or economic aid, the following dependent variable is created. The sectors social infrastructural aid, economic infrastructural aid and production aid are totaled and the relative
18
amount of social aid is calculated from the sum of the three sectors. A regression analysis will show whether there is a significant relationship. Additionally, the regression analysis will be performed on the sectors independently and on the combination of economic and production sector. These dependent variables are measured relative to total aid. The recipient countries that are analyzed should receive at least .8% of the actual disbursements for the period of 2005-2014, hence insignificant recipients are excluded from the analysis. Data concerning the sectoral composition of aid preceding 2005 is unavailable. The sectoral composition of aid is analyzed for 710 cases and a case is a specific yearly relationship between one donor and one recipient country. In some cases, ODA contains less than one million dollar, these cases are not incorporated in the analysis because this gives an improper view of the relative distributions. The independent variables that are included in the regression analysis are summarized in table 3.
Table 3: Indicators independent variables
4.4 Cooperation with recipient government
In order to measure the effect of colonialism in the 20th century on cooperation with the recipient government, the relationship between Germany and the Netherlands with Indonesia will be qualitatively analyzed. Due to limited resources the analysis focuses on the flow types 1 and 2
Independent variable Indicator Source
1 Colonial relationship in the 20th century for at least forty years.
Dummy variable, Yes = 1, No = 0. Strang, 1991.
2 Total ODA recipient receives per capita.
US dollar per capita. World Bank,
2016.
3 Gross Domestic Product (GDP) per capita.
US dollar per capita. World Bank,
2016a.
4 Corruption Index. Corruption scaled from 0-10 where 0 is highly corrupt and 10 completely clean.
Transparency, 2016.
5 Export from donor to recipient. US dollar in millions. OECD, 2016d and OEC, 2016.
6 Industry value adding. Percentage of GDP which is industry value added.
World Bank, 2016b.
7 Total ODA from specific donor to recipient country.
US dollar in millions. OECD, 2016c.
8 Recipient population. Total amount of persons in millions. World Bank, 2016c.
9 Donor country control. Dummy variables control for the fixed donor country effect.
10 Financial crisis control. Dummy variables control for the financial crisis in 2008.
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and not on flow type 3. The intensity of political conditionalities and the relative amount of CPA are the aspects of cooperation that will be analyzed. Dipama and Dal (2015) analyze political conditionalities by researching the development of laws and policies in the European Union. In compliance with their research strategy, the past three coalition agreements of the Netherlands and Germany will be analyzed. Subsequently the development cooperation policy documents and statements of current cooperation strategy on governmental websites will be analyzed. The unit of analysis is the attaching of political conditionalities, as defined in the literature review, to development cooperation. For the Netherlands the coalition agreements are Rijksoverheid (2007; 2010; 2012) and the development cooperation policy report (Ministry of Foreign Affairs of the Netherlands, 2013) and for Germany these are German Government (2005; 2009) and Konrad Adenauer Stiftung (2014) and the development cooperation policy report (BMZ, 2013). The yearly amount of CPA (OECD, 2016b) will be divided by the yearly gross disbursements (OECD, 2016c) to calculate and thus compare the relative amount of CPA that flows from the Netherlands and Germany to Indonesia.
5. GOVERNMENTAL AID AGENCIES
The empirical sections are structured as follows. Firstly a brief description of the development cooperation agencies of the four donor countries will be provided. Subsequently in section six I test H-IA, H-IB and H-II. In section seven I test H-III.
5.1 The United Kingdom
The Department for International Development (DFID) is the department that is responsible for executing the UK’s policy concerning development cooperation. This body executes the policy that is shaped by the UK government. In their ‘single departmental plan 2015-2020’, the DFID communicates that the UK takes its responsibility by meeting the needs of the world’s poorest, but that in doing so it protects and serves its own security and interests (Department for International Development, 2016). The DFID operates directly in 28 countries across Africa, Asia and the Middle East in which it aims to strengthen peace, security and governance and promote prosperity (United Kingdom, 2016). In addition to direct support in those countries, the DFID also works by funding NGO’s, civil society organizations and non-profit organizations. The DFID operates in a decentralized functional organization structure in which several functions such as economic development, finance and corporate government, general, policy and global programs operate in separate divisions (United Kingdom, 2016a).
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This ministerial department is supported by two public bodies, namely the Commonwealth Scholarship Commission in the UK and the Independent Commission for Aid Impact. The former commission is responsible for rewarding Commonwealth citizens all around the world with scholarships in order to foster development (United Kingdom, 2016b). The commonwealth citizens live in countries that were territories of the former British Empire, with other words, they live in former British colonies. The latter commission is responsible for scrutinizing the UK aid, it focuses on maximizing the impact of the aid budget and getting the best value for money for the UK taxpayer (Independent Commission for Aid Impact, 2016). 5.2 The Netherlands
The Dutch committee Development Cooperation is responsible for international development cooperation. It is a part of the Dutch ministry of foreign affairs and it aims to add value by combining trade and development cooperation in its foreign policies. International trade and development cooperation is one of the five directorates-general and this reflects the centralized divisional organizational structure that the Netherlands use (The Netherlands, 2016). Development cooperation aims to link trade and development cooperation by making use of private sector development instruments and the trade and investment instruments for Dutch companies that aim to do business in developing countries. Therefore the Dutch government encourages trade and investment strategies that are linked to developing countries (The Netherlands, 2016a). The intention is not to always substitute aid with trade, but the applied policy depends on the nature of the development relationship with the developing country. The Dutch focus on trade is reflected in the official government statement in which it states that trade is an international public good that should be available for every country (The Netherlands, 2016a). The Netherlands distinguish three different relationships: 1) an aid relationship in which the Netherlands support the developing country by providing aid. 2) A transitional relationship involves a combination of aid and trade to support the developing economies. 3) A trade relationship has the goal of promoting trade and investment as equal partner countries and this is what the Netherlands try to achieve via the other two relationships as well.
5.3 Germany
In Germany the Bundesministirium für wirschaftliche Zusammenarbeit und Entwicklung (BMZ, in English the Federal Ministry for Economic Cooperation and Development) is responsible for international development cooperation. On their website the BMZ (2016) states that their mandate is wide and varied. They argue that development policy should target
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different levels in order to resolve crises and conflicts in a peaceful manner, ensure that scarce resources are more equitably shared, preserve the environment for coming generations and to reduce global poverty. They link development policy to foreign policy, trade policy and security policy. The BMZ is responsible for developing guidelines and fundamental concepts on which the German development policy is based, hence they only form and do not execute the development policy (BMZ, 2016). Execution of the policy is performed by several implementing organizations. The BMZ contracts NGO’s and private organizations such as the KfW Entwicklungsbank, the Deutsche Investitions- und Entwicklungsgesellschaft (DEG) and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) to execute German economic cooperation and development policy (BMZ, 2016a). Germany uses a decentralized divisional organization structure, this is reflected in the five directorate-generals in which Germany provides aid via several channels. Germany is increasingly providing their aid projects and programs through private organizations in which it benefits from the expertise and specialization of these organizations. In their development cooperation, they concentrate on improving cooperation with a limited number of partner countries in order to specialize and operate more effective.
5.4 Switzerland
The Swiss Agency for Development and Cooperation (SDC) and the State Secretariat for Economic Affairs (SECO) are the national agencies of Switzerland that are responsible for defining and implementing development cooperation. These agencies share responsibility for the overall coordination of development activities, development cooperation and humanitarian aid. The SDC is responsible for the overall coordination of development activities and targets fragile and poor states and helps to rebuild institutions and ensure the protection of human rights. In addition they are responsible for humanitarian aid and for global cooperation in several multilateral institutions (Switzerland, 2016). The SECO agency is involved with economic cooperation with a select group of developing countries, they aim to promote economic, environmental and social sustainable growth. Another responsibility is that they take economic and trade measures to countries below investment grade with chances for integration in world markets. The SDC functions in a decentralized divisional organization structure. This is reflected in the several departments which operate on different terrains and in different geographical regions. The SDC distinguishes global cooperation, regional cooperation, cooperation with Eastern Europe and humanitarian aid. Subsequently these departments have several divisions in which specialized committees function. This structure generates the
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possibility to specialize, contextualize and adjust to certain characteristics that are unique for the challenges they deal with (Switzerland, 2016a). The SECO operates in a decentralized functional organization structure. This is reflected in the several divisions that are separated on the basis of functions (Switzerland, 2016b).
5.5 Development cooperation objectives
Table 4 summarizes the official objectives of the donor’s development cooperation agencies. Considering the inclusiveness of the aid agencies’ objectives, which means the scope of international problems they aim to tackle, the four countries are ranked. Switzerland is ranked first, they aim to tackle the most international problems when compared to the other donor countries. By including themes such as poverty, sustainable economic growth, globalization, political transitions, access to resources and services and responding to crises. Switzerland is followed by Germany who aims to achieve a world in which everyone can live a self-determined life in freedom. In order to accomplish this general objective, political changes and good governance in certain countries need to be promoted. Therefore this objective can be viewed to be an overarching objective from which smaller objectives can be deduced. Furthermore Germany aims to tackle poverty, climate change and violent conflicts. The United Kingdom is ranked third, even though they follow Germany closely. The difference between them is that the United Kingdom lacks the focus on climate change. In addition, the United Kingdom aims to tackle poverty, respond to crises and promote global prosperity. The Netherlands is ranked last due to their economic focus. They pursue inclusive growth, eradication of poverty and success for Dutch companies. The selfish formulated objective of success for Dutch companies is unique when compared to the other donor countries. This analysis shows that there are differences observable between the colonial and non-colonial donors. Especially the Netherlands shows a selfish focus when compared to the non-colonial donors. The non-colonial donors tend to handle a larger scope in the problems they aim to tackle when compared to the colonial donors.
23 Table 4: Overview of the donor’s objectives
6. RESULTS – SECTORAL COMPOSITION AND VOLATILITY OF ODA
This section discusses the results of the analysis of the effect of a colonial relationship in the 20th century on development cooperation in the 21st century. Section 6.1 discusses the relationship between colonialism and the volatility of aid. It is expected that in the case of a colonial relationship aid is less volatile than in the case of a non-colonial relationship. Section 6.2 focuses on the effect of colonialism on the sectoral composition of aid. For which it is expected that a colonial relationship in the 20th century is more positively related to social infrastructural aid than a non-colonial relationship.
Objectives Source
Objectives UK Strengthening global peace, security and governance. (DFID, 2016) Strengthening resilience and response to crises.
Promoting global prosperity.
Tackling extreme poverty and helping the world's most vulnerable.
Delivering value for money.
Objectives Netherlands
Achieve sustainable, inclusive growth all over the world. I.e. economic growth from which the poor also benefit.
(Netherlands, 2016)
Eradicate extreme poverty in a single generation. To ensure success for Dutch companies abroad.
Objectives Germany
Achieve a world in which everyone can live a self-determined life in freedom.
(BMZ, 2016b)
Achieve a world without poverty.
Suppress violent conflicts and environmental degradation.
Objectives Switzerland
Shape globalization that favors development, safeguards the environment and is socially acceptable.
(Switzerland, 2016) Create universal access to resources and services.
Promote sustainable economic growth.
Support transitions to democratic, market-based economy systems.
24 6.1 Volatility of aid
The results of the aid volatility of the four donor countries in relation to their recipient countries are discussed here. The recipient countries that are incorporated in this analysis, are the recipients that received at least .8% of the colonial donors’ actual disbursements in the period 2000-2014. Table 5 reports the average fluctuation of aid as a percentage of the total aid, from a colonial aid donor to their aid recipients. The yearly disbursements of a colonial donor to their recipients are measured for 2000-2014 and the reported variations in table 5 are the average taken for those years.
The results in table 5 show that the average aid fluctuation for colonial aid donors to their former colonies is almost twice as high as their average fluctuation to their non-former colonies. This is an unexpected observed tendency. As argued in HI-A, it is expected that colonial donors provide their aid more constantly to their former colonies (flow type 1), when compared to non-former colonies (flow type 3). The results show the contrary, colonial donors provide aid more constantly to non-former colonies. For the colonial relationships, the average fluctuation of NL-Indonesia is extremely high (-2,423.88) due to the difference between the years 2004 ($-.52 million) and 2005 ($175.99). Indonesia paid more loans back than it received ODA in 2004 and in 2005 they received more ODA, which explains this difference. In addition the high debt relief for UK-Nigeria-2005 is an outlier. If these outliers are removed, the average colonial fluctuation is 37.34%. For the non-colonial relationships, if the recipients that received extreme amounts of ODA due to war (Iraq and Afghanistan) and the cases that are extreme due to other special occasions (such as the massive debt relief in the case of NL-Nigeria-2005) are excluded, the average non-colonial fluctuation is 23.91%. Once accounted for the outliers as described, the difference between a colonial and a non-colonial relationship has decreased to 13.43 percent point. However the non-colonial relationships are still less volatile than the colonial relationships and therefore HI-A should be rejected. It should be noted that the average annual disbursements in a colonial relationship is $166.32 million and in a non-colonial relationship this amounts $77.94 million. Thus the average annual disbursements in a colonial relationship is twice as high as in the case of a non-colonial relationship. This confirms previous research that a colonial relationship leads to more ODA than in the case of a non-colonial relationship. In addition this helps to explain the difference between the flow types 1 and 3. If the amount of aid is higher and aid is decreased with $1 million, this has a stronger effect on flow type 3 than on flow type 1 due to the differences in quantity. Hence the observed difference
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means that in flow type 1, aid volatility has a stronger effect on the recipient government’s budget than in flow type 3.
Table 5: Volatility of aid colonial donors to former and non-former colonies in 2000-2014.
Colonial donors to former colony (Flow type 1)
Colonial donors to non-former colony
(Flow type 3) Cases Average variation in % Total ODA (millions $) Cases Average variation in % Cases Average fluctuation in % Total ODA (millions $)
NL - Indonesia -2,423.88 946.19 NL - Ethiopia 15.92 946.22 NL - Bolivia -2.68 650.2 NL - Suriname 226.84 558.73
NL - Burkina
Faso 6.82 713.98 NL - Viet Nam -21.44 474.49 UK - Ghana 11.53 2,099.67 NL - DRC 136.27 1,113.02 UK – DRC 106.69 2,501.15 UK - Kenya 13.77 1,717.08 NL - Ghana 23.44 1,177.24 UK - Ethiopia 43.12 3,845.51
UK - Malawi 8.87 1,828.15 NL - Mali 2.35 849.47 UK - Mozambique 20.88 1,675.50 UK - Nigeria 154.76 7,829.60 NL - Mozambique 1.11 1,030.49 UK - Rwanda 19.36 1,232.36
UK - Sierra Leone 23.02 1,435.49 NL - Nigeria 466.02 836.26
UK - South
Africa -211.23 661.86 UK - Somalia 83.28 961.35
NL - South
Africa -4.86 532.35 UK - China 1.53 962.70 UK - Sudan 39.77 1,837.35 NL - Sudan 20.02 1,052.20 UK - Nepal 17.08 1,294.81 UK - Tanzania 14.06 3,322.20
NL -
Tanzania -13.93 1,200.97 UK - Viet Nam 26.03 916.33
UK - Uganda 17.72 1,912.90 NL -
Afghanistan 43.42 1,275.91
UK - West Bank/
Gaza 27.59 892.72
UK - Zambia 24.95 1,505.15 NL - Iraq 419.76 493.74 UK - Iraq 184.79 2,902.12
UK - Zimbabwe 26.63 1,307.65
NL - West
Bank/ Gaza 14.30 464.89 UK - Serbia 233.41 860.12 UK - Bangladesh 16.92 3,609.23 NL - Bangladesh 7.14 990.61 UK - India 10.85 6,550.92 Average fluctuation -116.66 Average fluctuation 58.63
For HI-B, the results seem to match the theorized expectations. Table 6 shows that the average fluctuation of flow type 1 is more than three times higher than the average fluctuation of flow type 2. Similar as with the HI-A, after removing the outliers of the colonial relationships, the average fluctuation is 37.34%. For the non-colonial relationships, if the cases that concern Nigeria’s debt relief (GER-Nigeria-2005 and Nigeria 2005) and the non-relationship SWI-Suriname are deleted, the non-colonial average fluctuation is 35.05%. Even though the
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difference is only 2.29 percent point, HI-B should be rejected as well. Similar to HI-A, the colonial annual disbursements ($166.32 million) exceed the non-colonial annual disbursements ($35.62 million). In addition this shows that the impact of the volatility is greater in flow type 1 than in flow type 2.
Table 6: Volatility of aid colonial and non-colonial donors to former colonies in 2000-2014
Colonial donors to former colony (Flow type 1)
Colonial donors to non-former colony
(Flow type 3) Cases Average variation in % Total ODA (millions $) Cases Average variation in % Total ODA (millions $) Cases Average fluctuation in % Total ODA (millions $) NL - Indonesia -2423.88 946.19 GER -
Indonesia -189.35 523.78 SWI - Indonesia 207.84 112.11
NL - Suriname 226.84 558.73
GER -
Suriname 40.06 63.00 SWI - Suriname 0 0 UK - Ghana 11.53 2,099.67 GER - Ghana 5.44 810.67 SWI - Ghana 143.21 178.57 UK - Kenya 13.77 1,717.08 GER - Kenya 11.51 1,062.77 SWI - Kenya 34.58 66.39 UK - Malawi 8.87 1,828.15 GER - Malawi 6.38 407.66 SWI - Malawi 3.45 66.21 UK - Nigeria 154.76 7,829.60 GER - Nigeria 624.95 3,239.92 SWI - Nigeria 8,992.99 114.20 UK - Sierra Leone 23.02 1,435.49
GER - Sierra
Leone 40.25 216.22
SWI - Sierra
Leone 241.85 52.04 UK - Somalia 83.28 961.35 GER - Somalia 39.74 167.15 SWI - Somalia 51.46 96.74
UK - Sudan 39.77 1,837.35 GER - Sudan 11.40 448.33 SWI - Sudan 7.22 162.51 UK - Tanzania 14.06 3,322.20
GER -
Tanzania 21.48 1,030.04 SWI - Tanzania 8.45 361.58
UK - Uganda 17.72 1,912.90 GER - Uganda 11.86 624.54 SWI - Uganda 14.81 31.95 UK - Zambia 24.95 1,505.15 GER - Zambia 54.97 1,055.70 SWI - Zambia 13.24 10.35
UK - Zimbabwe 26.63 1,307.65 GER -
Zimbabwe 13.64 365.77 SWI - Zimbabwe 52.14 94.25 GER – Bangladesh GER - India 9.63 772.09 SWI – Bangladesh 8.22 288.89 UK - India 10.85 6,550.92 26.24 2,523.52 SWI - India 3.44 255.96
Average
fluctuation -116.66
Average
fluctuation 375.27
6.2 Sectoral composition of aid
Paragraph 6.2.1 deals with the results regarding H-II and the subsequent paragraph discusses the additional findings.
6.2.1 Findings H-II
The analysis concerning the sectoral composition of aid covers the time frame between 2005 and 2014. Sectoral data of other years is unavailable. The methodology section discussed the
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relevant variables for the regression analysis in detail. Table 7 shows the correlations between these variables. The Pearson correlation coefficients show that the colonial relationship in the 20th century not significantly correlates with the share social infrastructural aid of social,
economic and production aid. It does show significant correlations with the single sectors social infrastructure, program assistance and humanitarian aid. However the values of these correlations are relatively small.
Table 7: Correlation coefficients variables Colonial Status GDP per Capita Total ODA per Capita Corruption Level Export donor to recipient % GDP industry value added Total ODA from donor Population Share social of social + economic + production aid .021 -.054 .066 -.277** -.277** -.087* -.074 -.289** Social Infrastructure .080* .003 .017 .183** -.056 -.092* -.067 -.064 Economic Infrastructure -.001 .075 .143** .191** -.291** .061 .069 .324** Production Sectors -.049 .046 .042 .252** .103* .066 -.073 .081* Economic and Production -.026 .087* -.099* .291** .298** .087* .020 .315** Multisector -.035 .119** -.114** .090* .155** .177** -.077 .181** Program Assistance .109** -.142** -.004 .102* -.101* -.112** .035 -.111** Debt Relief 0.07 -.031 .100* -.078 -.040 .124** .397** -.048 Humanitarian Aid -.086* -.093* .057 -.516** -.169** -.071 -.139** -.173** Unspecified -.049 .086* -.107** .012 .046 .019 -.030 -.095* N (Cases) 648 618 648 622 627 593 648 648
**. Correlation is significant at the 0.01 level (2-tailed). *. Correlation is significant at the 0.05 level (2-tailed).
When considering the regression analysis in table 8, it shows that colonialism is not significantly related to the share of social infrastructural aid of social, economic and production sectors (1) and therefore H-II should be rejected. The theorized argument is not supported by this dataset. It was theorized that social infrastructural aid would be a more important destination for colonial donors due to the strengthening of human capital, living conditions and
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political stability which are important conditions that can generate economic growth. This findings shows that there is no significant difference between colonial and non-colonial relationships concerning social, economic and production sectors. Considering the extreme low value (.313) with a standard deviation of 2.959, there is too much variation in the behavior of donor countries that prevent significant relationships to occur.
A possible explanation could be that the non-colonial donors share similar interests with the colonial donors. According to the Migration Policy Institute (2016), Germany is one of the most popular destinations for migrants. Despite the fact that Germany did not have the same colonial legacy as the Netherlands and the United Kingdom, they receive a high amount of migrants and therefore can be more likely to prevent these flows to occur. Switzerland is not that popular as Germany, however it remains a moderate popular destination for migrants. So migration flows could explain the findings. Another explanation could be found in the behavior of the Dutch government. One of their objectives is to ensure success of Dutch companies abroad, so it could be the case that this former colonial power provides more aid to the economic and production sectors. If this is the case, they are not that different from non-colonial aid donors who are expected to pursue their own interests. Even though the colonial impact of the Netherlands in this dataset is little, it still could have contributed to this outcome.
The only independent variable that significantly predicts the relative amount of social infrastructural aid is corruption (-6.330). This strong relationship shows that if a country becomes one step cleaner on a scale from 0 to 10, this leads to a 6.330 percent point decrease in the relative amount of social infrastructural aid. Hence if a country becomes less corrupt, this leads to relatively more aid to the economic and production sector than to the social sector. This could be explained as a rewarding strategy performed by donor countries. If recipient governments become cleaner, they are rewarded with aid in the economic and production sectors. These sectors are important for developing businesses and economic sectors in the recipient economy and by rewarding these sectors, donor countries can benefit from the economic development as well through better access to export and potential for foreign direct investments. In addition, becoming cleaner also requires less aid for civil society and governance.
