The political economy of aid giving: a literature review

Abstract Foreign aid is an important component of international economic exchange and has historically been a central topic in International Relations (IR) scholarship. This phenomenon prompts fundamental questions regarding the motivations behind states’ allocation of resources beyond their national borders and the processes by which donor preferences are shaped at the nexus of power, interests, and ideas. Conventional IR theories concur on the premise that aid is inherently political. Subsequent scholarship has expanded upon this foundation, examining a broad range of systemic and domestic determinants of aid, emphasising how state interests, institutions, and the political economy of donors influence aid allocation. This article provides an overview of the extant literature, including pertinent debates, and presents significant advances in the field of the international political economy of aid. It also highlights how recent geopolitical shifts challenge conventional understandings of aid and concludes by proposing a reversal of the classic question for future research—from why states give aid to why they are increasingly reluctant to do so.