Foreign Aid as “Soft Power” (in India, Brazil and China)

Posted on 20 October 2010

By Sherine Jayawickrama

The embrace of foreign aid as an instrument of “soft power” and as a pillar of foreign policy has been notable in the United States – and it is increasingly so in India, Brazil and China as well.  It is a reflection of how the landscape of global development and aid financing has changed in recent years.  I’m not sure that NGOs are yet fully coming to terms with what these changes mean.

Vijaya Ramachandran at the Center for Global Development blogged a couple of weeks ago about India’s emergence as an aid donor.  She noted that, although India was the largest recipient of foreign aid in the mid-1980s, it is now the fifth largest donor to Afghanistan and its aid to Africa has grown at a compounded annual growth rate of 22 percent over the past ten years.

The Economist recently argued that Brazil was, in search of soft power, turning itself into one of the world’s biggest aid donors (see Speak Softly and Carry a Blank Cheque – subscription needed to view the complete article).  Although the Brazilian Cooperation Agency (ABC) has a relatively small budget, there are a plethora of Brazilian institutions that provide assistance to developing countries.  The total value of all Brazilian aid could be close to $4 billion a year – similar to donors like Sweden and Canada (except for the strong upward trend in Brazil, compared to stagnant levels in many countries that are more traditional donors).

In recent years, China has become a major donor and investor in developing countries, especially in Africa.  According to a Congressional Research Service report, China’s aid to Africa, Latin America and Southeast Asia increased from less than $1 billion in 2002 to an estimated $25 billion in 2007. In addition to aid to Africa, China is beginning to cancel debt to African countries, sending volunteers to Africa and offering scholarships to African students.

Although the numbers (magnitude of aid or investment streams, growth rates, etc.) are impressive in and of themselves, it could be the opportunity to provide a different kind of support for development processes that could be most significant. In article in The Economist, the head of ABC in Brazil notes that there is “a Brazilian way” of engaging in foreign aid provision, based on the social programs that have been successful in Brazil. Providing AIDS treatment to the poor and conditional cash transfer programs like Bolsa Familia are examples.

China, Brazil and India don’t have clear definitions of what constitutes foreign aid or systems for tracking various disbursements or investments that would fit such a definition.  Their emergence as aid donors is very welcome in that can help disrupt traditional donor-recipient identities and relationships.  But there is still a need for more transparency to provide citizens of both recipient countries (and these new donor countries) the information they need to hold aid providers to account.

Many international NGOs were founded and grew as a result of moral and financial support mobilized in the west – both from private individuals, foundations and corporations and from western government donor agencies.  Are these NGOs well positioned to adapt to the major economic and geopolitical shifts that are occuring globally? And how are they coming to terms with what these shifts imply for their own roles and relevance?

Sherine Jayawickrama manages the Humanitarian & Development NGOs domain of practice at the Hauser Center for Nonprofit Organizations and this blog.


3 responses to Foreign Aid as “Soft Power” (in India, Brazil and China)

  • anuj says:

    Well put!

    Foreign aid represents a number of things, often starts with foreign/ political policy, but then often extends to and driven by commerce and trade considerations; even though some donor blocks have resisted those imperatives, keeping aid ‘unattached’, and thus more objective and purposeful. British DFID and EC in Europe have taken this public stand, though collusion of purposes often can’t be completely denied. Extending the argument, China, India, Brazil, not to not mention middle some countries in the middle east – by their entry into the ‘aid’ world, if promote more of the same, even though with differently looking instruments, results are unlikely to be different, i.e. foreign ideas and solutions can make only so much sense. Yet, as you mention, power of ‘soft power’, good, bad and ugly, can’t be denied. Hopefully new entrants will pay attention to past lessons, and allow local ownership and leadership. We all know in the aid industry that technical solutions are easy to find, but extremely hard to socialize. This is where, the new entrants, if they manage to perhaps engage with their own respective credible civil society institutions in shaping their aid agenda and instruments; they are likely to make that much qualitative difference in the global aid sector; otherwise aid conceptualized by bureaucracies, chinese/ Indian or brazilian, is unlikely to create more good than not. This is where role of likes of Grameen, BRAC, Myrada, SEWA on the global scene somehow sounds even more promising (softer aid?).

    INGOs with their DNA in the west/ north may or may not change their corporate culture enough to be able to remain relevant and/ or useful in any significant way, unless they adapt/ localise and become more agile to interact with new donors on the scene. If I amy add, in addition to foreign aid, national governments in the south are showing upward trend in investing in social issues, and western/ northern donors are preferring home-grown civil society – both of which perhaps have direct bearing in the future on INGOs. Even as it will be welcome to see them adapt, at the end, who really cares whether INGOs survive or parish?! But then, I digress…

    • I agree that the opportunity here is not the magnitude of the aid from these “emerging sources” but the opportunity to do something qualitatively different and better. There is a huge opportunity for local NGOs and civil society groups to shape their countries’ foreign aid agenda, but I don’t think that is happening. Perhaps if these governments are a bit more transparent about the goals/magnitude of aid, local civil society will have more of an opening to have an influence?

      Your point about INGO relevance is a good one! For better or worse, I do care about INGO relevance – not because I think INGOs should always be major fixture on the development stage (I think you are right that a lot of the roles they now play will be played by others in the future – and that will be a good thing), but because I believe they are one important expression of a global civil society.

  • Sujeet Kumar says:

    Sherine,

    As the title of this blog mentions, foreign aid has always been used as a potent tool for the expression of soft power by nation states (DFID, USAID, SwissAid, et al). What is however new is that the direction of the flow has shifted; we now see more South-South flow. This trend will only accelerate in the future as the West grapples with the repercussions of the economic crisis and consequent stagnant (or at best slow) economic growth and countries such as China, India, Brazil (and also the middle east countries) experiencing fast growth trajectories.

    I completely agree with you that, more than the magnitude of the aid, this new development has immense potential for knowledge sharing, technology transfer and joint project implementation. To give an example: The Amul Dairy Cooperative, one of independent India’s biggest success story, has helped transform India into the world’s largest milk producing country. More importantly, Amul Dairy has organized over 10,000 village cooperatives, designed and implemented multiple interventions along the value chain and transformed the lives of millions of small farmers.
    I was reading some time back, that 100,000 cooperatives have been formed in Venezuela in the last 4 years. What an opportunity for India to extend its expertise and aid in the cooperative sector, given the Amul experience.

    This is not an isolated example. There are countless sectors and ways in which the foreign aid of developing countries can be leveraged to have multiplier effects, beyond the capital infusion. This was, in my view, a grey area with the aid from the North, which often had the well-intentioned,yet wrong, prescriptions for development in the South.

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