Foreign aid has re-gained the attention of a wide and diverse scholarship lying at the intersection of political economy, finance, development studies, geopolitics, and international relations. This is due to the growing presence of non-mainstream providers within a foreign aid system historically dominated by Western donors. These rising actors differ from traditional ones because they are not Western/high-income nations, and because they act outside the normative framework which has supposedly governed foreign aid disbursements for decades.
In the book under review, Stallings and Kim look at the foreign aid policies of three of these actors—Japan, South Korea, and China—focusing on the economic model that characterizes their behavior as donors. The book's main conclusion is that the aid performance of these donors presents a set of relevant and peculiar features that can be summarized as the “East Asian model of aid.” This places them as a unicum within the donors group, as well as grants their foreign aid a high level of effectiveness.
The book is a rich addition both to the literature on foreign aid per se and to the ongoing debate on non-traditional aid. First, it offers a comprehensive analysis of the foreign aid policy of three non-mainstream donors: China, Japan, and South Korea. The study of Japanese and South Korean aid policies is particularly useful. While China's “South–South partnership” program has attracted growing attention in the last decade, resulting in a burgeoning body of literature, the same cannot be said for Japan, despite Japanese aid being significant in Asia. There is even less analysis of South Korea, likely due to the fact that it is a more recent donor (net donor since 1997, and member of the Organisation for Economic Co-operation and Development's Development Assistance Committee (OECD DAC) since 2010). This books attempts to fill the gap in the literature providing important information about the foreign aid behavior and foreign aid vision of all the three donors. Also, contrary to the classification of Japan as a traditional donor, it successfully highlights the peculiarities that distinguish it from fellow DAC members.
Second, the book successfully places this set of information within the debate on foreign aid drivers and effectiveness, with rigor and originality. Foreign aid has been discussed since its inception after World War II. Most scholars who have looked at the determinants of foreign aid argue that donors are driven by their own interest, although donors maintain they target recipients’ needs. This was evidently stated with the creation of the DAC within the OECD in 1962, and the formulation of a clearly development-oriented aid paradigm (ODA, i.e. Official Development Assistance). Due to the nature of the OECD, the DAC paradigm and ODA have been associated to high-income/Western donors. In the last two decades, however, a growing number of middle-income donors that are believed to act outside the DAC framework have increased their aid disbursements and gained popularity among recipients. These actors are often ambiguously grouped and referred to as emerging, new, alternative, or non-traditional donors. Proliferation and success of these other donors have gained them a central position within the discussion on foreign aid. Stallings and Kim bring fresh air into the debate on how these donors differ from traditional ones, and whether their mode of aid is going to bring about a new paradigm to the detriment of the OECD-DAC one. The conceptual contribution of their work is to provide a third category—that of East Asian donors—which transcends the traditional versus alternative dichotomy. The authors argue that the East Asian model of aid of Japan, South Korea, and China is unique, different from both the DAC and “the rest.” Its characteristic features are: 1) engagement of the neighborhood on a priority basis; 2) focus on infrastructure and economic growth rather than poverty alleviation; 3) coexistence of other types of flows (such as non-concessional loans, foreign direct investments (FDI), etc.) along with ODA; 4) participation of the private sector in the public-led aid process; 5) clear statement of mutual benefit for both donor and recipient; and, 6) absence of political conditionality (pp. 14–16). This model is considered to be rooted in the philosophy of the so called developmental state, of which the three countries are leading examples. Having directly “tested” the developmental state as an effective way to overcome extreme poverty and aid dependence in their own country, Japan, Korea, and China are now willing to initiate other developing nations to the same. Therefore, along with resources they aim to also transfer to their aid recipients this specific development model (pp. 16, 23, 39, 82, 127).
This core thesis is presented in Chapter 1. Chapters 2, 3, and 4 look at the three donors individually. Since they target “the political economy of East Asian foreign aid,” Stallings and Kim analyse the composition of aid outflows and their evolution according to typical indicators (e.g. monetary value, grant/loan ratio, geographical and sectoral destination, etc.), comparing them to OECD-DAC standards. However, in the effort of defining each donor's policy and vision, they also pay attention to identity-related elements, such as the country's historical experience as recipient of Western aid, its economic trajectory and development philosophy, and relevant transformations of its domestic politics and institutions.
Chapters 5 and 6 take Vietnam as a case-study, since it figures as a top recipient for all the three East Asian donors and for most of DAC countries as well. The authors find that Japan, Korea, and China “put very strong emphasis on funds for economic infrastructure and production” (p. 179) and that their “FDI is closely linked with ODA” (p. 180). This approach is a better fit to the development plan established by the recipient government, which equally prioritizes economic growth, and attributes high importance to ownership (pp. 189 and 199). Overall, the donors studied “promote a different development approach than Westerners,” who instead privilege concessional flows, keep private and public sector separate, and focus on poverty reduction, health, and social development (p. 179). Chapter 7 further elaborates on these conclusions and offers some insights about the potential clash or convergence of Western and Asian modes of aid in the future.
Essentially, Stallings and Kim argue that East Asian donors do it differently, and do it better: their aid mode differs from others, delivers tangible results, and suits the agenda of Asian recipients. This model results in effective development indeed, as long as a strictly economicistic definition of development is considered. The developmental state which the Asian donors promote seems to identify success in mere macroeconomic growth, at least in the medium-term, in the belief that “social and political aspects of development will follow later” (p. 187). But does this actually happen? Are development goals relative, or is there a right way to go about them? And, more generally, what is the very meaning of development in the first place? The critical reader might feel these questions have been discounted.
The book is highly recommended for scholars and policy-makers working on development assistance and non-traditional donors in particular, as well as for those who—without being necessarily focused on foreign aid—are interested in the evolution of the developmental state, of leading Asian economies, and of international development in contemporary Asia.