Aid as a building bloc: Australia and the Bretton Woods Institutions

Australia has recently witnessed a dramatic reduction in the aid it provides to developing countries. Debates often focus on the implications for poverty eradication, but also at stake is Australia’s leadership position in certain international financial institutions. To explore this political dimension, we examine the pattern of Australian aid to developing countries through the lens of the Bretton Woods Institutions: the International Monetary Fund and the World Bank. Specifically, we consider countries that elect Australia to the executive boards of these institutions. Using aid data from 1960 to 2009 for 186 countries, we test whether Australia rewards members of its voting bloc with more foreign aid. Descriptive data and regression analyses support our hypothesis: Australia gives as much as 10 times more annual aid to bloc-members than to other developing countries. We take the finding as evidence of one of the many ways in which Australian aid can advance foreign policy objectives.