Countering adversaries and cultivating friends: Indirect rivalry factors and the allocation of US foreign aid

This analysis examines the link between indirect rivalry factors' - situations in which states are neighbors of direct US rivals, and/or states that share rivalries in common with the US - and allocations of foreign aid to shed light on the impact of strategic calculations on a key area of foreign policy behavior. Blending literatures on rivalry/conflict and foreign aid, the study is situated in the relevant prior work and a theory is developed that links indirect rivalry factors with allocations of foreign aid. It is argued that indirect rivalry factors are likely to affect a state's foreign assistance as states in a rivalry strategically allocate aid to create friends and isolate their targeted rivals. In particular, it is argued that donors direct greater amounts of aid to (i) other states involved in a rivalry with the donor's rivals (rivalries in common, or rivals of my rival' effects) and (ii) states within the geographic region in which the donor's existing rivals are situated (neighborhood effects, or neighbors of rivals'). Hypotheses on the effects of these indirect rivalry factors on aid allocations are developed and then tested empirically against US foreign aid allocations from 1962 to 2000. The results lend support to the authors' theory of indirect rivalry factors and their impact on aid allocation.