The Wages of Containment: Foreign Aid, American Grand Strategy, and the Origins of the Developmental State

Abstract

This dissertation examines the role of foreign aid in American grand strategy during the Cold War. There is a prevalent tendency in the literature on aid policy to maintain a distinction between geopolitical and developmental goals. I argue that those goals may reinforce each other depending on the geopolitical alignment of the aid recipient. During the Cold War, the United States used aid to support economic development in order to defend its allies and security partners from Communist security threats. In this dissertation, I provide empirical support for the claim that U.S. aid to allies and security partners was more developmental than aid to neutral and non-aligned countries. I also argue that in response to a severe Communist threat in Northeast Asia, the United States used foreign aid and other forms of diplomatic influence to support the creation of capitalist developmental states in Japan, South Korea, and Taiwan. As a result of U.S. officials’ perception that the Communist powers in Northeast Asia were highly aggressive and highly durable, the United States supported a statist model of capitalism among American allies in order to promote both political stability and economic growth. U.S. interventions made a critical contribution to the formation of autonomous economic bureaucracies that could spearhead rapid industrialization. In the Philippines, by contrast, the belief among U.S. officials in a relatively weak Communist insurgency led the United States to forego the opportunity to support the creation of a developmental state. These findings offer a new perspective on the geopolitical origins of the developmental state, the causes of variation in a donor’s aid policy toward its allies, and the relationship between strategic aid policy and economic development.