An estimate from the United Nations Conference on Trade and Development’s (UNCTAD 2017) World Investment Report suggests that achieving the sustainable development goals (SDGs) will require from $5 trillion to $7 trillion annually, with an investment gap of about $2.5 trillion in developing countries. Official development assistance (ODA) can cover only a fraction of this financial gap, and its share in developing countries’ total external finance has declined due to rapidly increasing amounts of private funds pouring into those countries. With this rapidly changing global development landscape, the relevance of international financial institutions (IFIs) like the World Bank and the International Monetary Fund (IMF) has been called into question as the volume of their investments has been dwarfed by that of other sources of finance. Given tightened budgets, IFIs are under pressure to increase “value for money” by spending their funds more effectively and crowding in other sources of finance to maximize their impact. Daniel McDowell’s Brother, Can You Spare a Billion? and Mark Buntaine’s Giving Aid Effectively both shed new light on the roles and limitations of IFIs in this new era of financial globalization and austerity.

In his book, McDowell explores why the United States sometimes acts unilaterally as an international lender of last resort (ILLR). It does so by providing emergency loans to save foreign economies facing financial crises even though there are strong reasons for it to prefer doing so multilaterally through the IMF, whose raison d’être is to do exactly that. In McDowell’s words, an ILLR is defined as “an actor that is prepared to respond to international financial crises by providing credit to illiquid institutions in foreign jurisdictions when no other actor is willing or able” (p. 4). The book’s focus on the role of the United States, a sovereign state, as an ILLR is itself novel because, as the author rightly points out, scant attention has been paid to this topic among scholars of international relations or international political economy despite its salience in international financial markets.

The central argument of Brother, Can You Spare a Billion? is that the United States takes up the role of an ILLR when “the IMF is either too slow or too small to protect vital US economic and financial interests” (p. 7). McDowell claims that the IMF’s capacity to act as an ILLR is constrained by two factors: its unresponsiveness and resource insufficiency. That is, when a financial crisis hits, the IMF may not have enough financial resources to tame the fire nor may it act swiftly enough to prevent it from spreading farther, which in turn could threaten U.S. vital economic interests. The author shows through a combination of historical case studies and statistical analysis that the United States is more likely to provide bailouts unilaterally when it believes that the IMF cannot serve as an effective or credible ILLR due to those shortcomings.

The book offers novel insights into the unique role that the United States has played in stabilizing international financial crises, while also shedding light on the limitations of the IMF to act as an ILLR. McDowell’s writing style is clear and easy to comprehend for both experts and nonexperts alike, and the book’s rich case studies help provide useful context to key findings discovered in the statistical analyses. With that said, I find it somewhat problematic to draw direct comparisons between the United States and the IMF in terms of their abilities to serve as an ILLR. The author also should have spent some time highlighting fundamental differences between the United States and the IMF, a topic that is largely missing from the book.

The primary role of the IMF has changed from that of a mere provider of loans for those countries facing financial crises to that of an active protagonist for policy reforms to facilitate economic growth in developing countries—particularly in low-income countries. The IMF imposes conditions on its loans to provide incentives for major policy changes that client countries need to undertake to access its credit, and its lending decision is an outcome of a long negotiation process with those countries. As is clear from the historical and quantitative evidence presented in the book, the U.S. ILLR role is, in contrast, limited almost exclusively to providing liquidity to advanced and/or emerging economies, but not to low-income countries that are not yet well integrated into the global financial market, and thus pose little risk to the U.S. financial and public interests.

These key differences partly explain why the IMF’s capacity to act as an ILLR for any given foreign economy is more constrained than that of the United States, due to the former’s much broader institutional mandates and diverse lending portfolio, which can both delay its lending decisions and spread its resources more thinly across a broader set of countries. That said, it is true that the IMF is searching for its relevance in advanced or emerging economies that can rely on bilateral currency swaps to keep themselves afloat when hit by crisis—an issue that the book does a great job of highlighting.

Giving Aid Effectively also critiques multilateral development banks (MDBs). Buntaine argues that when their member states delegate discretion to MDBs, this may result in agency slack—a situation where “there is a discrepancy between the collective preferences of member states and the actions of the international organization[s]” (p. 8). One of the primary sources of this discrepancy, according to Buntaine, derives from what the author refers to as the “approval imperative,” where the staff and management of those MDBs are strongly motivated to approve lending even if such lending decisions may run directly counter to the interests of members states (p. 20).

Buntaine sees selectivity as a key vehicle for controlling the approval imperative and aligning the actions of MDBs with the collective interests of their member states. Selectivity is defined as “increas[ing] the allocation of projects with a successful record and decreas[ing] the allocation of projects with an unsuccessful record” (p. 2). He shows how MDBs’ decisions to approve environmentally risky or environment-improving projects can be controlled through various mechanisms, some of which are more (or less) effective. These control mechanisms include administrative procedures (Chapter 4), complaint mechanisms (Chapter 5), project evaluation (Chapter 6), and strategic planning (Chapter 7). The author uses a combination of both qualitative and quantitative evidence to test the efficiency of each of these tools in mitigating the approval imperative and concludes that internal and external control mechanisms to hold MDBs accountable to their own performance are integral to aligning their actions with the interests of their member states and, in so doing, promote greater selectivity and aid effectiveness.

This book makes valuable contributions to the scholarship on foreign aid, aid effectiveness, and international organizations by highlighting the types of incentive mechanisms that can be put in place to ensure that MDBs can be held accountable for their lending decisions. However, it also suffers from various shortcomings. First, the book lacks clarity and/or specificity in terms of both theory and concept. The author’s theoretical framework relies on a classic principal-agent (PA) model to describe the relationship between member states (principals) and MDBs (agents), respectively. However, it is problematic to assume that those states have unified, collective interests in greater aid effectiveness when the delegation literature in international relations suggests otherwise. Bilateral donors delegate resources and discretion to multilateral organizations for different reasons, be they diplomatic, geopolitical, technical, or otherwise (e.g., see Romilly Greenhill and Gideon Rabinowitz’s 2016 paper, “Why Do Donors Delegate to Multilateral Organisations?” at https://www.odi.org/sites/odi.org.uk/files/resource-documents/11088.pdf). This heterogeneity across donors does not factor into Buntaine's theoretical framework or empirical analysis.

Second, selectivity and aid effectiveness are used almost interchangeably throughout the book. The author seems to assume that approving projects with past records of success would somehow lead to greater aid effectiveness without providing any evidence of this. While there is no universally accepted definition of aid effectiveness, it generally has to do with the ability of aid (or a donor-funded project) to promote economic growth or achieve its intended developmental outcomes. Conceptually, selectivity and aid effectiveness should be treated differently, and their relationship itself should be tested empirically.

Lastly, Buntaine’s policy recommendation does not seem to address the very issue of the “Samaritan’s Dilemma.” The author suggests that MDBs should focus on projects within their country specific portfolio where they can be most “successful.” This success, however, is measured by some ex post ratings or scores in safeguard assessments or evaluations, which themselves are subject to bias. More importantly, this type of selectivity can potentially pull funds away from so-called risky projects that likely receive lower performance ratings or scores because of greater difficulty in implementing them and their higher social and environmental risks. This is true even though it is perhaps these projects that are more likely to benefit the neediest, who tend to concentrate in areas where environmental or social risks are higher.

Despite these limitations, this work brings novel and valuable perspectives to the political economy of foreign aid. Buntaine cleverly uses project-level data, which are still underutilized in the foreign aid literature, to determine how projects should be designed or what types of control mechanisms need to be established for greater accountability and effectiveness—empirical questions that are highly relevant to development practitioners. In so doing, he helps us understand how MDBs can draw lessons from their past experiences to target their resources more effectively for maximum impact. This is a topic that has become ever more relevant today, given the increasing pressure for IFIs to create value for money.