Aiding Social Protection: the Political Economy of Externally Financing Social Policy in Developing Countries

A research project funded by the European Research Council (ERC) Starting Grant scheme


The Aiding Social Protection: the Political Economy of Externally Financing Social Policy in Developing Countries (AIDSOCPRO) research project was awarded the ERC Starting Grant in December 2014 and will run until April 2020. It is led by Andrew Fischer, Associate Professor of Social Policy and Development Studies at ISS.

About the research

The research explores the political economy of international development assistance  directed towards social expenditures, examined through the lens of a particular financial quandary that has been ignored in the literature despite having important economic and political repercussions.

The quandary is that aid cannot be directly spent on expenditures denominated in domestic currency. Instead, aid needs to be first converted into domestic currency whereas the foreign exchange provided is used for other purposes, resulting in a process prone to complex politics regarding domestic monetary policy and spending commitments. The implications require a serious rethink of many of the accepted premises in the political economy of aid and related literatures.

It is urgent to engage in this rethinking given tensions between two dynamics in the current global political economy: a tightening financial cycle facing developing countries versus an increasing emphasis in international development agendas of directing aid towards social expenditures.

The financial quandary might exacerbate these tensions, restricting recipient government policy space despite donor commitments of respecting national ownership. The proposed research examines these implications through the emerging social protection agenda among donors, which serves as an ideal policy case given that social protection expenditures are almost entirely based on domestic currency.

Methods and objectives

This will be researched through a mixed-method comparative case study of six developing countries, combining quantitative analysis of balance of payments and financing constraints with qualitative process tracing based on elite interviews and documentary research.

The objective is to re-orient our thinking on these issues for a deeper appreciation of the systemic political and economic challenges facing global redistribution towards poorer countries, particularly with respect to the forthcoming Sustainable Development Goals. 

Project publications

AIDSOCPRO has already published several Working Papers and open access articles associated with the project:

Aiding Social Protection: the Political Economy of Externally Financing Social Policy in Developing Countries (AIDSOCPRO) poster

AIDSOCPRO symposium 2017


In February 2017, AIDSOCPRO hosted its first international symposium on Global Redistribution and the Challenges of Externally Financing Social Policy and Development.

The symposium debated:

  1. how large scale global distribution could or should happen in light of the evolution of international financial and trade flows in developing countries today;
  2. whether the current aid system could be fit for purpose, or other modalities of global redistribution should be conceived;
  3. whether global redistributive flows should be directed towards social expenditures or productive sectors in poor countries; and
  4. the implications of directing aid towards social spending on the evolution of social policy and development in recipient countries.
ERC executive agency, Horizon 2020 logo

European Research Council

This project has received funding from the European Research Council (ERC) under the European Union’s Horizon 2020 research and innovation programme (grant agreement No 638647).

Set up in 2007 by the EU, the European Research Council is the first pan-European funding organization for frontier research. It aims to stimulate scientific excellence in Europe by encouraging competition for funding between the very best, creative researchers of any nationality and age.

European Research Agency

The ERC operates according to an 'investigator-driven', or 'bottom-up', approach, allowing researchers to identify new opportunities in any field of research, without thematic priorities. Since 2007, the ERC has funded over 4,000 projects throughout Europe.

ERC Starting Grants aim to support up-and-coming research leaders to establish a proper research team and to start conducting independent research in Europe. The scheme targets promising researchers who have the proven potential of becoming independent research leaders. It supports the creation of excellent new research teams.

A total of 3273 applications were submitted in the 2014 round of the ERC Starting Grant in all disciplines, and there was a success rate of about 8.5%. 

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