When does international intervention work? Efforts by external actors to shape the behavior of sovereign states – such as their economic, political, foreign, and social policies – has received significant attention in international relations scholarship. Yet, the conditions under which intervention succeeds, and the mechanisms through which it does so, remain underspecified. In some cases, intervenors – whether other states, international organizations, or private actors – successfully compel sovereign targets to take actions they otherwise would not, while in others these endeavors have little or no effect. What explains this variation?

I explore this question in the context of aid conditionality. Conditionality – in which foreign actors provide finance to developing countries in exchange for specified policy reforms or other actions – blends elements of harder, more coercive forms of intervention, such as humanitarian military intervention and political and economic sanctions, with elements of softer forms of intervention, like diplomacy and international law. Conditionality has generated a rich scholarly debate, with many studies finding that its efficacy is contingent on the incentives of recipient nations to comply with the conditions external actors seek to impose, but existing research has not devoted adequate attention to variation in the stringency of aid conditions – that is, how much recipients oppose or embrace them – or to the full range of financial tools external actors have to induce recipients to adopt them. Yet, recipients may have more incentives to adopt conditions that reflect their preferences, while external actors may be able to further shape recipient incentives through the types of financial support they offer, including using exceptions to aid provision policies to make adoption of conditions more beneficial. If that is the case, then overlooking variation in the stringency of conditions and the use of exceptional financial practices by aid providers may have hindered the ability of aid scholars to understand the efficacy of conditionality in shaping the behavior of recipient states.

My dissertation takes up this puzzle. Specifically, I ask whether and under which circumstances the use of exceptional financial practices by international financial institutions (IFIs) like the World Bank can induce aid recipient countries to adopt policy conditions they otherwise would not. I argue preference alignment plays a significant role in recipient adoption of aid conditions: The more aligned conditions are with recipient preferences – that is, the less stringent they are –, the more likely recipients are to embrace them, while the more aligned conditions are with IFI preferences, the more likely IFIs are to use positive and punitive exceptional financial measures like side payments and penalties to compel recipients to adopt their conditions. I argue exceptional finance should prove especially effective in inducing reforms associated with costly development action – such as the promotion of peace, crisis prevention, and global public goods provision –, which represent top IFI objectives that recipients tend to broadly support but do not typically consider top priorities for the use of scarce aid resources. Using a mixed methodological approach that blends large-N statistical analysis of World Bank programs from 2010-2019 with a regression discontinuity design and qualitative country case studies, I find strong support for my theoretical argument but also important limitations to its scope.

My dissertation has important policy implications not only for IFIs but for international intervention in other areas. In the realm of aid, my findings suggest that the use of exceptional financial inducements can prove a highly effective measure to compel aid recipients to increase contributions to global priorities like climate change mitigation, refugee support, pandemic prevention, and resolving and averting civil conflict. This contention has taken center stage in recent debates over the future of the World Bank, with key donors encouraging the Bank to make more expansive use of its financial resources to induce recipient contributions to global goals. My work also offers insights for international intervention in other substantive domains, suggesting that, when states broadly support the objectives that intervenors promote, they sometimes simply need a nudge to prioritize them over, or alongside, domestic objectives. External actors can often provide that nudge through financial assistance that deviates from aid norms and allows recipients to pursue domestic priorities while also advancing global agendas.