Foreign aid as a form of capital flow is novel in both its magnitude and its global coverage. Though historical examples of countries paying "bribes" (see below) or "reparations" to others are numerous, the continuing large-scale transfer of capital from rich-country governments to those of poor countries is a post-World War II phenomenon. The origins of these transfers lie in the breakdown of the international capital market in the period between the two world wars and in the rivalry for political allies during the cold war.... MORE