This chapter surveys the main theoretical approaches to international aid in order to build a framework capable of explaining Japanese ODA. It begins with economic theories that stress constraints related to savings, foreign trade and human capital in developing countries, and then turns to political theories that interpret aid as an instrument linked to power, security and influence in the international system. The analysis contrasts neomercantilist interpretations, which conceive ODA as a tool to support national commercial and investment interests, with liberal-idealist and structuralist views that emphasize cooperation, interdependence, development and asymmetries between North and South. Drawing on neorealist theory and foreign policy analysis, the chapter argues that ODA can function simultaneously as a development mechanism and as an instrument of economic diplomacy. These theoretical elements are used to formulate hypotheses about the relationship between Japanese aid, trade and foreign direct investment in Latin America between 1960 and 2001.