 Political economy of aid allocation: The case of Arab donorsAhsan Kibria, Reza Oladi and Ryan Bosworth The World Economy, 2021, vol. 44, issue 8, 2460-2495 Abstract: By exploiting a unique data set on aid allocation by major Arab donors, this paper explores the relationship between aid allocation and the strategic alignment of donors with recipients as well as the developmental need of recipients. To motivate our empirical work, we first develop a new theory of aid allocation, wherein a representative donor country's payoff depends on both the well‐being of the representative recipient country as well as its strategic alignment with the donor. Our theoretical model suggests that there exists a positive relationship between donor's aid allocation and the geopolitical and cultural alignment of the recipient country. Our model also predicts that donors allocate more aid to recipient countries with higher levels of country capacity. To test the prediction of our theory empirically, we construct a new measure of geopolitical and cultural alignment for recipient countries by using principal component analysis. We employ this measure and a set of control variables to show that the geopolitical and cultural alignment of a recipient country and its capacity to implement development projects are the key determinants of aid allocation from the Arab donors. Date: 2021 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:worlde:v:44:y:2021:i:8:p:2460-2495 Ordering information: This journal article can be ordered from Access Statistics for this article The World Economy is currently edited by David Greenaway More articles in The World Economy from Wiley Blackwell |
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