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Darlings and Orphans: Interactions across Donors in International Aid

Ronald Davies () and Stephan Klasen ()

Scandinavian Journal of Economics, 2019, vol. 121, issue 1, 243-277

Abstract: We examine how the bilateral aid flows from an individual donor to a recipient depend on the aid flows from all other bilateral and multilateral donors to that recipient. Thereby, we assess to what extent issues including donor coordination, free‐riding, selectivity, specialization, and common donor interests drive bilateral aid allocations. We find that others’ bilateral flows lead to a significant increase in aid flows from a particular donor, but primarily within a given year. The effects are particularly pronounced for large donors and so‐called “darling” recipients. Overall, the results suggest that herding is a dominant feature of aid inter‐relationships.

Date: 2019
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Scandinavian Journal of Economics is currently edited by Richard Friberg, Matti Liski and Kjetil Storesletten

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Handle: RePEc:bla:scandj:v:121:y:2019:i:1:p:243-277