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Aid Delivery through Non‐governmental Organisations: Does the Aid Channel Matter for the Targeting of Swedish Aid?

Axel Dreher (), Florian Mölders and Peter Nunnenkamp

The World Economy, 2010, vol. 33, issue 2, 147-176

Abstract: This paper analyses whether aid channelled through non‐governmental organisations (NGOs) is less affected by selfish donor motivations and better targeted to needy recipient countries than aid distributed by state agencies. We employ Tobit (and Probit) models and make use of an exceptionally detailed database that allows an assessment of the allocation of Swedish aid channelled through NGOs in comparison to the allocation of Swedish official aid. Our analysis provides mixed results. On the one hand, NGOs appear to be altruistic as far as available indicators on political and commercial motivations of aid can tell. On the other hand, needs‐based targeting of aid by NGOs turns out to be surprisingly weak. GDP per capita of recipient countries shapes the allocation of official aid, but not that of aid channelled through NGOs. The headcount of absolute poverty has a significantly positive effect on aid allocation, but its impact is not particularly strong when NGOs are involved. Overall, the Swedish case supports the sceptical view that NGOs are not necessarily superior donors compared to state aid agencies.

Date: 2010
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