Explaining development aid allocation by growth

Chris Doucouliagos and Martin Paldam

Journal of Entrepreneurship and Public Policy, 2013, vol. 2, issue 1, 21-41

Abstract: Purpose - The purpose of this paper is to study a little researched relation: the relation from economic growth in a less developed country to the development aid it receives. Does economic growth influence donor aid allocation decisions? Design/methodology/approach - The authors’ apply two different methodologies. First, a quantitative and systematic review is presented of the literature of 30 empirical studies of aid allocation where a growth coefficient is estimated. Second, a primary study is presented of the data using a panel of 147 countries for the period 1967‐2004. Findings - The growth‐aid relation should be negative if humanitarian motives dominate aid allocation decisions. The result from both the meta‐analysis and the primary data analysis suggests a very small effect between lagged growth and aid allocations, with a dominating positive sign. This result appears to be driven partly by the large development banks. Originality/value - No attempt has previously been made to summarize the literature on growth as a motive for giving aid. This paper offers the first attempt to do so, by presenting a meta‐analysis of the empirical literature, as well as analysis of the primary data.

Keywords: Aid allocation; Growth; Meta‐analysis; Economic growth; International aid; Developing countries; Banks (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jepppp:v:2:y:2013:i:1:p:21-41

DOI: 10.1108/20452101311318657

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