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Assessing the allocation of Italian foreign aid

Riccardo Settimo () and Claudia Maurini

No 43, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: This paper provides an assessment of Italian aid policy during the period 1983-2006. In comparison with other donors (DAC and G-7), the main stylized facts are: persistently lower aid/GDP ratio, greater recourse to multilateral channels, a higher percentage of �tied� flows and relatively greater recourse to debt relief. Drawing on the empirical literature on aid allocation, we estimate the determinants of Italy�s bilateral aid. We use three groups of explanatory variables, reflecting national-interest, humanitarian and selectivity-related motivations. We find that the distribution of Italian bilateral resources is significantly affected by both national-interest (like foreign policy or trade) and humanitarian motives, related to recipients� needs; the latter�s role, in particular, seems to have strengthened over time. There is ample room for improving selectivity, i.e., the capacity to direct ODA flows to �deserving� countries, where better policies and institutions are likely to increase aid effectiveness.

Keywords: Italian foreign aid; aid allocation; donor motives; economic development. (search for similar items in EconPapers)
JEL-codes: F35 O1 (search for similar items in EconPapers)
Date: 2009-03
New Economics Papers: this item is included in nep-dev
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