Assessing the allocation of aid: Developmental concerns and the self-interest of donors

Gustavo Canavire-Bacarreza, Peter Nunnenkamp, Rainer Thiele and Luis Triveño

No 1253, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: In this paper, we perform a Tobit analysis of aid allocation, covering the period 1999-2002 and accounting for both altruistic and selfish donor motives. It turns out that poorer countries get clearly more aid from both bilateral and multilateral donors. Most donors are also found to direct significantly more aid to well-governed recipients if governance is measured by the World Bank's Country Policy and Institutional Assessment (CPIA). If the CPIA is replaced by the Kaufmann index on institutional conditions in recipient countries, however, the policy orientation of aid becomes extremely weak. In contrast to a recent paper by Dollar and Levin, our estimates do not suggest that multilateral aid is more poverty- and policy-oriented than bilateral aid. Post-conflict resolution emerges as a significant determinant of aid allocation in 2002. The importance of selfish aid motives clearly differs between bilateral and multilateral donors. In particular, the export-related self- interest of donor countries provided a fairly strong incentive to grant bilateral aid, as did colonial ties.

Keywords: Donor motives; Tobit analysis; Foreign aid allocation (search for similar items in EconPapers)
JEL-codes: C24 F35 (search for similar items in EconPapers)
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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Working Paper: Assessing the allocation of aid: developmental concerns and the self-interest of donors (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1253

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