Earmarked aid to international development organizations has quadrupled over the last two decades and now represents almost twenty percent of total aid. This paper introduces a new dataset on earmarked aid, which alternatively has been referred to as multi-bi, restricted, non-core or trust fund aid. The data makes it possible to track the rise of the new aid channel over an extended period of time and in greater detail regarding, e.g., the implementing multilateral organizations. The data include more than 100,000 earmarked projects of 23 OECD donors to 290 multilateral institutions from 1990 to 2012. We graphically illustrate the distribution and patterns of this new aid channel for all actors involved, namely donor governments and their aid-providing agencies, multilateral organizations, and recipient countries, and highlight promising avenues for further research. In a first empirical application of the data, we analyze donors' heterogeneous use of earmarked aid, and test three lines of argument for the provision of earmarked aid: official donor motives regarding specific recipient needs, public opinion in donor countries, and 'market-oriented' donor economies' use of earmarked aid to 'bypass' recipient countries with weak governance. We show that earmarked aid is associated with different donor-and recipient-level factors than traditional or 'pure' bilateral aid.

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We investigate the effects of short-term political motivations on the effectiveness of foreign aid. Specifically, we test whether the effect of aid on economic growth is reduced by the share of years a country served on the United Nations Security Council (UNSC) in the period the aid is committed, which provides quasi-random variation in aid. Our results show that the effect of aid on growth is significantly lower when aid was committed during a country's tenure on the UNSC. This holds when we restrict the sample to Africa, which follows the strictest norm of rotation on the UNSC and thus where UNSC membership can most reliably be regarded as exogenous. We derive two conclusions from this. First, short-term political favoritism reduces the effectiveness of aid. Second, results of studies using political interest variables as instruments for overall aid arguably estimate the effect of politically motivated aid and thus a lower bound for the effect of all aid.