Assessing the Allocation of Aid: Developmental Concerns and the Self-Interest of Donors

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.

Aid, trade and migration: How do bilateral flows interact?

“…Imports from developing countries reduce the amount of assistance, suggesting that extending trade with developing countries is perceived as a better way to promote economic development (Winters et al., ). On the other hand, aid can be tied to donors' exports (Canavire‐Bacarreza, Nunnenkamp, Thiele, & Triveño, ; Claessens, Cassimon, & Van Campenhout, ; Dollar & Levin, ): bilateral donors are prone to reward trade partners and new market opportunities. Finally, aid efforts can support trade activities, in particular since the inception of the “Aid for Trade” initiative, in which aid is associated with economic integration (see Cadot, Fernandes, Gourdon, Mattoo, and Melo, ; Vijil, for details).…”

Factors of Czech Aid Selection and Allocation: Panel Probit and Tobit Analysis

“…Byť tento předpoklad může být v souvislosti s mnoha proměn-nými přijatelný, nemusí platit vždy. I přes tato omezení patří model Tobit v současnosti mezi nejčastěji aplikované přístupy, viz například Dreher et al (2011), Dreher et al (2009, Doucouliagos a Manning (2009), Canavire et al (2005, Berthélemy a Tichit (2004).…”

“…Ačkoliv je institucionální kvalita obvykle relevantním faktorem selekce i alokace pomoci (vyšší kvalita institucí recipientských zemí vede k vyšší pravděpodobnosti selekce i k vyšším objemům rozvojové pomoci), je podle Canavire et al (2005) zda Česká republika v selekci a alokaci pomoci preferuje demokratické či autokratické recipienty. Dosavadní studie alokace pomoci přitom naznačují, že donoři refl ektují typ politického režimu v přijímajících zemích a spíše mají tendenci svou pomoc alokovat do zemí demokratických (například Alesina a Dollar, 2000).…”

Principal determinants of territorial allocation of the Slovak Republic’s bilateral development aid: Path-dependent trajectory?

“…Besides socioeconomic development and poverty levels, researchers tend not to disregard aspects of political and civil freedoms, quality of governance, as well as democratic system in a recipient country (Canavire-Bacarreza et al 2005 andHarmáček et al 2017). Variable approximating civil and political freedoms in recipient countries (Freedom) consists of an unweighted arithmetic average of political rights (PR) and civil liberties (CL) indicators provided by the Freedom House (2021).…”

“…This approach was later criticised due to its inaccuracy when using binary and censored dependent variables (Bowles 1987). Most researchers shifted afterwards to alternative approaches, combining both recipient needs and donor interests into one model, giving rise to the so called "hybrid" models (e. g., Berthélemy and Tichit 2004, Canavire-Bacarreza et al 2005, Dreher et al 2009.…”