Relative Effectiveness of Bilateral and Multilateral Aid on Development Outcomes

Abstract

Aid donors are interested in understanding whether allocating aid via bilateral or multilateral channels might be more effective for achieving development goals. We review 45 papers that empirically test the associations between bilateral and multilateral aid flows and various development outcomes including gross domestic product growth, governance indicators, human development indicators and levels of nonaid investment flows. Findings suggest that differences between countries and regions, time periods, aid objectives, and individual donor organizations all may influence the effectiveness of aid delivered bilaterally and multilaterally. We find, however, no consistent evidence that either bilateral or multilateral aid is more effective overall.

Conditional Linkages Between Iron Ore Exports, Foreign Aid and Terrorism

“…While a recent survey of the literature has failed to establish differences in development outcomes of multilateral aid vis-à-vis bilateral aid (Biscaye et al, 2015), the intuition of this interpretation is consistent with available evidence that former colonial powers who have various strategic interests in former colonies may be more effective at allocating foreign aid towards the fight against terrorism and the export of natural resources 4 . Recent evidence on…”

Fuel exports, aid and terrorism

“…Hence, the corresponding difficulty in consensus-building among donors may eventually lead to less appealing significant effects on development outcomes. Whereas a recent survey of the literature has been inconclusive on significant differences in terms of development outcomes for bilateral aid vis-à-vis multilateral aid (Biscaye et al, 2015), the basis for our interpretation is deeply rooted in the documented evidence that former colonial powers preserve various strategic interests in former colonies and hence can more effectively allocate development assistance towards fighting terrorism and boosting natural resource exports 3 . Contemporary examples include the recent military intervention of France in the Central African Republic and Mali on the one hand and the exploitation of uranium in Niger following the latest presidential elections (Melly & Darracq, 2013).…”

FDI, Aid, Terrorism: Conditional Threshold Evidence from Developing Countries

“…Conversely, with multilateral aid, multiple donors with potentially very conflicting interests are involved. Whereas a recent literature survey has established no consistent evidence on the effectiveness of bilateral aid vis-à-vis multilateral aid in the development outcomes of recipient countries (Biscaye et al, 2015), what is granted in our explanation is its consistency with common sense and evidence that bilateral aid to former colonies from former colonial powers is strongly tailored in view of preserving colonial legacies and strategic interests. Accordingly, the threshold effect established in our findings may be due to conflicting strategic interests of multilateral donorswhich may indulge them to end-up allocating aid essentially on FDI development outcomes.…”