The Needy Donor: An Empirical Analysis of India’s Aid Motives

Abstract

It is puzzling that India, which has a large domestic constituency of people suffering from underdevelopment, chronic poverty and mal-governance, is emerging as an important aid India's aid allocation with that of other donors. Our findings show that India's aid allocation is partially in line with our expectations of the behavior of a "needy" donor. Commercial and political self-interests dominate India's aid allocation. We find the importance of political interests to be significantly larger for India than for all donors of the Development Assistance Committee. Moreover, we find that countries which are closer geographically are favored, and that countries at a similar developmental stage are more likely to enter India's aid program.

Is there a Strategy in China’s Health Official Development Assistance to African Countries?

“…He finds that poorer countries are more likely to receive some positive amount of Arab aid as well as countries that adopt voting patterns in the United Nations General Assembly (UNGA) similar to Saudi Arabia. Fuchs and Vadlamannati (2013) focus on aid motives of India and show that commercial and political self-interests (as measured by UNGA voting alignment) dominate India's aid allocation. Dreher et al (2011) compare the factors associated with aid allocation between Development Assistance Committee (DAC) donors and new donors, namely Arab, Asian, Latin American and Eastern/Central European donors.…”

Fairness in the international allocation of development aid

“…Donors will understandably be reluctant to provide such a large share of their aid to a single country, especially one that is a net donor in its own right ( The New Indian Express , ). Yet as Fuchs and Vadlamannati () note, it is both unsurprising that India still receives aid and puzzling that it has emerged as an aid donor, not only because of its very high poverty level, but because it ranks below each of its neighbours in South Asia in terms of life expectancy, access to sanitation, infant immunisation and underweight children. Donors will have a range of valid motives for providing aid to India beyond poverty reduction, yet it would seem difficult to justify such a large gap.…”

Brazil's Development Cooperation: Following in China's and India's Footsteps?

“…Clist, ; Hoeffler & Outram, ), evidence is less encompassing for donors outside of the DAC. Most notably, two previous case studies for China and India (Fuchs & Vadlamannati, ; Dreher & Fuchs, ) suggest that the aid allocation by ‘new’ and ‘old’ donors appears to be more similar than one might suspect. Both donors do, for example, not indiscriminately support autocratic or otherwise badly governed countries.…”