The role of oil in the allocation of foreign aid: The case of the G7 donors

Does the quality of institutions matter for foreign investment concentration in Africa? Understanding the controversial role of international aid

“…Starting from the observed minimum value (−0.61) of bilateral aid provided by the former metropolis up to the maximum value (2.72) for the sample, it appears that the marginal effect remains negative and continuously decreases. Thus, while Couharde et al (2019) show that bilateral aid allows foreign countries to guarantee their oil supply by African countries, our study finds that bilateral aid is a lever allowing foreign countries to strengthen their FDI position in Africa.…”

“…Spain, which is the former metropolis, is almost absent. Couharde et al (2019) show that there is competition among G7 countries to grant aid to oilexporting countries to be the priority target for their oil offers. Nigeria, for example, the leading oil exporter in sub-Saharan Africa, receives from the United States each year nearly $300 million in aid and provides an average of 8% of oil imports from the United States.…”

“…However, some countries such as Nigeria (NGA), characterized by a less-exemplary institutional framework, also have a relatively low FDI concentration (Figure 1b). Regarding Angola and Nigeria, Couharde et al (2019) argue that due to a significant and steady volume of aid, the United States has managed to enter these markets as much as China has done in several countries, including Tanzania (Li et al, 2013). Similarly, while Spain, which colonized Equatorial Guinea (EQG), records a marginal share of FDI inflows (Figure 1a), the United States, the main aid power in the country, concentrates more than 60% of the inflows received.…”

Does foreign aid volatility increase international migration?

“…We next control for oil rents as a share of sample country GDP, on the basis that oil reserves impact aid allocation (Couharde et al 2020). Additionally, oil rents are closely related to government revenue and migrant labor (Halliday 1977;Arnold and Shah 1984).…”

Equal opportunity and poverty reduction: How should aid be allocated?

“…Donors' interests (strategic allies, commercial allies) are potential criteria influencing their decisions. For instance, Couharde, Karanfil, Kilama, and Omgba (2019) underline the role of oil on bilateral aid policy, while in Nunnenkamp and Öhler (2011), donor strategic interests are reflected by the recipient's relative importance as a donor's export market and by the degree of recipient UN voting coincidence with a donor.…”