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What Determines Bilateral Aid Allocations? Evidence From Time Series Data

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  • Simon Feeny
  • Mark McGillivray

Abstract

This paper models the allocation of bilateral foreign development aid to developing countries. A simple theoretical framework is developed, in which aid is treated as a private good of a donor country bureaucratic group responsible for bilateral aid allocation. This model is applied to time series data for ten principal recipients of bilateral official development assistance. Features of this application are that it caters for the joint determination of aid allocations and for donor allocation behavior to differ among individual recipient countries. Results indicate that both recipient need and donor interest variables determine the amount of foreign aid to developing countries, and that donor allocation behavior often differs markedly among recipients.

Suggested Citation

  • Simon Feeny & Mark McGillivray, 2008. "What Determines Bilateral Aid Allocations? Evidence From Time Series Data," Review of Development Economics, Wiley Blackwell, vol. 12(3), pages 515-529, August.
    • Handle: RePEc:bla:rdevec:v:12:y:2008:i:3:p:515-529
    DOI: 10.1111/j.1467-9361.2008.00443.x
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