Advanced Search
MyIDEAS: Login to save this article or follow this journal

Donor ideology and types of foreign aid

Contents:

Author Info

  • Brech, Viktor
  • Potrafke, Niklas

Abstract

We examine how donor government ideology influences the composition of foreign aid flows. We use data for 23 OECD countries over the period 1960–2009 and distinguish between multilateral and bilateral aid, grants and loans, recipient characteristics such as income and political institutions, tied and untied aid, and aid by sector. The results show that leftist governments increased the growth of bilateral grant aid, and more specifically grant aid to least developed and lower middle-income countries. Our findings confirm partisan politics hypotheses because grants are closely analogous to domestic social welfare transfer payments, and poverty and inequality are of greatest concern for less developed recipient countries.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.sciencedirect.com/science/article/pii/S014759671300098X
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Elsevier in its journal Journal of Comparative Economics.

Volume (Year): 42 (2014)
Issue (Month): 1 ()
Pages: 61-75

as in new window
Handle: RePEc:eee:jcecon:v:42:y:2014:i:1:p:61-75

Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/622864

Related research

Keywords: Foreign aid; Government ideology; Partisan politics; International organizations; Panel data;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Axel Dreher & Peter Nunnenkamp & Rainer Thiele, 2006. "Does Aid for Education Educate Children? Evidence from Panel Data," Kiel Working Papers 1290, Kiel Institute for the World Economy.
  2. Younas, Javed, 2008. "Motivation for bilateral aid allocation: Altruism or trade benefits," European Journal of Political Economy, Elsevier, vol. 24(3), pages 661-674, September.
  3. Rainer Thiele & Peter Nunnenkamp & Axel Dreher, 2007. "Do Donors Target Aid in Line with the Millennium Development Goals? A Sector Perspective of Aid Allocation," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 143(4), pages 596-630, December.
  4. Kilby, Christopher & Dreher, Axel, 2010. "The impact of aid on growth revisited: Do donor motives matter?," Economics Letters, Elsevier, vol. 107(3), pages 338-340, June.
  5. Odedokun, Matthew, 2003. "Economics and Politics of Official Loans versus Grants Panoramic Issues and Empirical Evidence," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  6. Alberto Alesina & David Dollar, 1998. "Who Gives Foreign Aid to Whom and Why?," NBER Working Papers 6612, National Bureau of Economic Research, Inc.
  7. Niklas Potrafke, 2009. "Did globalization restrict partisan politics? An empirical evaluation of social expenditures in a panel of OECD countries," Public Choice, Springer, vol. 140(1), pages 105-124, July.
  8. Axel Dreher & Peter Nunnenkamp & Rainer Thiele, 2006. "Does US Aid Buy UN General Assembly Votes? A Disaggregated Analysis," KOF Working papers 06-138, KOF Swiss Economic Institute, ETH Zurich.
  9. W. J. Henisz, 2000. "The Institutional Environment for Economic Growth," Economics and Politics, Wiley Blackwell, vol. 12(1), pages 1-31, 03.
  10. Axel Dreher, 2006. "Does globalization affect growth? Evidence from a new index of globalization," Applied Economics, Taylor & Francis Journals, vol. 38(10), pages 1091-1110.
  11. Maizels, Alfred & Nissanke, Machiko K., 1984. "Motivations for aid to developing countries," World Development, Elsevier, vol. 12(9), pages 879-900, September.
  12. Andreas Fuchs & Axel Dreher & Peter Nunnenkamp, 2012. "Determinants of Donor Generosity: A Survey of the Aid Budget Literature," Kiel Working Papers 1789, Kiel Institute for the World Economy.
  13. Timothy D. Lane & Leslie Lipschitz & Cristina Arellano & Ales Bulir, 2005. "The Dynamic Implications of Foreign Aid and its Variability," IMF Working Papers 05/119, International Monetary Fund.
  14. Knack, Stephen & Rahman, Aminur, 2004. "Donor fragmentation and bureaucratic quality in aid recipients," Policy Research Working Paper Series 3186, The World Bank.
  15. Osterloh, Steffen, 2010. "Words speak louder than actions: The impact of politics on economic performance," ZEW Discussion Papers 10-092, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  16. Nunnenkamp, Peter & Thiele, Rainer & Wilfer, Tom, 2005. "Grants versus loans: Much ado about (almost) nothing," Kiel Economic Policy Papers 4, Kiel Institute for the World Economy (IfW).
  17. Markus Goldstein & Todd Moss, 2005. "Compassionate conservatives or conservative compassionates? US political parties and bilateral foreign assistance to Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 41(7), pages 1288-1302.
  18. Niklas Potrafke, 2011. "Does government ideology influence budget composition? Empirical evidence from OECD countries," Economics of Governance, Springer, vol. 12(2), pages 101-134, June.
  19. Ilyana Kuziemko & Eric Werker, 2006. "How Much Is a Seat on the Security Council Worth? Foreign Aid and Bribery at the United Nations," Journal of Political Economy, University of Chicago Press, vol. 114(5), pages 905-930, October.
  20. Robert K. Fleck & Christopher Kilby, 2009. "Changing Aid Regimes? U.S. Foreign Aid from the Cold War to the War on Terror," Villanova School of Business Department of Economics and Statistics Working Paper Series 1, Villanova School of Business Department of Economics and Statistics.
  21. James H. Stock & Mark W. Watson, 2008. "Heteroskedasticity-Robust Standard Errors for Fixed Effects Panel Data Regression," Econometrica, Econometric Society, vol. 76(1), pages 155-174, 01.
  22. Fleck, Robert K. & Kilby, Christopher & Fleck, Robert K., 1998. "Foreign Aid and Domestic Politics: Voting in Congress and the Allocation of USAID Contracts Across Congressional Districts," Vassar College Department of Economics Working Paper Series 44, Vassar College Department of Economics, revised Dec 1999.
  23. Summers, Robert & Heston, Alan, 1991. "The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950-1988," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 327-68, May.
  24. Bazoumana Ouattara & Eric Strobl, 2008. "Aid, Policy and Growth: Does Aid Modality Matter?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 144(2), pages 347-365, July.
  25. Boone, Peter, 1996. "Politics and the effectiveness of foreign aid," European Economic Review, Elsevier, vol. 40(2), pages 289-329, February.
  26. Epstein, Gil S. & Gang, Ira N., 2008. "Good Governance and Good Aid Allocation," IZA Discussion Papers 3585, Institute for the Study of Labor (IZA).
  27. Chong, Alberto & Gradstein, Mark, 2008. "What determines foreign aid? The donors' perspective," Journal of Development Economics, Elsevier, vol. 87(1), pages 1-13, August.
  28. Fleck, Robert K. & Kilby, Christopher, 2005. "How Do Political Changes Influence U.S. Bilateral Aid Allocations? Evidence from Panel Data," Vassar College Department of Economics Working Paper Series 67, Vassar College Department of Economics.
  29. Niklas Potrafke, 2012. "Political cycles and economic performance in OECD countries: empirical evidence from 1951–2006," Public Choice, Springer, vol. 150(1), pages 155-179, January.
  30. Collier, Paul & Hoeffler, Anke, 2002. "Aid, policy, and growth in post-conflict societies," Policy Research Working Paper Series 2902, The World Bank.
  31. Matthew Odedokun, 2004. "Multilateral and Bilateral Loans versus Grants: Issues and Evidence," The World Economy, Wiley Blackwell, vol. 27(2), pages 239-263, 02.
  32. Alexander Pivovarsky & Benedict J. Clements & Sanjeev Gupta & Erwin Tiongson, 2003. "Foreign Aid and Revenue Response," IMF Working Papers 03/176, International Monetary Fund.
  33. Christian Bjørnskov, 2005. "Does Political Ideology Affect Economic Growth?," Public Choice, Springer, vol. 123(1), pages 133-146, April.
  34. Helen V. Milner & Dustin H. Tingley, 2010. "The Political Economy Of U.S. Foreign Aid: American Legislators And The Domestic Politics Of Aid," Economics and Politics, Wiley Blackwell, vol. 22(2), pages 200-232, 07.
  35. Bjørnskov, Christian, 2008. "The growth-inequality association: Government ideology matters," Journal of Development Economics, Elsevier, vol. 87(2), pages 300-308, October.
  36. Noël, Alain & Thérien, Jean-Philippe, 1995. "From domestic to international justice: the welfare state and foreign aid," International Organization, Cambridge University Press, vol. 49(03), pages 523-553, June.
  37. White, Halbert, 1982. "Maximum Likelihood Estimation of Misspecified Models," Econometrica, Econometric Society, vol. 50(1), pages 1-25, January.
  38. Yu Wang & Shuai Jin, 2013. "Veto players and foreign aid provision," Constitutional Political Economy, Springer, vol. 24(1), pages 43-56, March.
  39. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
  40. Berthelemy, Jean-Claude & Tichit, Ariane, 2004. "Bilateral donors' aid allocation decisions--a three-dimensional panel analysis," International Review of Economics & Finance, Elsevier, vol. 13(3), pages 253-274.
  41. Tingley, Dustin, 2010. "Donors and domestic politics: Political influences on foreign aid effort," The Quarterly Review of Economics and Finance, Elsevier, vol. 50(1), pages 40-49, February.
  42. Bjørnskov, Christian, 2010. "Do elites benefit from democracy and foreign aid in developing countries?," Journal of Development Economics, Elsevier, vol. 92(2), pages 115-124, July.
  43. Erik Lundsgaarde & Christian Breunig & Aseem Prakash, 2007. "Trade versus aid: donor generosity in an era of globalization," Policy Sciences, Springer, vol. 40(2), pages 157-179, June.
  44. José Cheibub & Jennifer Gandhi & James Vreeland, 2010. "Democracy and dictatorship revisited," Public Choice, Springer, vol. 143(1), pages 67-101, April.
  45. Alberto Chong & Mark Gradstein & Cecilia Calderon, 2009. "Can foreign aid reduce income inequality and poverty?," Public Choice, Springer, vol. 140(1), pages 59-84, July.
  46. Raechelle Mascarenhas & Todd Sandler, 2006. "Do donors cooperatively fund foreign aid?," The Review of International Organizations, Springer, vol. 1(4), pages 337-357, December.
  47. Round, Jeffery I. & Odedokun, Matthew, 2004. "Aid effort and its determinants," International Review of Economics & Finance, Elsevier, vol. 13(3), pages 293-309.
  48. Doucouliagos, Hristos & Paldam, Martin, 2011. "The ineffectiveness of development aid on growth: An update," European Journal of Political Economy, Elsevier, vol. 27(2), pages 399-404, June.
  49. Axel Dreher & Peter Nunnenkamp & Maya Schmaljohann, 2013. "The Allocation of German Aid: Self-interest and Government Ideology," Kiel Working Papers 1817, Kiel Institute for the World Economy.
  50. Milner, Helen V. & Tingley, Dustin H., 2011. "Who Supports Global Economic Engagement? The Sources of Preferences in American Foreign Economic Policy," International Organization, Cambridge University Press, vol. 65(01), pages 37-68, January.
  51. Tingley, Dustin, 2010. "Corrigendum to "Donors and Domestic Politics: Political Influences on Foreign Aid Effort" [Q. Rev. Econ. Finance 50 (2010) 40-49]," The Quarterly Review of Economics and Finance, Elsevier, vol. 50(2), pages 244-244, May.
  52. Blair, Patricia W., 1969. "The Dimension of Poverty," International Organization, Cambridge University Press, vol. 23(03), pages 683-704, June.
  53. Bjørnskov, Christian & Schröder, Philipp J.H., 2010. "Are Debt Repayment Incentives Undermined by Foreign Aid?," Working Papers 10-20, University of Aarhus, Aarhus School of Business, Department of Economics.
  54. International Monetary Fund, 2010. "A Historical Public Debt Database," IMF Working Papers 10/245, International Monetary Fund.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Axel Dreher & Peter Nunnenkamp & Maya Schmaljohann, 2013. "The Allocation of German Aid: Self-interest and Government Ideology," Kiel Working Papers 1817, Kiel Institute for the World Economy.
  2. Andreas Fuchs & Axel Dreher & Peter Nunnenkamp, 2012. "Determinants of Donor Generosity: A Survey of the Aid Budget Literature," Kiel Working Papers 1789, Kiel Institute for the World Economy.
  3. Björn Kauder & Benjamin Larin & Niklas Potrafke, 2014. "Was bringt uns die große Koalition? Perspektiven der Wirtschaftspolitik," Ifo Working Paper Series Ifo Working Paper No. 172, Ifo Institute for Economic Research at the University of Munich.
  4. Danny Kurban & Niklas Potrafke, 2013. "Zum Einfluss von Regierungsideologie in Geberländern auf die Verteilung von Entwicklungshilfe," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 66(14), pages 30-34, 07.
  5. Niklas Potrafke, 2014. "The Evidence on Globalization," CESifo Working Paper Series 4708, CESifo Group Munich.
  6. Axel Dreher & Anna Minasyan & Peter Nunnenkamp, 2013. "Government Ideology in Donor and Recipient Countries: Does Political Proximity Matter for the Effectiveness of Aid?," Kiel Working Papers 1870, Kiel Institute for the World Economy.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eee:jcecon:v:42:y:2014:i:1:p:61-75. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.