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Modelling Aid Allocation: Issues, Approaches And Results

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  • Mark McGillivray

    (World Institute for Development Economics Research)

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    Abstract

    There is a widespread view that political criteria have received less emphasis in aid allocation since the end of the cold war, with a greater share of aid subsequently being based on developmental criteria. An observed increase in aid effectiveness is attributed to this shift. A reasonably large literature on aid allocation supports this view: a number of influential, widely cited studies conclude that developmental criteria played no role in the 1970s and 1980s inter-recipient aid allocation. This paper argues that the shift is not as significant as commonly thought. It points to a number of methodological weaknesses in the dominant modelling approach used within the literature, showing that more rigorous econometric methods suggest that developmental criteria have had a larger influence on cold war period aid allocation than previously thought. An alternative interpretation of the observed increase in aid effectiveness is provided.

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    File URL: http://www.jed.or.kr/full-text/28-1/Mcgillivray.PDF
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    Bibliographic Info

    Article provided by Chung-Ang Unviersity, Department of Economics in its journal Journal Of Economic Development.

    Volume (Year): 28 (2003)
    Issue (Month): 1 (June)
    Pages: 171-188

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    Handle: RePEc:jed:journl:v:28:y:2003:i:1:p:171-188

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    Related research

    Keywords: Aid Allocation; Donor Interest; Recipient Need; Tobit Models; Regression;

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    References

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    1. Patrick GUILLAUMONT & Lisa CHAUVET, 1999. "Aid and Performance: A Reassessment," Working Papers 199910, CERDI.
    2. McGillivray, Mark & Oczkowski, Edward, 1991. "Modelling the Allocation of Australian Bilateral Aid: A Two-Part Sample Selection Approach," The Economic Record, The Economic Society of Australia, vol. 67(197), pages 147-52, June.
    3. Rukmani Gounder, 2001. "Aid-growth nexus: empirical evidence from Fiji," Applied Economics, Taylor & Francis Journals, vol. 33(8), pages 1009-1019.
    4. Amemiya, Takeshi, 1984. "Tobit models: A survey," Journal of Econometrics, Elsevier, vol. 24(1-2), pages 3-61.
    5. Gounder, Rukmani, 1994. "Empirical results of aid motivations: Australia's bilateral aid program," World Development, Elsevier, vol. 22(1), pages 99-113, January.
    6. Oecd, 2002. "Aid volume, channels and allocations for poverty reduction," OECD Journal on Development, OECD Publishing, vol. 3(3), pages 33-46.
    7. Collier, Paul & Dollar, David, 1999. "Aid allocation and poverty reduction," Policy Research Working Paper Series 2041, The World Bank.
    8. Gang, Ira N. & Lehman, James A., 1990. "New directions or not: USAID in Latin America," World Development, Elsevier, vol. 18(5), pages 723-732, May.
    9. Dowling, J. M. & Hiemenz, Ulrich, 1985. "Biases in the allocation of foreign aid: Some new evidence," World Development, Elsevier, vol. 13(4), pages 535-541, April.
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