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Assessing the allocation of Italian foreign aid

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  • Riccardo Settimo

    ()
    (Bank of Italy)

  • Claudia Maurini

    ()
    (Bank of Italy)

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    Abstract

    This paper provides an assessment of Italian aid policy during the period 1983-2006. In comparison with other donors (DAC and G-7), the main stylized facts are: persistently lower aid/GDP ratio, greater recourse to multilateral channels, a higher percentage of “tied†flows and relatively greater recourse to debt relief. Drawing on the empirical literature on aid allocation, we estimate the determinants of Italy’s bilateral aid. We use three groups of explanatory variables, reflecting national-interest, humanitarian and selectivity-related motivations. We find that the distribution of Italian bilateral resources is significantly affected by both national-interest (like foreign policy or trade) and humanitarian motives, related to recipients’ needs; the latter’s role, in particular, seems to have strengthened over time. There is ample room for improving selectivity, i.e., the capacity to direct ODA flows to “deserving†countries, where better policies and institutions are likely to increase aid effectiveness.

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    Bibliographic Info

    Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Questioni di Economia e Finanza (Occasional Papers) with number 43.

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    Date of creation: Mar 2009
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    Handle: RePEc:bdi:opques:qef_43_09

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    Related research

    Keywords: Italian foreign aid; aid allocation; donor motives; economic development.;

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    1. Canavire-Bacarreza, Gustavo & Nunnenkamp, Peter & Thiele, Rainer & Triveño, Luis, 2006. "Assessing the allocation of aid : developmental concerns and the self-interest of donors," Open Access Publications from Kiel Institute for the World Economy 3983, Kiel Institute for the World Economy (IfW).
    2. Sylviane GUILLAUMONT JEANNENEY & Patrick GUILLAUMONT & Jacky AMPROU, 2006. "Aid Selectivity According to Augmented Criteria," Working Papers 200616, CERDI.
    3. Dollar, David & Levin, Victoria, 2004. "Increasing selectivity of foreign aid, 1984-2002," Policy Research Working Paper Series 3299, The World Bank.
    4. Dudley, Leonard & Montmarquette, Claude, 1976. "A Model of the Supply of Bilateral Foreign Aid," American Economic Review, American Economic Association, vol. 66(1), pages 132-42, March.
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