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Assessing the allocation of Italian foreign aid

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Author Info
Riccardo Settimo () (Bank of Italy)
Claudia Maurini () (Bank of Italy)
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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Paper provided by Bank of Italy, Economic Research Department 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.;

Find related papers by JEL classification:
F35 - International Economics - - International Finance - - - Foreign Aid
O1 - Economic Development, Technological Change, and Growth - - Economic Development

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  1. Peter Nunnenkamp & Rainer Thiele, 2006. "Targeting Aid to the Needy and Deserving: Nothing But Promises?," The World Economy, Blackwell Publishing, vol. 29(9), pages 1177-1201, 09. [Downloadable!] (restricted)
  2. Collier, Paul & Dollar, David, 2002. "Aid allocation and poverty reduction," European Economic Review, Elsevier, vol. 46(8), pages 1475-1500, September. [Downloadable!] (restricted)
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  3. Craig Burnside & David Dollar, 2000. "Aid, Policies, and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 847-868, September. [Downloadable!] (restricted)
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  4. McGillivray, Mark & Oczkowski, Edward, 1992. "A Two-Part Sample Selection Model of British Bilateral Foreign Aid Allocation," Applied Economics, Taylor and Francis Journals, vol. 24(12), pages 1311-19, December.
  5. Alesina, Alberto & Dollar, David, 2000. " Who Gives Foreign Aid to Whom and Why?," Journal of Economic Growth, Springer, vol. 5(1), pages 33-63, March. [Downloadable!] (restricted)
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  6. 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. [Downloadable!] (restricted)
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This page was last updated on 2009-11-20.

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