Assessing the allocation of Italian foreign aid
AbstractThis 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 â€œtiedâ€ flows and relatively greater recourse to debt relief. Drawing on the empirical literature on aid allocation, we estimate the determinants of Italyâ€™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 recipientsâ€™ needs; the latterâ€™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 â€œdeservingâ€ countries, where better policies and institutions are likely to increase aid effectiveness.
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Bibliographic InfoPaper provided by Bank of Italy, Economic Research and International Relations Area in its series Questioni di Economia e Finanza (Occasional Papers) with number 43.
Date of creation: Mar 2009
Date of revision:
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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