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Who’s Afraid of Foreign Aid? The Donors’ Perspective

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Author Info
Alberto Chong ()
Mark Gradstein ()

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Abstract

With efforts across the industrial countries to increase the amount of foreign aid mounting, it is important to understand its determinants. This paper examines the factors affecting the support for foreign aid among voters in donor countries. A simple theoretical model, which considers an endogenous determination of official and private aid flows, relates individual income to aid support through the elasticity of substitution and also suggests that government efficiency is an important factor in this regard. The empirical analysis of individual attitudes, based on the World Values Surveys, reveals that satisfaction with own government performance and individual relative income are positively related to the willingness to provide foreign aid. Furthermore, when using donor country data we find that aid is adversely affected by government inefficiency and income inequality.

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Publisher Info
Paper provided by CESifo GmbH in its series CESifo Working Paper Series with number CESifo Working Paper No. 1833.

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Date of creation: 2006
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Handle: RePEc:ces:ceswps:_1833

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Related research
Keywords: foreign aid donors perceptions development corruption

Find related papers by JEL classification:
H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General

This paper has been announced in the following NEP Reports:

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  11. Schweinberger, Albert G. & Lahiri, Sajal, 2006. "On the provision of official and private foreign aid," Journal of Development Economics, Elsevier, vol. 80(1), pages 179-197, June. [Downloadable!] (restricted)
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  18. Alberto Alesina & Beatrice Weder, 2002. "Do Corrupt Governments Receive Less Foreign Aid?," American Economic Review, American Economic Association, vol. 92(4), pages 1126-1137, September. [Downloadable!] (restricted)
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  19. Kopczuk, Wojciech & Slemrod, Joel & Yitzhaki, Shlomo, 2005. "The limitations of decentralized world redistribution: An optimal taxation approach," European Economic Review, Elsevier, vol. 49(4), pages 1051-1079, May. [Downloadable!] (restricted)
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