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The Allocation of Development Aid Assistance: Do new donors have old motives?

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  • Hristos Doucouliagos

    ()

  • Elizabeth Manning

    ()

Abstract

The aid allocation literature explores the motives behind development aid assistance. This literature is enormous, yet surprisingly, the extant empirical studies have in the main only focused on the motives of established donors. Consequently, relatively little is known of the motives of new donors. This paper explores the aid allocation motives of three relatively new DAC donors: Greece, Luxembourg, and Portugal. Both OLS and Tobit two-way effects estimators are used to model their aid allocation process. The results indicate that humanitarian concerns are not an important factor for these three donors. Greece contributes aid predominately to its neighbors and to transitional East European nations. Portugal is motivated by commercial interests and former colony status. The bandwagon effect exists in reverse for Portugal. Commercial interests operate also for Luxembourg. Additionally, Luxembourg appears to donate to smaller more developed countries and is less inclined to donate to East European nations.

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File URL: http://www.deakin.edu.au/buslaw/aef/workingpapers/papers/2009_17.pdf
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Bibliographic Info

Paper provided by Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance in its series Economics Series with number 2009_17.

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Date of creation: 11 Nov 2009
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Handle: RePEc:dkn:econwp:eco_2009_17

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Keywords: foreign aid allocation; bilateral aid; economic development; humanitarian concerns.;

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Cited by:
  1. Raschky, Paul A. & Schwindt, Manijeh, 2012. "On the channel and type of aid: The case of international disaster assistance," European Journal of Political Economy, Elsevier, vol. 28(1), pages 119-131.

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