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Aid Effort and its Determinants

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  • Jeffery I. Round

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  • Matthew Odedokun
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    Abstract

    The paper empirically explores the factors that could have accounted for the generally declining aid effort (defined as the generosity ratio, or the share of GDP given as aid) of bilateral donors over the last three decades. Annual panel data over 1970-2000 period for the 22 DAC members are used in a series of regressions. The findings suggest the existence of progressivity of aid in relation to donor income. There is also evidence of the economies of scale, in the sense that the share of aid in income decreases with growth in the size of donor country population. Domestic pro-poor tendency also appears to enhance donor generosity, and a positive ‘peer pressure’ effect is also observed. In addition, the extent of military adventurism of the donor is observed to have enhanced aid effort, just as also the size of government. [Discussion Paper No. 2003/03]

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    Bibliographic Info

    Paper provided by eSocialSciences in its series Working Papers with number id:3211.

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    Date of creation: Nov 2010
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    Handle: RePEc:ess:wpaper:id:3211

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    Related research

    Keywords: determinants of aid efforts; generosity; ODA; DAC; donors; G7;

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    1. Svensson, Jakob, 1998. "Foreign aid and rent-seeking," Policy Research Working Paper Series 1880, The World Bank.
    2. 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.
    3. Roubini, Nouriel & Sachs, Jeffrey D., 1989. "Political and economic determinants of budget deficits in the industrial democracies," European Economic Review, Elsevier, vol. 33(5), pages 903-933, May.
    4. Beck, T.H.L. & Clarke, G. & Groff, A. & Keefer , P. & Walsh, P., 2001. "New tools in comparative political economy: The database of political institutions," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3125517, Tilburg University.
    5. Finn Tarp & Christian F. Bach & Henrik Hansen & Søren Baunsgaard, 1998. "Danish Aid Policy: Theory and Empirical Evidence," Discussion Papers 98-06, University of Copenhagen. Department of Economics.
    6. Murshed, S Mansoob & Sen, Somnath, 1995. "Aid Conditionality and Military Expenditure Reduction in Developing Countries: Models of Asymmetric Information," Economic Journal, Royal Economic Society, vol. 105(429), pages 498-509, March.
    7. Gordon, Robert J., 1989. "Comments 'political and economic determinants of budget deficits in the industrial democracies' by N. Roubini and J.D. Sachs," European Economic Review, Elsevier, vol. 33(5), pages 934-938, May.
    8. Trumbull, William N & Wall, Howard J, 1994. "Estimating Aid-Allocation Criteria with Panel Data," Economic Journal, Royal Economic Society, vol. 104(425), pages 876-82, July.
    9. Sajal Lahiri & Pascalis Raimondos-Møller, 1999. "Lobbying by Ethnic Groups and Aid Allocation," EPRU Working Paper Series 99-05, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics, revised Oct 2003.
    10. Noël, Alain & Thérien, Jean-Philippe, 1995. "From domestic to international justice: the welfare state and foreign aid," International Organization, Cambridge University Press, vol. 49(03), pages 523-553, June.
    11. Beck, Thorsten & Clarke, George & Groff, Alberto & Keefer, Philip & Walsh, Patrick, 2000. "New tools and new tests in comparative political economy - the database of political institutions," Policy Research Working Paper Series 2283, The World Bank.
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