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Aid Effort and Its Determinants: A Comparison of the Italian Performance with other OECD Donors

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Abstract

this paper aims at contributing to a better understanding of the determinants of aid effort by donor countries, a topic that has been rather under researched in the vast economic literature on development aid. We conduct an econometric analysis on panel data that refer to the 22 member countries of the OECD Development Assistance Committee over the 1970 2004 period; the estimates are then used as a benchmark against which we assess to what extent the poor Italian aid performance can be traced back to its specific macroeconomic, structural and institutional characteristics. The analysis suggests that these factors – that are found to significantly influence aid effort – fall short of explaining the limited amount of fiscal resources that Italy devotes to international aid. Even when its specific characteristics are accounted for, Italy is found to be lagging behind the OECD norm, so that the analysis challenges the claims that the limited Italian aid effort is due to binding fiscal constraints.

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Bibliographic Info

Paper provided by Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa in its series Working Papers - Economics with number wp2008_11.rdf.

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Length: 43 pag
Date of creation: 2008
Date of revision:
Handle: RePEc:frz:wpaper:wp2008_11.rdf

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Keywords: foreign aid; fiscal expenditures; economic development;

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References

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  1. Schiff, Maurice, 1994. "How trade, aid, and remittances affect international migration," Policy Research Working Paper Series 1376, The World Bank.
  2. David Roodman, 2004. "The Anarchy of Numbers: Aid, Development, and Cross-country Empirics," Development and Comp Systems 0412003, EconWPA.
  3. 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.
  4. Ugur Karakaplan & Bilin Neyapti & Selin Sayek, 2005. "Aid and Foreign Direct Investment: International Evidence," Working Papers 2005/12, Turkish Economic Association.
  5. Pasaran, M.H. & Im, K.S. & Shin, Y., 1995. "Testing for Unit Roots in Heterogeneous Panels," Cambridge Working Papers in Economics 9526, Faculty of Economics, University of Cambridge.
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  7. 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.
  8. Mosley, Paul, 1985. "The Political Economy of Foreign Aid: A Model of the Market for a Public Good," Economic Development and Cultural Change, University of Chicago Press, vol. 33(2), pages 373-93, January.
  9. Round, Jeffery I. & Odedokun, Matthew, 2004. "Aid effort and its determinants," International Review of Economics & Finance, Elsevier, vol. 13(3), pages 293-309.
  10. Anne Boschini & Anders Olofsg�rd, 2007. "Foreign aid: An instrument for fighting communism?," Journal of Development Studies, Taylor & Francis Journals, vol. 43(4), pages 622-648.
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  12. Dudley, L., 1977. "Foreign Aid and the Theory of Alliances," Cahiers de recherche 7704, Universite de Montreal, Departement de sciences economiques.
  13. Thierry Tressel & Alessandro Prati, 2006. "Aid Volatility and Dutch Disease," IMF Working Papers 06/145, International Monetary Fund.
  14. Alberto Chong & Mark Gradstein, 2006. "Who’s Afraid of Foreign Aid? The Donors’ Perspective," CESifo Working Paper Series 1833, CESifo Group Munich.
  15. Cohen, Daniel, 1996. "The sustainability of African debt," Policy Research Working Paper Series 1621, The World Bank.
  16. Silvia Marchesi & Alessandro Missale, 2004. "What does motivate lending and aid to the HIPCs?," Development Working Papers 189, Centro Studi Luca d\'Agliano, University of Milano.
  17. KIMURA Hidemi & TODO Yasuyuki, 2007. "Is Foreign Aid a Vanguard of FDI? A Gravity-Equation Approach," Discussion papers 07007, Research Institute of Economy, Trade and Industry (RIETI).
  18. Elbadawi, Ibrahim A, 1999. "External Aid: Help or Hindrance to Export Orientation in Africa?," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 8(4), pages 578-616, December.
  19. Collier, Paul & Dollar, David, 2002. "Aid allocation and poverty reduction," European Economic Review, Elsevier, vol. 46(8), pages 1475-1500, September.
  20. Hoekman. Bernard & Prowse, Susan, 2005. "Economic policy responses to preference erosion : from trade as aid toaid for trade," Policy Research Working Paper Series 3721, The World Bank.
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Citations

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Cited by:
  1. Andrew Mold & Sebastian Paulo & Annalisa Prizon, 2009. "Taking Stock of the Credit Crunch: Implications for Development Finance and Global Governance," OECD Development Centre Working Papers 277, OECD Publishing.
  2. Sèna Kimm Gnangnon, 2013. "How do OECD donor countries distribute foreign aid among developing countries during their fiscal episodes?," Working Papers halshs-00786009, HAL.
  3. Andreas Fuchs & Axel Dreher & Peter Nunnenkamp, 2012. "Determinants of Donor Generosity: A Survey of the Aid Budget Literature," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 121, Courant Research Centre PEG.
  4. Pincin, Jared, 2013. "Political power and aid tying practices in the development assistance committee countries," MPRA Paper 49806, University Library of Munich, Germany.
  5. Axel Dreher & Andreas Fuchs, 2011. "Does terror increase aid?," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 86, Courant Research Centre PEG.

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