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Are ‘New’ Donors Different? Comparing the Allocation of Bilateral Aid between Non-DAC and DAC Donor Countries

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  • Axel Dreher

    (Georg-August University Goettingen)

  • Peter Nunnenkamp

    (Kiel Institute for the World Economy)

  • Rainer Thiele

    (Kiel Institute for the World Economy)

Abstract

Major DAC donors are widely criticized for weak targeting of aid, selfish aid motives and insufficient coordination. The emergence of an increasing number of new donors may further complicate the coordination of international aid efforts. On the other hand, new donors (many of which were aid recipients until recently) may have competitive advantages in allocating aid according to need and merit. Project-level data on aid by new donors, as collected by the PLAID initiative, allow for empirical analyses comparing the allocation behavior of new versus old donors. We employ Probit and Tobit models and test for significant differences in the distribution of aid by new and old donors across recipient countries. We find that new donors (i) focus on closer neighbors, (ii) care less for recipient need, (iii) exhibit a weaker bias towards badly governed countries, (iv) respond to disasters, but with fewer resources than old donors, and (v) do not pursue commercial self interest.

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Bibliographic Info

Paper provided by Courant Research Centre PEG in its series Courant Research Centre: Poverty, Equity and Growth - Discussion Papers with number 25.

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Date of creation: 11 Mar 2010
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Handle: RePEc:got:gotcrc:025

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Fax: + 49 551 39 14059
Web page: http://www.uni-goettingen.de/en/82144.html

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Keywords: aid allocation; new donors; donor motives; Probit; Tobit;

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References

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  1. Peter Nunnenkamp & Rainer Thiele, 2006. "Targeting Aid to the Needy and Deserving: Nothing But Promises?," The World Economy, Wiley Blackwell, vol. 29(9), pages 1177-1201, 09.
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Citations

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Cited by:
  1. Fuchs, Andreas & Vadlamannati, Krishna Chaitanya, 2012. "The Needy Donor: An Empirical Analysis of India’s Aid Motives," Working Papers 0532, University of Heidelberg, Department of Economics.
  2. Axel Dreher & Andreas Fuchs, 2011. "Rogue Aid? The Determinants of China’s Aid Allocation," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 93, Courant Research Centre PEG, revised 29 Feb 2012.
  3. Audrey Menard, 2012. "Do natural resources condition the aidgovernance relationship? Evidence from Africa," Working Papers of BETA 2012-18, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.

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