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The Politics Of Foreign Aid

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Author Info
Meyer, Wolfgang (University of Cincinnati)
Raimondos-Møller, Pascalis (Department of Economics, Copenhagen Business School)

Additional information is available for the following registered author(s):

Abstract

Why do donor countries give foreign aid? The answers found in the literature are:

(i) because donor countries care for recipient countries (e.g. altruism), and/or (ii)

because there exist distortions that make the indirect gains from foreign aid (e.g.

terms of trade effects) to be larger than the direct losses. This paper proposes a

third answer to the above question, namely that aid is determined through the

domestic political process of the donor country. The paper demonstrates how

foreign aid affects the donor country’s income distribution and how, in a direct

democracy, the majority of voters might benefit from foreign aid giving even

though the country’s social welfare is reduced.

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File URL: http://openarchive.cbs.dk/cbsweb/handle/10398/7488
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Publisher Info
Paper provided by Copenhagen Business School, Department of Economics in its series Working Papers with number 04-1999.

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Length: 20 pages
Date of creation: 02 Mar 1999
Date of revision:
Handle: RePEc:hhs:cbsnow:1999_004

Contact details of provider:
Postal: Department of Economics, Copenhagen Business School, Solbjerg Plads 3 C, 5. sal, DK-2000 Frederiksberg, Denmark
Phone: 38 15 25 75
Fax: 38 15 26 65
Email:
Web page: http://www.cbs.dk/departments/econ/
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Related research
Keywords: foreign aid; politics; majority voting.;

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Find related papers by JEL classification:
F35 - International Economics - - International Finance - - - Foreign Aid

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. 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. [Downloadable!]
    Other versions:
  2. Helpman, Elhanan, 1995. "Politics and Trade Policy," CEPR Discussion Papers 1269, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  3. Alberto Alesina & David Dollar, 1998. "Who Gives Foreign Aid to Whom and Why?," NBER Working Papers 6612, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Bhagwati, Jagdish N & Brecher, Richard A & Hatta, Tatsuo, 1983. "The Generalized Theory of Transfers and Welfare: Bilateral Transfers in a Multilateral World," American Economic Review, American Economic Association, vol. 73(4), pages 606-18, September. [Downloadable!] (restricted)
  5. Mayer, Wolfgang, 1984. "Endogenous Tariff Formation," American Economic Review, American Economic Association, vol. 74(5), pages 970-85, December. [Downloadable!] (restricted)
  6. Rodrik, Dani, 1995. "Political economy of trade policy," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 28, pages 1457-1494 Elsevier. [Downloadable!] (restricted)
  7. Boone, Peter, 1996. "Politics and the effectiveness of foreign aid," European Economic Review, Elsevier, vol. 40(2), pages 289-329, February. [Downloadable!] (restricted)
  8. Burnside, Craig & Dollar, David, 1997. "Aid, policies, and growth," Policy Research Working Paper Series 1777, The World Bank. [Downloadable!]
    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Lahiri, Sajal & Raimondos-Møller, Pascalis, 2000. "Special Interest Politics and Aid Fungibility," CEPR Discussion Papers 2482, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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