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Who's Afraid of Foreign Aid? The Donors' Perspective

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  • Alberto Chong

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  • Mark Gradstein

Abstract

Since efforts by industrial countries to increase the amount of foreign aid they provide have been on the rise recently, it is important to understand the determinants involved. This paper examines the factors affecting support for foreign aid among voters in donor countries. The theoretical model, which considers an endogenous determination of official and private aid flows, suggests that government efficiency is an important factor in this regard, and also ties individual income to aid support through the elasticity of substitution. An empirical analysis of individual attitudes, based on the World Values Surveys, reveals that two factors are positively related to an individual`s willingness to support foreign aid: satisfaction with own government performance and individual relative income. Furthermore, when using donor country data, we find that aid is negatively tied to inequality, corruption and taxes. These results are quite consistent with the analytical framework.

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Paper provided by Inter-American Development Bank, Research Department in its series Research Department Publications with number 4452.

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Date of creation: Mar 2006
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Handle: RePEc:idb:wpaper:4452

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  1. Dudley, Leonard & Montmarquette, Claude, 1976. "A Model of the Supply of Bilateral Foreign Aid," American Economic Review, American Economic Association, vol. 66(1), pages 132-42, March.
  2. Alberto Alesina & David Dollar, 1998. "Who Gives Foreign Aid to Whom and Why?," NBER Working Papers 6612, National Bureau of Economic Research, Inc.
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  19. 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.
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Cited by:
  1. Simone Bertoli & Giovanni Andrea Cornia & Francesco Manaresi, 2008. "Aid Effort and Its Determinants: A Comparison of the Italian Performance with other OECD Donors," Working Papers - Economics wp2008_11.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
  2. Matteo Bobba & Andrew Powell, 2006. "Mediación multilateral de la ayuda extranjera," Research Department Publications 4501, Inter-American Development Bank, Research Department.
  3. Matteo Bobba & Andrew Powell, 2006. "Multilateral Intermediation of Foreign Aid: What is the Trade-Off for Donor Countries?," Research Department Publications 4500, Inter-American Development Bank, Research Department.
  4. Matteo Bobba & Andrew Powell, 2007. "Aid and Growth: Politics Matters," Research Department Publications 4511, Inter-American Development Bank, Research Department.
  5. Armando Barrientos & Daniel Neff, 2011. "Attitudes to Chronic Poverty in the ‘Global Village’," Social Indicators Research, Springer, vol. 100(1), pages 101-114, January.
  6. Matteo Bobba & Andrew Powell, 2007. "Ayuda y crecimiento: La política importa," Research Department Publications 4512, Inter-American Development Bank, Research Department.
  7. Simone Bertoli & Giovanni Andrea Cornia & Francesco Manaresi, 2007. "Aid performance and its determinants. A comparison of Italy with the OECD norm," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 60(242), pages 271-321.
  8. Paxton, Pamela & Knack, Stephen, 2008. "Individual and country-level factors affecting support for foreign aid," Policy Research Working Paper Series 4714, The World Bank.

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