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Empirical Evidence on the New International Aid Architecture

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Author Info
Stijn Claessens
Danny Cassimon
Bjorn Van Camperhout

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Abstract

We study how 22 donors allocate their bilateral aid among 147 recipient countries over the 1970- 2004 period to investigate whether changes in the international aid architecture?at the international and country level?have led to changes in behavior. We find that after the fall of the Berlin wall, and especially in the late nineties, bilateral aid responds more to economic need and the quality of a recipient country's policy and institutional environment and less to debt, size, and colonial linkages. Importantly, we find that when a country uses a PRSP and passes the HIPC decision point the perverse effect of large bilateral and multilateral debt shares on aid flows is reduced, suggesting less defensive lending. Overall, it appears international aid architecture changes have led to more selectivity in aid allocations. The specific factors causing these changes remain unclear, however. Furthermore, there remain large differences among donors in selectivity that appear to relate to donors' own institutional environments. Together this suggests that further reforms will have to be multifaceted.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 07/277.

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Length: 53 pages
Date of creation: 14 Dec 2007
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Handle: RePEc:imf:imfwpa:07/277

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  3. Jacky Amprou & Patrick Guillaumont & Sylviane Guillaumont Jeanneney, 2007. "Aid Selectivity According to Augmented Criteria," The World Economy, Blackwell Publishing, vol. 30(5), pages 733-763, 05. [Downloadable!] (restricted)
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  8. Jean-Claude Berthélemy, 2006. "Bilateral Donors' Interest vs. Recipients' Development Motives in Aid Allocation: Do All Donors Behave the Same?," Review of Development Economics, Blackwell Publishing, vol. 10(2), pages 179-194, 05. [Downloadable!] (restricted)
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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. Thorsten Drautzburg & Inna Melnykovska & Rainer Schweickert, 2008. "Which Membership Matters? External vs. Internal Determinants of Institutional Change in Transition Countries," Kiel Working Papers 1421, Kiel Institute for the World Economy. [Downloadable!]
  2. Ezequiel Cabezon & Tej Prakash, 2008. "Public Financial Management and Fiscal Outcomes in sub-Saharan African Heavily-Indebted Poor Countries," IMF Working Papers 08/217, International Monetary Fund. [Downloadable!]
  3. Ansgar Belke & Ingo Bordon & Inna Melnykovska & Rainer Schweickert, 2009. "Prospective Membership and Institutional Change in Transition Countries," Kiel Working Papers 1562, Kiel Institute for the World Economy. [Downloadable!]
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