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Are NGOs the Better Donors? A Case Study of Aid Allocation for Sweden

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  • Axel Dreher
  • Florian Mölders
  • Peter Nunnenkamp

Abstract

This paper analyzes whether and to what extent non-governmental organizations (NGOs) outperform official donors by allocating aid in a way that renders effective poverty alleviation more likely. We employ Probit and Tobit models and make use of an exceptionally detailed database that allows an assessment of the allocation of Swedish NGO aid in comparison to the allocation of Swedish official aid. Our results show that NGOs are more selective when deciding about which countries to enter at all. Moreover, in contrast to NGO aid, there is some evidence that political and commercial motives matter for the selection of ODA recipients. However, the Swedish case also supports the skeptical view according to which NGOs are unlikely to outperform official donors by providing better targeted aid when it comes to the allocation across recipients having passed the eligibility test.

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Bibliographic Info

Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1383.

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Length: 38 pages
Date of creation: Oct 2007
Date of revision:
Handle: RePEc:kie:kieliw:1383

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Keywords: Aid allocation; NGO aid; ODA; Sector-specific aid;

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References

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  1. Cohen, Daniel & Sachs, Jeffrey, 1986. "Growth and external debt under risk of debt repudiation," European Economic Review, Elsevier, vol. 30(3), pages 529-560, June.
  2. Canavire-Bacarreza, Gustavo & Nunnenkamp, Peter & Thiele, Rainer & Triveño, Luis, 2006. "Assessing the allocation of aid : developmental concerns and the self-interest of donors," Open Access Publications from Kiel Institute for the World Economy 3983, Kiel Institute for the World Economy (IfW).
  3. Dollar, David & Alesina, Alberto, 2000. "Who Gives Foreign Aid to Whom and Why?," Scholarly Articles 4553020, Harvard University Department of Economics.
  4. Nunnenkamp, Peter & Thiele, Rainer, 2006. "Targeting aid to the needy and deserving : nothing but promises?," Open Access Publications from Kiel Institute for the World Economy 3875, Kiel Institute for the World Economy (IfW).
  5. Alberto Alesina & Beatrice Weder, 1999. "Do Corrupt Governments Receive Less Foreign Aid?," NBER Working Papers 7108, National Bureau of Economic Research, Inc.
  6. Amin, S. & Rai, A.S. & Topa, G., 2000. "Does Microcredit Reach the Poor and Vulnerable? Evidence from Nothern Bangladesh," Papers 28, Chicago - Graduate School of Business.
  7. Robinson, Mark & Riddell, Roger C., 1995. "Non-Governmental Organizations and Rural Poverty Alleviation," OUP Catalogue, Oxford University Press, number 9780198233305.
  8. Michael Clemens & Steven Radelet & Rikhil Bhavnani, 2004. "Counting Chickens When They Hatch: The Short-term Effect of Aid on Growth," Working Papers 44, Center for Global Development.
  9. Collier, Paul & Hoeffler, Anke, 2002. "Aid, policy, and growth in post-conflict societies," Policy Research Working Paper Series 2902, The World Bank.
  10. Cohen, Daniel & Jacquet, Pierre & Reisen, Helmut, 2007. "Loans or Grants," CEPR Discussion Papers 6024, C.E.P.R. Discussion Papers.
  11. Oecd, 2003. "Aid Effectiveness and Selectivity: Integrating Multiple Objectives into Aid Allocations," OECD Journal on Development, OECD Publishing, vol. 4(3), pages 7-40.
  12. McGillivray, Mark, 2003. "Aid Effectiveness and Selectivity: Integrating Multiple Objectives into Aid Allocations," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  13. Collier, Paul & Dollar, David, 1999. "Aid allocation and poverty reduction," Policy Research Working Paper Series 2041, The World Bank.
  14. McGillivray, Mark & Feeny, Simon & Hermes, Niels & Lensink, Robert, 2005. "It Works; It Doesn't; It Can, But That Depends?: 50 Years of Controversy over the Macroeconomic Impact of Development Aid," Working Paper Series RP2005/54, World Institute for Development Economic Research (UNU-WIDER).
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Citations

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Cited by:
  1. Dreher, Axel & Nunnenkamp, Peter & Öhler, Hannes & Weisser, Johannes, 2009. "Acting Autonomously or Mimicking the State and Peers? A Panel Tobit Analysis of Financial Dependence and Aid Allocation by Swiss NGOs," Open Access Publications from Kiel Institute for the World Economy 39946, Kiel Institute for the World Economy (IfW).
  2. Koch, Dirk-Jan & Dreher, Axel & Nunnenkamp, Peter & Thiele, Rainer, 2009. "Keeping a Low Profile: What Determines the Allocation of Aid by Non-Governmental Organizations?," World Development, Elsevier, vol. 37(5), pages 902-918, May.
  3. Malki, Elli, 2008. "Put your money where your mouth is," MPRA Paper 12388, University Library of Munich, Germany.
  4. Peter Nunnenkamp & Janina Weingarth & Johannes Weisser, 2008. "Is NGO Aid Not So Different After All? Comparing the Allocation of Swiss Aid by Private and Official Donors," Kiel Working Papers 1405, Kiel Institute for the World Economy.
  5. Metzger, Laura & Nunnenkamp, Peter & Mahmoud, Toman Omar, 2010. "Is Corporate Aid Targeted to Poor and Deserving Countries? A Case Study of Nestlé's Aid Allocation," World Development, Elsevier, vol. 38(3), pages 228-243, March.
  6. Bjørnskov, Christian, 2010. "Do elites benefit from democracy and foreign aid in developing countries?," Journal of Development Economics, Elsevier, vol. 92(2), pages 115-124, July.
  7. World Bank & International Monetary Fund, 2010. "Global Monitoring Report 2010 : The MDGs after the Crisis," World Bank Publications, The World Bank, number 2444, October.
  8. Paul A. Raschky & Manijeh Schwindt, 2010. "On the Channel and Type of Aid: The Case of International Disaster Assistance," Development Research Unit Working Paper Series 06-10, Monash University, Department of Economics.
  9. Laura Metzger & Peter Nunnenkamp & Toman Omar Mahmoud, 2008. "Does Corporate Aid Really Help Fighting Worldwide Poverty? A Case Study of Nestlé's Aid Allocation," Kiel Working Papers 1414, Kiel Institute for the World Economy.
  10. Dirk-Jan Koch & Ruerd Ruben, 2008. "Spatial Clustering Of NGOs: An Evolutionary Economic Geography Approach," Papers in Evolutionary Economic Geography (PEEG) 0814, Utrecht University, Section of Economic Geography, revised Aug 2008.

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