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Needs-Based Targeting or Favoritism? The Regional Allocation of Multilateral Aid within Recipient Countries

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  • Hannes Öhler
  • Peter Nunnenkamp

Abstract

The regional allocation of aid within recipient countries has been largely ignored in the aid allocation literature. We use geocoded data on the location of aid projects financed by the World Bank and the African Development Bank within a sample of 27 recipient countries to assess the claim of donors that their aid targets needy population segments. We also assess whether political leaders in these countries direct aid funds to their home region, irrespective of regional needs. We do not find that the multilateral aid institutions take regional needs into account. Instead, favoritism appears to play an important role for location choices, in particular for physical infrastructure projects

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Bibliographic Info

Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1838.

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Length: 35 pages
Date of creation: Mar 2013
Date of revision:
Handle: RePEc:kie:kieliw:1838

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Keywords: aid allocation; within-country targeting; favoritism; World Bank; African Development Bank;

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  1. Stijn Claessens & Danny Cassimon & Bjorn Van Campenhout, 2009. "Evidence on Changes in Aid Allocation Criteria," World Bank Economic Review, World Bank Group, vol. 23(2), pages 185-208, June.
  2. Roland Hodler & Paul Raschky, 2010. "Foreign Aid and Enlightened Leaders," Development Research Unit Working Paper Series 54-10, Monash University, Department of Economics.
  3. Dollar, David & Levin, Victoria, 2006. "The Increasing Selectivity of Foreign Aid, 1984-2003," World Development, Elsevier, vol. 34(12), pages 2034-2046, December.
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