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Lobbying by Ethnic Groups and Aid Allocation

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  • Sajal Lahiri
  • Pascalis Raimondos-Møller

Abstract

We develop a political-economic model of foreign aid allocation. Each ethnic group in the donor country lobbies the government for allocating more aid to its country of origin, and the government accepts contributions from lobby groups. Initial per-capita income of the recipients and those of the ethnic groups are shown to be important determinants of the solution of the political equilibrium. We also examine the effects of changes in the degree of corruption, aid fatigue, and ethnic composition, in the donor country on the allocation of aid.

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File URL: http://www.econ.ku.dk/epru/files/wp/wp9905.PDF
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Bibliographic Info

Paper provided by Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics in its series EPRU Working Paper Series with number 99-05.

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Date of creation: Jan 1999
Date of revision: Oct 2003
Handle: RePEc:kud:epruwp:99-05

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