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Survey of Foreign Aid: History, Trends and Allocation


Author Info

  • Peter Hjertholm

    (Institute of Economics, University of Copenhagen)

  • Howard White

    (University of Sussex, IDS)


This paper (i) traces the historical origins of foreign aid, (ii) investigates tren­ds in the volume, composition, allocation and quality of aid flows, and (iii) reviews the empirical literature on aid allocation. The paper concludes that, historically, aid has served a multitude of objectives. For some donors, the allocation and quality of aid have been largely shaped by concern for the development needs of recipients. By contrast, the foreign aid of some larger donors has been used principally as a foreign and commercial policy tool. Yet while this particular character of aid flows may well have impaired the effectiveness of aid, there is no automatic contradiction between donor and recipient objectives. Perhaps the most important change in the aid picture is the reversal after 1992 of the historic upward trend in aid volumes. This may not be a problem when smaller aid flows are compensated by private flows, as has happened in several developing countries. Yet it may be a problem in low-income countries without access to private capital, which continue to rely on aid for financial resources. The underlying premises of donor-recipient cooperation are very different when aid resources become more limited, especially when debt service is still a factor of significance. The need to keep objectives and rationales clear turn out to be even more important.

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Bibliographic Info

Paper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number 00-04.

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Length: 131 pages
Date of creation: Mar 2000
Date of revision:
Handle: RePEc:kud:kuiedp:0004

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Related research

Keywords: Foreign Aid; Aid Allocation;

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Cited by:
  1. Harrigan, Jane & Wang, Chengang, 2011. "A New Approach to the Allocation of Aid Among Developing Countries: Is the USA Different from the Rest?," World Development, Elsevier, Elsevier, vol. 39(8), pages 1281-1293, August.
  2. Jean-Michel Severino & Pierre Jacquet, 2004. "Prêter, donner : comment aider ?," Revue d'Économie Financière, Programme National Persée, Programme National Persée, vol. 74(1), pages 285-317.
  3. Cepparulo, Alessandra & Giuriato, Luisa, 2009. "Aid Financing of Global Public Goods: an Update," MPRA Paper 22625, University Library of Munich, Germany.
  4. Alessandra Cepparulo & Luisa Giuriato, 2012. "Global Challenges and Country-Specific Responses through Aid Financing of Global Public Goods," Working Papers, University of Rome La Sapienza, Department of Public Economics 156, University of Rome La Sapienza, Department of Public Economics.


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