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Danish Aid Policy: Theory and Empirical Evidence

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Author Info

  • Finn Tarp

    (University of Copenhagen Institute of Economics)

  • Christian F. Bach

    (University of Copenhagen Institute of Economics)

  • Henrik Hansen

    (The Royal Veterinary and Agricultural University, Frederiksberg, Denmark)

  • Søren Baunsgaard

    (University of Copenhagen Institute of Economics)

Abstract

This paper is a study of Danish aid policy from the early 1960s to 1995. It includes (i) a review of officially stated aims and criteria, (ii) a descriptive analysis of actual behaviour in international comparative perspective, (iii) a review of the theoretical and empirical aid allocation literature, and (iv) a series of panel data regressions to further explore how Danish bilateral aid was, in actual fact, distributed country-by-country. A theoretical model explaining how the allocation process took place is also formulated. It underpins the empirical analysis from which it transpires that a two step model is a useful way of analysing Danish aid allocations. The first step is whether to select a country or not, and the second involves the decision of how much aid to commit. The empirical analysis demonstrates that Danish aid has been guided in both steps by officially stated aims and criteria in an expected and statistically significant manner although a clear Eastern and Southern Africa bias was found. Another general result is that the relative weights of the explanatory variables have varied both from year-to-year and between sub-periods.

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Bibliographic Info

Paper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number 98-06.

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Length: 34 pages + tables
Date of creation: May 1998
Date of revision:
Publication status: Published in Gupta, K. (ed.): Foreign Aid: New Perspectives. Norwell MA,1999, pp 149-69
Handle: RePEc:kud:kuiedp:9806

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Related research

Keywords: Danish foreign aid; modelling aid allocation; panel data analysis;

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Citations

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Cited by:
  1. Gravier-Rymaszewska, Joanna, 2012. "How Aid Supply Responds to Economic Crises: A Panel VAR Approach," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  2. Akinkugbe, Oluyele, 2003. "Flow of Foreign Direct Investment to Hitherto Neglected Developing Countries," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  3. Emmanuel Frot & Javier Santiso, 2009. "Herding in Aid Allocation," OECD Development Centre Working Papers 279, OECD Publishing.
  4. Berthelemy, Jean-Claude & Tichit, Ariane, 2004. "Bilateral donors' aid allocation decisions--a three-dimensional panel analysis," International Review of Economics & Finance, Elsevier, vol. 13(3), pages 253-274.
  5. Channing Arndt & Sam Jones & Finn Tarp, 2009. "Aid and Growth: Have We Come Full Circle?," Discussion Papers 09-22, University of Copenhagen. Department of Economics.
  6. Mark McGillivray, 2005. "What determines African bilateral aid receipts?," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(8), pages 1003-1018.
  7. Jean-Claude Berthélemy, 2004. "Bilateralism and multilateralism in official development assistance policies," Cahiers de la Maison des Sciences Economiques bla04104, Université Panthéon-Sorbonne (Paris 1).
  8. 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).
  9. Feeny, Simon, 2003. "What Determines Foreign Aid to Papua New Guinea? An Inter-temporal Model of Aid Allocation," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  10. Jeffery I. Round & Matthew Odedokun, 2010. "Aid Effort and its Determinants," Working Papers id:3211, eSocialSciences.
  11. Round, Jeffery I. & Odedokun, Matthew, 2003. "Aid Effort and its Determinants," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  12. Jean-Claude Berthélemy, 2005. "Bilateral donors' interest vs. Recipients' development motives in aid allocation : do all donors behave the same ?," Cahiers de la Maison des Sciences Economiques bla05001, Université Panthéon-Sorbonne (Paris 1).
  13. Ronald B. Davies & Stephan Klasen, 2013. "Of Donor Coordination, Free-Riding, Darlings, and Orphans: The Dependence of Bilateral Aid on Other Bilateral Giving," CESifo Working Paper Series 4177, CESifo Group Munich.
  14. Fink, Guenther & Redaelli, Silvia, 2009. "Determinants of international emergency aid - humanitarian need only ?," Policy Research Working Paper Series 4839, The World Bank.
  15. McGillivray, Mark, 2003. "Modelling Aid Allocation: Issues, Approaches and Results," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).

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