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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)

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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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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
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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;

Find related papers by JEL classification:
C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data
F35 - International Economics - - International Finance - - - Foreign Aid
O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Gang, Ira N. & Lehman, James A., 1990. "New directions or not: USAID in Latin America," World Development, Elsevier, vol. 18(5), pages 723-732, May. [Downloadable!] (restricted)
  2. Dudley, Leonard & Montmarquette, Claude, 1976. "A Model of the Supply of Bilateral Foreign Aid," American Economic Review, American Economic Association, vol. 66(1), pages 132-42, March. [Downloadable!] (restricted)
  3. McGillivray, Mark & Oczkowski, Edward, 1991. "Modelling the Allocation of Australian Bilateral Aid: A Two-Part Sample Selection Approach," The Economic Record, The Economic Society of Australia, vol. 67(197), pages 147-52, June.
  4. Mcgillivray, M. & White, H., 1993. "Explanatory studies of aid allocation among developing countries : a critical survey," Working Papers - General Series 148, Institute of Social Studies. [Downloadable!]
  5. Burnside, Craig & Dollar, David, 1997. "Aid, policies, and growth," Policy Research Working Paper Series 1777, The World Bank. [Downloadable!]
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Frot, Emmanuel & Santiso, Javier, 2009. "Herding in Aid Allocation," SITE Working Paper Series 5, Stockholm Institute of Transition Economics, Stockholm School of Economics, revised 02 Oct 2009. [Downloadable!]
    Other versions:
  2. Akinkugbe, Oluyele, 2003. "Flow of Foreign Direct Investment to Hitherto Neglected Developing Countries," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  3. 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). [Downloadable!]
  4. Mark McGillivray, 2005. "What determines African bilateral aid receipts?," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(8), pages 1003-1018. [Downloadable!]
  5. Peter Hjertholm & Howard White, 2000. "Survey of Foreign Aid: History, Trends and Allocation," Discussion Papers 00-04, University of Copenhagen. Department of Economics. [Downloadable!]
  6. Berthelemy, Jean-Claude & Tichit, Ariane, 2002. "Bilateral Donors' Aid Allocation Decisions: A Three-dimensional Panel Analysis," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
    Other versions:
  7. Fink, Guenther & Redaelli, Silvia, 2009. "Determinants of international emergency aid - humanitarian need only ?," Policy Research Working Paper Series 4839, The World Bank. [Downloadable!]
  8. Round, Jeffery I. & Odedokun, Matthew, 2003. "Aid Effort and its Determinants," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  9. Feeny, Simon, 2003. "What Determines Foreign Aid to Papua New Guinea? An Inter-temporal Model of Aid Allocation," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  10. 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). [Downloadable!]
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