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Are 'new' donors different? Comparing the allocation of bilateral aid between non-DAC and DAC donor

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  • Dreher, Axel
  • Nunnenkamp, Peter
  • Thiele, Rainer

Abstract

Major DAC donors are widely criticized for weak targeting of aid, selfish aid motives and insufficient coordination. The emergence of an increasing number of new donors may further complicate the coordination of international aid efforts. On the other hand, new donors (many of which were aid recipients until recently) may have competitive advantages in allocating aid according to need and merit. Project-level data on aid by new donors, as collected by the PLAID initiative, allow for empirical analyses comparing the allocation behavior of new versus old donors. We employ Probit and Tobit models and test for significant differences in the distribution of aid by new and old donors across recipient countries. We find that new donors (i) focus on closer neighbors, (ii) care less for recipient need, (iii) exhibit a weaker bias towards badly governed countries, (iv) respond to disasters, but with fewer resources than old donors, and (v) do not pursue commercial self interest. --

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Bibliographic Info

Paper provided by University of Goettingen, Department of Economics in its series Center for European, Governance and Economic Development Research Discussion Papers with number 96.

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Date of creation: 2010
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Handle: RePEc:zbw:cegedp:96

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Keywords: aid allocation; new donors; donor motives; Probit; Tobit;

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References

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  1. Peter Kragelund, 2008. "The Return of Non-DAC Donors to Africa: New Prospects for African Development?," Development Policy Review, Overseas Development Institute, Overseas Development Institute, vol. 26(5), pages 555-584, 09.
  2. Sanjeev Gupta & Catherine A. Pattillo & Smita Wagh, 2006. "Are Donor Countries Giving More or Less Aid?," IMF Working Papers, International Monetary Fund 06/1, International Monetary Fund.
  3. Sanjeev Gupta & Catherine Pattillo & Smita Wagh, 2006. "Are Donor Countries Giving More or Less Aid?," Review of Development Economics, Wiley Blackwell, Wiley Blackwell, vol. 10(3), pages 535-552, 08.
  4. Barro, Robert J. & Lee, Jong-Wha, 2005. "IMF programs: Who is chosen and what are the effects?," Journal of Monetary Economics, Elsevier, Elsevier, vol. 52(7), pages 1245-1269, October.
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  7. Alberto Alesina & Beatrice Weder, 1999. "Do Corrupt Governments Receive Less Foreign Aid?," NBER Working Papers 7108, National Bureau of Economic Research, Inc.
  8. Eric Neumayer, 2004. "Arab-related Bilateral and Multilateral Sources of Development Finance: Issues, Trends, and the Way Forward," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 27(2), pages 281-300, 02.
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  10. Kilby, Christopher, 2005. "Donor Influence in MDBs: the Case of the Asian Development Bank," Vassar College Department of Economics Working Paper Series, Vassar College Department of Economics 70, Vassar College Department of Economics.
  11. Axel Dreher & Nathan Jensen, 2003. "Independent Actor or Agent? An Empirical Analysis of the impact of US interests on IMF Conditions," International Finance, EconWPA 0310004, EconWPA, revised 08 Jan 2004.
  12. Christopher Kilby, 2009. "Donor influence in international financial institutions: Deciphering what alignment measures measure," Villanova School of Business Department of Economics and Statistics Working Paper Series, Villanova School of Business Department of Economics and Statistics 8, Villanova School of Business Department of Economics and Statistics.
  13. Kilby, Christopher, 2009. "The political economy of conditionality: An empirical analysis of World Bank loan disbursements," Journal of Development Economics, Elsevier, Elsevier, vol. 89(1), pages 51-61, May.
  14. Richard Manning, 2006. "Will 'Emerging Donors' Change the Face of International Co-operation?," Development Policy Review, Overseas Development Institute, Overseas Development Institute, vol. 24(4), pages 371-385, 07.
  15. Dollar, David & Levin, Victoria, 2006. "The Increasing Selectivity of Foreign Aid, 1984-2003," World Development, Elsevier, Elsevier, vol. 34(12), pages 2034-2046, December.
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