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Of Donor Coordination, Free-Riding, Darlings, and Orphans: The dependence of bilateral aid commitments on other bilateral giving

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  • Klasen, Stephan
  • Davies, Ronald B.

Abstract

Using data from 1988 to 2007, we examine to what extent bilateral aid flows of an individual donor to a country depend on aid flows from all other bilateral and multilateral donors to that country. We thereby want to assess to what extent donor coordination, free-riding, selectivity, and common donor motivations drive bilateral aid allocation as these determinants would point to different dependence structures. Using approaches from spatial econometrics and controlling for endogeneity using an GMM framework, we find that other bilateral flows lead to a significant (but rather small) increase in aid flows from a particular donor. The effects are particularly pronounced for so-called donor 'orphans' who seem to be collectively shunned by bilateral aid donors. This suggests that donor coordination and free-riding are quantitatively less important than common donor interests and selectivity.

Suggested Citation

  • Klasen, Stephan & Davies, Ronald B., 2011. "Of Donor Coordination, Free-Riding, Darlings, and Orphans: The dependence of bilateral aid commitments on other bilateral giving," Proceedings of the German Development Economics Conference, Berlin 2011 47, Verein für Socialpolitik, Research Committee Development Economics.
    • Handle: RePEc:zbw:gdec11:47
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    Cited by:

    1. Peter Nunnenkamp & Hannes Öhler & Rainer Thiele, 2013. "Donor coordination and specialization: did the Paris Declaration make a difference?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(3), pages 537-563, September.
    2. Barthel, Fabian & Neumayer, Eric & Nunnenkamp, Peter & Selaya, Pablo, 2014. "Competition for Export Markets and the Allocation of Foreign Aid: The Role of Spatial Dependence among Donor Countries," World Development, Elsevier, vol. 64(C), pages 350-365.
    3. Andreas Fuchs & Peter Nunnenkamp & Hannes Öhler, 2015. "Why Donors of Foreign Aid Do Not Coordinate: The Role of Competition for Export Markets and Political Support," The World Economy, Wiley Blackwell, vol. 38(2), pages 255-285, February.
    4. Fuchs, Andreas & Dreher, Axel & Nunnenkamp, Peter, 2014. "Determinants of Donor Generosity: A Survey of the Aid Budget Literature," World Development, Elsevier, vol. 56(C), pages 172-199.
    5. Abrams M E Tagem, 2017. "Analysing the determinants of health aid allocation in sub-Saharan Africa," Discussion Papers 2017-09, University of Nottingham, CREDIT.
    6. Knack, Stephen & Xu, Lixin Colin & Zou, Ben, 2014. "Interactions among donors'aid allocations : evidence from an exogenous World Bank income threshold," Policy Research Working Paper Series 7039, The World Bank.
    7. Öhler, Hannes, 2013. "Do Aid Donors Coordinate Within Recipient Countries?," Working Papers 0539, University of Heidelberg, Department of Economics.
    8. Granath, Louise, 2016. "The rise of China: Competing or complementary to DAC aid flows in Africa?," Working Papers in Economics 671, University of Gothenburg, Department of Economics.
    9. repec:awi:wpaper:539 is not listed on IDEAS

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