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What Determines Bilateral Aid Allocations? Evidence From Time Series Data


  • Simon Feeny
  • Mark McGillivray


This paper models the allocation of bilateral foreign development aid to developing countries. A simple theoretical framework is developed, in which aid is treated as a private good of a donor country bureaucratic group responsible for bilateral aid allocation. This model is applied to time series data for ten principal recipients of bilateral official development assistance. Features of this application are that it caters for the joint determination of aid allocations and for donor allocation behavior to differ among individual recipient countries. Results indicate that both recipient need and donor interest variables determine the amount of foreign aid to developing countries, and that donor allocation behavior often differs markedly among recipients. Copyright © 2008 The Authors. Journal compilation © 2008 Blackwell Publishing Ltd.

Suggested Citation

  • Simon Feeny & Mark McGillivray, 2008. "What Determines Bilateral Aid Allocations? Evidence From Time Series Data," Review of Development Economics, Wiley Blackwell, vol. 12(3), pages 515-529, August.
  • Handle: RePEc:bla:rdevec:v:12:y:2008:i:3:p:515-529

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    Cited by:

    1. Tapas Mishra & Bazoumana Ouattara & Mamata Parhi, 2012. "International Development Aid Allocation Determinants," Economics Bulletin, AccessEcon, vol. 32(2), pages 1385-1403.
    2. Anke Hoeffler & Verity Outram, 2008. "Need, Merit or Self-Interest - What Determines the Allocation of Aid?," Economics Series Working Papers CSAE WPS/2008-19, University of Oxford, Department of Economics.
    3. Stubbs, Thomas H. & Kentikelenis, Alexander E. & King, Lawrence P., 2016. "Catalyzing Aid? The IMF and Donor Behavior in Aid Allocation," World Development, Elsevier, vol. 78(C), pages 511-528.
    4. 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.
    5. Axel Dreher & Peter Nunnenkamp & Maya Schmaljohann, 2015. "The Allocation of German Aid: Self-interest and Government Ideology," Economics and Politics, Wiley Blackwell, vol. 27(1), pages 160-184, March.
    6. Hausman, William J. & Neufeld, John L. & Schreiber, Till, 2014. "Multilateral and bilateral aid policies and trends in the allocation of electrification aid, 1970–2001," Utilities Policy, Elsevier, vol. 29(C), pages 54-62.
    7. Gnangnon, Sèna Kimm, 2017. "Structural economic vulnerability, openness and bilateral development aid flows," Economic Analysis and Policy, Elsevier, vol. 53(C), pages 77-95.
    8. repec:wsi:jicepx:v:08:y:2017:i:03:n:s1793993317500144 is not listed on IDEAS
    9. Kafayat Amusa & Nara Monkam & Nicola Viegi, 2016. "The Political and Economic Dynamics of Foreign Aid: A Case Study of United States and Chinese Aid to Sub-Sahara Africa," Working Papers 201628, University of Pretoria, Department of Economics.
    10. Katharina Stepping, 2012. "The determinants of selection and allocation decisions for health assistance. Which role do health indicators play?," MAGKS Papers on Economics 201231, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    11. 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, vol. 39(8), pages 1281-1293, August.
    12. Katharina Stepping, 2012. "Do poor health conditions lead to higher allocation of development assistance?," MAGKS Papers on Economics 201230, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    13. Lars M. Johansson & Jan Pettersson, 2008. "Tied Aid, Trade-Facilitating Aid or Trade-Diverting Aid?," DEGIT Conference Papers c013_008, DEGIT, Dynamics, Economic Growth, and International Trade.
    14. Abrams M E Tagem, 2017. "Analysing the determinants of health aid allocation in sub-Saharan Africa," Discussion Papers 2017-09, University of Nottingham, CREDIT.
    15. Carro, Martha & Larrú, José María, 2010. "Flowing Together or Flowing Apart: An Analysis of the Relation between FDI and ODA Flows to Argentina and Brazil," MPRA Paper 25064, University Library of Munich, Germany.
    16. Pallas, Sarah Wood & Ruger, Jennifer Prah, 2017. "Effects of donor proliferation in development aid for health on health program performance: A conceptual framework," Social Science & Medicine, Elsevier, vol. 175(C), pages 177-186.
    17. Kilolo, Jean-Marc Malambwe, 2013. "Country size, trade liberalization and transfers," MPRA Paper 47996, University Library of Munich, Germany.

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