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Need, Merit and Politics in Multilateral Aid Allocation: A District†level Analysis of World Bank Projects in India


  • Peter Nunnenkamp
  • Hannes Öhler
  • Maximiliano Sosa Andrés


We assess the targeting of foreign aid within recipient countries by employing Poisson estimations on the determinants of the World Bank's allocation of project aid at the district level in India. The evidence of needs†based location choices is very weak as long as the poverty orientation of overall commitments is taken as the yardstick. It is only for some sectors that we find stronger indications of needs†based allocation when combining sector†specific commitments with corresponding measures of need. The evidence for a merit†based allocation of World Bank aid is even weaker. We typically do not find evidence that aid allocation is affected by political patronage at the state or district level. However, the World Bank prefers districts where foreign direct investors may benefit from projects related to infrastructure.

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  • Peter Nunnenkamp & Hannes Öhler & Maximiliano Sosa Andrés, 2017. "Need, Merit and Politics in Multilateral Aid Allocation: A District†level Analysis of World Bank Projects in India," Review of Development Economics, Wiley Blackwell, vol. 21(1), pages 126-156, February.
  • Handle: RePEc:bla:rdevec:v:21:y:2017:i:1:p:126-156
    DOI: 10.1111/rode.12259

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    Cited by:

    1. Christian Bommer & Axel Dreher & Marcello Perez-Alvarez, "undated". "Home bias in humanitarian aid: The role of regional favoritism in the allocation of international disaster relief," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 266, Courant Research Centre PEG.
    2. Knutsen, Tora & Kotsadam, Andreas, 2020. "The political economy of aid allocation: Aid and incumbency at the local level in Sub Saharan Africa," World Development, Elsevier, vol. 127(C).
    3. Michael Chasukwa & Dan Banik, 2019. "Bypassing Government: Aid Effectiveness and Malawi’s Local Development Fund," Politics and Governance, Cogitatio Press, vol. 7(2), pages 103-116.
    4. Eichenauer, Vera Z. & Fuchs, Andreas & Kunze, Sven & Strobl, Eric, 2019. "Distortions in aid allocation of United Nations flash appeals: Evidence from the 2015 Nepal earthquake," Kiel Working Papers 2120, Kiel Institute for the World Economy (IfW).
    5. Dreher, Axel & Fuchs, Andreas & Hodler, Roland & Parks, Bradley C. & Raschky, Paul A. & Tierney, Michael J., 2019. "African leaders and the geography of China's foreign assistance," Journal of Development Economics, Elsevier, vol. 140(C), pages 44-71.
    6. Michael Chasukwa & Dan Banik, 2019. "Institutional bypass and aid effectiveness in Africa," WIDER Working Paper Series wp-2019-22, World Institute for Development Economic Research (UNU-WIDER).
    7. Dipendra, K.C., 2020. "Which aid targets poor at the sub-national level?," World Development Perspectives, Elsevier, vol. 17(C).

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