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Why Donors of Foreign Aid Do Not Coordinate: The Role of Competition for Export Markets and Political Support

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  • Andreas Fuchs
  • Peter Nunnenkamp
  • Hannes Öhler

Abstract

type="main" xml:id="twec12213-abs-0001"> Development assistance has been criticised for a lack of coordination between aid donors. This paper argues that competition for export markets and political support prevents donor countries from coordinating their aid activities between one another. To test these hypotheses, we perform logit and fractional logit estimations for a large sample of recipient countries and aid activities since the early 1970s. Our empirical results reveal that export competition between donors is a major impediment to aid coordination. Although less conclusive, we also find some evidence that donors' competition over political support prevents them from coordinating aid activities more closely.

Suggested Citation

  • 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.
  • Handle: RePEc:bla:worlde:v:38:y:2015:i:2:p:255-285
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    1. repec:spr:revint:v:12:y:2017:i:2:d:10.1007_s11558-017-9275-2 is not listed on IDEAS
    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. Mohamed Mounir Sraieb, 2015. "An Empirical Model for U.S. Foreign Aid Allocation," Working Papers ECARES ECARES 2015-48, ULB -- Universite Libre de Bruxelles.
    4. Gallemore, Caleb & Jespersen, Kristjan, 2016. "Transnational Markets for Sustainable Development Governance: The Case of REDD+," World Development, Elsevier, vol. 86(C), pages 79-94.
    5. Peter Nunnenkamp & Albena Sotirova & Rainer Thiele, 2016. "Do Aid Donors Specialize and Coordinate within Recipient Countries? The case of Malawi," Development Policy Review, Overseas Development Institute, vol. 34(6), pages 831-849, November.
    6. repec:bla:devpol:v:35:y:2017:i::p:o64-o79 is not listed on IDEAS
    7. Bickenbach, Frank & Mbelu, Asithandile & Nunnenkamp, Peter, 2017. "Is foreign aid concentrated increasingly on needy and deserving recipient countries? An analysis of Theil indices, 1995-2015," Kiel Working Papers 2078, Kiel Institute for the World Economy (IfW).
    8. Schrader, Klaus & Bencek, David & Laaser, Claus-Friedrich, 2013. "IfW-Krisencheck: Alles wieder gut in Griechenland?," Kiel Discussion Papers 522/523, Kiel Institute for the World Economy (IfW).
    9. repec:bla:devpol:v:35:y:2017:i:4:p:531-548 is not listed on IDEAS

    More about this item

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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