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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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    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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