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International Development Aid Allocation Determinants

  • Tapas Mishra


    (Department of Economics, Swansea University, UK)

  • Bazoumana Ouattara


    (Department of Economics, Swansea University, UK)

  • Mamata Parhi


    (WISERD and Department of Economics, Swansea University, UK)

This paper investigates the factors explaining aid allocation by bilateral and multilateral donors. We use data for 146 aid recipient countries over the period 1990-2007 and employ Bayesian Averaging of Classical Estimates Approach (BACE) approach and find that both the recipient need and donor interest motives are `significant' determinants of bilateral and multilateral aid allocation process. Our results also indicate that the measures for recipient need and donor interests vary from bilateral to multilateral donors. For example, with respect to the recipient need, we find that while income per capita matters in the allocation of multilateral aid, for bilateral donors the size of population, as an indicator of recipient need, is a key element in the allocation process. Similar findings also hold for democracy/governance indicators.

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Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 32 (2012)
Issue (Month): 2 ()
Pages: 1385-1403

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Handle: RePEc:ebl:ecbull:eb-11-00879
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  1. Alberto Alesina & David Dollar, 1998. "Who Gives Foreign Aid to Whom and Why?," NBER Working Papers 6612, National Bureau of Economic Research, Inc.
  2. Alberto Alesina & Beatrice Weder, 2002. "Do Corrupt Governments Receive Less Foreign Aid?," American Economic Review, American Economic Association, vol. 92(4), pages 1126-1137, September.
  3. Berthelemy, Jean-Claude & Tichit, Ariane, 2004. "Bilateral donors' aid allocation decisions--a three-dimensional panel analysis," International Review of Economics & Finance, Elsevier, vol. 13(3), pages 253-274.
  4. Hansen, Henrik & Tarp, Finn, 2000. "Aid and Growth Regressions," MPRA Paper 62288, University Library of Munich, Germany.
  5. Carl-Johan Dalgaard & Henrik Hansen & Finn Tarp, 2004. "On The Empirics of Foreign Aid and Growth," Economic Journal, Royal Economic Society, vol. 114(496), pages F191-F216, 06.
  6. Michael A. Clemens & Steven Radelet & Rikhil Bhavnani, 2004. "Counting chickens when they hatch: The short-term effect of aid on growth," International Finance 0407010, EconWPA.
  7. Gustavo Canavire & Peter Nunnenkamp & Rainer Thiele & Luis Triveño, 2005. "Assessing the Allocation of Aid: Developmental Concerns and the Self-Interest of Donors," Kiel Working Papers 1253, Kiel Institute for the World Economy.
  8. 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, 08.
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