An equal-opportunity approach to the allocation of international aid
How should international aid be distributed? The most common view is according to some utilitarian formula: in order to maximize the average growth rate of aid recipients or the growth rate of income of the class of recipient countries. Recently, the World Bank  has published a study demonstrating the importance of good economic management, within a recipient country, in transforming aid into economic growth. We identify good economic management with e ort, and ask, how should aid be distributed to equalize opportunities [among recipient countries] for achieving growth, according to Roemer''s  theory of equal opportunity. In addition, we calculate how aid should be distributed according to a utilitarian view. Both the equal-opportunity and utilitarian recommendations are less compensatory than actual aid policy (they would give less to many African countries than present policy does). We discuss the results.
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Research Department Publications
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