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Who gives aid to whom and when? Aid accelerations, shocks and policies

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  • Brück, Tilman
  • Xu, Guo

Abstract

We address the pitfalls of averaging by exploiting the longitudinal variation in aid to identify sudden and sharp increases in aid flows. Focusing on specific events, we test if aid accelerations correspond to policies and shocks in the recipient country. We find that positive regime changes and wars are significant predictors of aid accelerations. The results also suggest the presence of aid spill-overs, where neighbors of war-torn countries are almost as likely to experience large aid inflows. Disaggregating aid flows by donors, we find some indicative evidence for competing allocation rules among European donors. We argue that drivers of aid accelerations differ from drivers of average aid flows—a distinction that can help reconcile some of the ambiguous empirical results in the aid literature.

Suggested Citation

  • Brück, Tilman & Xu, Guo, 2012. "Who gives aid to whom and when? Aid accelerations, shocks and policies," European Journal of Political Economy, Elsevier, vol. 28(4), pages 593-606.
  • Handle: RePEc:eee:poleco:v:28:y:2012:i:4:p:593-606
    DOI: 10.1016/j.ejpoleco.2012.05.011
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    Cited by:

    1. 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.
    2. Yasemin Bal Gündüz & Masyita Crystallin, 2018. "Do IMF programs catalyze donor assistance to low-income countries?," The Review of International Organizations, Springer, vol. 13(3), pages 359-393, September.
    3. Tobias Heinrich & Matt W. Loftis, 2019. "Democracy Aid and Electoral Accountability," Journal of Conflict Resolution, Peace Science Society (International), vol. 63(1), pages 139-166, January.
    4. Berrittella, Maria, 2017. "Can stability of foreign aid agreement reduce global income inequality?," Economic Analysis and Policy, Elsevier, vol. 54(C), pages 105-111.
    5. Udvari, Beáta & Dávid Kiss, Gábor & Pontet, Julianna, 2016. "Challenges of Missing Data in Analyses of Aid Activity: The Case of US Aid Activity," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 39(1-2), pages 1-25, March-Jun.
    6. Tilman Brück & Olaf J de Groot & Friedrich Schneider, 2011. "The economic costs of the German participation in the Afghanistan war," Journal of Peace Research, Peace Research Institute Oslo, vol. 48(6), pages 793-805, November.
    7. Stubbs, Thomas H. & Kentikelenis, Alexander E. & King, Lawrence P., 2016. "Catalyzing Aid? The IMF and Donor Behavior in Aid Allocation," World Development, Elsevier, vol. 78(C), pages 511-528.
    8. Hicks, Daniel L. & Hicks, Joan Hamory & Maldonado, Beatriz, 2016. "Women as policy makers and donors: Female legislators and foreign aid," European Journal of Political Economy, Elsevier, vol. 41(C), pages 46-60.
    9. Michael Brzoska & Raphael Bossong & Eric van Um, 2011. "Security Economics in the European Context: Implications of the EUSECON Project," Economics of Security Working Paper Series 58, DIW Berlin, German Institute for Economic Research.
    10. Young, Andrew T. & Sheehan, Kathleen M., 2014. "Foreign aid, institutional quality, and growth," European Journal of Political Economy, Elsevier, vol. 36(C), pages 195-208.
    11. repec:elg:eechap:15325_15 is not listed on IDEAS
    12. Nagae, Akira & Katayama, Hajime & Takase, Koichi, 2022. "Donor aid allocation and accounting standards of recipients," Economic Modelling, Elsevier, vol. 106(C).
    13. Hagen, Rune Jansen, 2014. "Rents and the Political Economy of Development Aid," Working Papers in Economics 07/14, University of Bergen, Department of Economics.

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    More about this item

    Keywords

    ODA; Growth acceleration; Policies;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General

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