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Does Marketisation of Aid Reduce the Country-level Poverty Targeting of Private Aid Agencies?


  • Dirk-Jan Koch
  • Judith Westeneng
  • Ruerd Ruben


This article addresses the question whether private aid agencies (PAAs) that operate in a market-like environment prefer to target different countries compared to their counterparts that operate in a more protected environment. The mainstream view is that competition for funds leads to a focus on middle-income countries where PAAs can easily obtain results. An alternative view considers PAA country choice more dependent on donor priorities. We collected data on aid allocation from 15 private agencies in Germany, Norway and the United States. The German organisations, which operate in the most protected environment, are least focused on the politically and economically poorly performing countries, whereas Norwegian and US-based private agencies show a higher degree of poor-country targeting. These results suggest that critics of marketisation may overestimate its pitfalls regarding country allocation. The poor-country targeting of PAAs proved to be related to the country choices made by bilateral donors, indicating the merit of the slipstream hypothesis. Cet article pose la question de savoir si les destinataires de l'aide des agences privées qui travaillent dans un environnement concurrentiel sont différents de ceux des agences d'aide qui travaillent dans un environnement plus protégé. Traditionnellement on considère que la concurrence pour l'obtention des fonds tend à favoriser les pays à revenus intermédiaires où les agences d'aide privées peuvent plus facilement obtenir des résultats. Une vision alternative considère que le choix des pays par les agences d'aide privées dépend plus des priorités des donateurs. Nous avons rassemblé des données sur l'allocation de l'aide par 15 agences privées d'Allemagne, de Norvège et des Etats Unis. Les organisations allemandes qui opèrent dans un environnement plus protégé sont moins centrées sur les pays peu performants d'un point de vue économique et politique alors que les agences provenant de Norvège et des Etats Unis ciblent plus facilement les pays pauvres. Ces résultats suggèrent que les critiques de la marchandisation de l'aide surestiment probablement les écueils liés à son allocation. Le ciblage des pays pauvres par les agences d'aide privées est fortement induit par les choix des donateurs bilatéraux indiquant ainsi les mérites de l'hypothèse alternative.

Suggested Citation

  • Dirk-Jan Koch & Judith Westeneng & Ruerd Ruben, 2007. "Does Marketisation of Aid Reduce the Country-level Poverty Targeting of Private Aid Agencies?," The European Journal of Development Research, Taylor and Francis Journals, vol. 19(4), pages 636-657.
  • Handle: RePEc:taf:eurjdr:v:19:y:2007:i:4:p:636-657
    DOI: 10.1080/09578810701667730

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    Cited by:

    1. Peter Nunnenkamp & Hannes Öhler, 2012. "Funding, Competition and the Efficiency of NGOs : An Empirical Analysis of Non‐charitable Expenditure of US NGOs Engaged in Foreign Aid," Kyklos, Wiley Blackwell, vol. 65(1), pages 81-110, February.
    2. Koch, Dirk-Jan & Dreher, Axel & Nunnenkamp, Peter & Thiele, Rainer, 2009. "Keeping a Low Profile: What Determines the Allocation of Aid by Non-Governmental Organizations?," World Development, Elsevier, vol. 37(5), pages 902-918, May.
    3. Dreher, Axel & Mölders, Florian & Nunnenkamp, Peter, 2007. "Are NGOs the better donors? A case study of aid allocation for Sweden," Kiel Working Papers 1383, Kiel Institute for the World Economy (IfW).
    4. Axel Dreher & Florian Mölders & Peter Nunnenkamp, 2010. "Aid Delivery through Non-governmental Organisations: Does the Aid Channel Matter for the Targeting of Swedish Aid?," The World Economy, Wiley Blackwell, vol. 33(2), pages 147-176, February.
    5. Nunnenkamp, Peter & Weingarth, Janina & Weisser, Johannes, 2009. "Is NGO aid not so different after all? Comparing the allocation of Swiss aid by private and official donors," European Journal of Political Economy, Elsevier, vol. 25(4), pages 422-438, December.
    6. Luc Fransen, 2013. "The Embeddedness of Responsible Business Practice: Exploring the Interaction Between National-Institutional Environments and Corporate Social Responsibility," Journal of Business Ethics, Springer, vol. 115(2), pages 213-227, June.
    7. Metzger, Laura & Nunnenkamp, Peter & Omar Mahmoud, Toman, 2008. "Does corporate aid really help fighting worldwide poverty? A case study of Nestlé's aid allocation," Kiel Working Papers 1414, Kiel Institute for the World Economy (IfW).

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