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Assessing the allocation of Italian foreign aid

Author

Listed:
  • Riccardo Settimo

    () (Bank of Italy)

  • Claudia Maurini

    () (Bank of Italy)

Abstract

This paper provides an assessment of Italian aid policy during the period 1983-2006. In comparison with other donors (DAC and G-7), the main stylized facts are: persistently lower aid/GDP ratio, greater recourse to multilateral channels, a higher percentage of �tied� flows and relatively greater recourse to debt relief. Drawing on the empirical literature on aid allocation, we estimate the determinants of Italy�s bilateral aid. We use three groups of explanatory variables, reflecting national-interest, humanitarian and selectivity-related motivations. We find that the distribution of Italian bilateral resources is significantly affected by both national-interest (like foreign policy or trade) and humanitarian motives, related to recipients� needs; the latter�s role, in particular, seems to have strengthened over time. There is ample room for improving selectivity, i.e., the capacity to direct ODA flows to �deserving� countries, where better policies and institutions are likely to increase aid effectiveness.

Suggested Citation

  • Riccardo Settimo & Claudia Maurini, 2009. "Assessing the allocation of Italian foreign aid," Questioni di Economia e Finanza (Occasional Papers) 43, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:opques:qef_43_09
    as

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    File URL: http://www.bancaditalia.it/pubblicazioni/qef/2009-0043/QEF_43.pdf
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    References listed on IDEAS

    as
    1. Jacky Amprou & Patrick Guillaumont & Sylviane Guillaumont Jeanneney, 2007. "Aid Selectivity According to Augmented Criteria," The World Economy, Wiley Blackwell, vol. 30(5), pages 733-763, May.
    2. Canavire-Bacarreza, Gustavo & Nunnenkamp, Peter & Thiele, Rainer & Triveño, Luis, 2005. "Assessing the allocation of aid: Developmental concerns and the self-interest of donors," Kiel Working Papers 1253, Kiel Institute for the World Economy (IfW).
    3. Dollar, David & Levin, Victoria, 2004. "Increasing selectivity of foreign aid, 1984-2002," Policy Research Working Paper Series 3299, The World Bank.
    4. Dudley, Leonard & Montmarquette, Claude, 1976. "A Model of the Supply of Bilateral Foreign Aid," American Economic Review, American Economic Association, vol. 66(1), pages 132-142, March.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Italian foreign aid; aid allocation; donor motives; economic development.;

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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