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Who’s Afraid of Foreign Aid? The Donors’ Perspective

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  • Alberto Chong
  • Mark Gradstein

Abstract

With efforts across the industrial countries to increase the amount of foreign aid mounting, it is important to understand its determinants. This paper examines the factors affecting the support for foreign aid among voters in donor countries. A simple theoretical model, which considers an endogenous determination of official and private aid flows, relates individual income to aid support through the elasticity of substitution and also suggests that government efficiency is an important factor in this regard. The empirical analysis of individual attitudes, based on the World Values Surveys, reveals that satisfaction with own government performance and individual relative income are positively related to the willingness to provide foreign aid. Furthermore, when using donor country data we find that aid is adversely affected by government inefficiency and income inequality.

Suggested Citation

  • Alberto Chong & Mark Gradstein, 2006. "Who’s Afraid of Foreign Aid? The Donors’ Perspective," CESifo Working Paper Series 1833, CESifo.
  • Handle: RePEc:ces:ceswps:_1833
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    Cited by:

    1. Matteo Bobba & Andrew Powell, 2007. "Aid and Growth: Politics Matters," Research Department Publications 4511, Inter-American Development Bank, Research Department.
    2. Barrientos Armando & Villa Juan Miguel, 2015. "Evaluating Antipoverty Transfer Programmes in Latin America and Sub-Saharan Africa. Better Policies? Better Politics?," Journal of Globalization and Development, De Gruyter, vol. 6(1), pages 147-179, June.
    3. Beletskaya, M., 2019. "Bilateral International Assistance: Factors for Donor Countries," Journal of the New Economic Association, New Economic Association, vol. 43(3), pages 95-114.
    4. Matteo Bobba & Andrew Powell, 2006. "Multilateral Intermediation of Foreign Aid: What is the Trade-Off for Donor Countries?," Research Department Publications 4500, Inter-American Development Bank, Research Department.
    5. Simone Bertoli & Giovanni Andrea Cornia & Francesco Manaresi, 2007. "Aid performance and its determinants. A comparison of Italy with the OECD norm," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 60(242), pages 271-321.
    6. Matteo Bobba & Andrew Powell, 2006. "Mediación multilateral de la ayuda extranjera," Research Department Publications 4501, Inter-American Development Bank, Research Department.
    7. Paxton, Pamela & Knack, Stephen, 2008. "Individual and country-level factors affecting support for foreign aid," Policy Research Working Paper Series 4714, The World Bank.
    8. Berrittella, Maria, 2017. "Can stability of foreign aid agreement reduce global income inequality?," Economic Analysis and Policy, Elsevier, vol. 54(C), pages 105-111.
    9. Matteo Bobba & Andrew Powell, 2007. "Ayuda y crecimiento: La política importa," Research Department Publications 4512, Inter-American Development Bank, Research Department.
    10. Simone Bertoli & Giovanni Andrea Cornia & Francesco Manaresi, 2007. "Aid performance and its determinants. A comparison of Italy with the OECD norm," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 60(242), pages 271-321.
    11. Armando Barrientos & Daniel Neff, 2011. "Attitudes to Chronic Poverty in the ‘Global Village’," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 100(1), pages 101-114, January.
    12. Bobba, Matteo & Powell, Andrew, 2011. "Aid Effectiveness: Politics Matters," IDB Publications (Working Papers) 1598, Inter-American Development Bank.

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    Keywords

    foreign aid; donors; perceptions; development; corruption;
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