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An Empirical Model for U.S. Foreign Aid Allocation

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  • Mohamed Mounir Sraieb

Abstract

This paper revisits the U.S. foreign aid drivers and addresses two shortcomingsin the literature on aid allocation. The first relates to the widespread use of staticmodels for aid allocation, despite of the general recognition that inertia may be akey determinant of donors’ decisions. The second, concerns the divergence betweenthe importance given to merit-based motivations for aid provision in donors’ officialdeclarations, on the one hand, and the poor measurement of such motivations inempirical studies, on the other hand. This paper combines a dynamic modeling thataccounts for inertia, a proper treatment of the sample selection problem, and mostimportantly, uses proxies for the merit-based motivations in the spirit of the “WashingtonConsensus” requirements. Next, the paper moves beyond existing studies bymeasuring the relative importance to the U.S. of need, merit-based, and self-interestmotivations. Furthermore, the analysis explores the link between the relative importanceof the motivation vectors and the geographic distribution of aid recipients.This allows to explain why conditionality, an integral part of most aid contracts, isnot enforced with the same rigor by the same donor when dealing with geographicallydifferent recipients.

Suggested Citation

  • Mohamed Mounir Sraieb, 2015. "An Empirical Model for U.S. Foreign Aid Allocation," Working Papers ECARES ECARES 2015-48, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:eca:wpaper:2013/221416
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    References listed on IDEAS

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    4. Dreher, Axel & Sturm, Jan-Egbert & Vreeland, James Raymond, 2009. "Development aid and international politics: Does membership on the UN Security Council influence World Bank decisions?," Journal of Development Economics, Elsevier, vol. 88(1), pages 1-18, January.
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    More about this item

    Keywords

    development aid; inertia; dynamic panel; aid motivations; merit-based motivation; recipient need; strategic interest;

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General

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