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Who's Afraid of Foreign Aid?: The Donors' Perspective

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  • Gradstein, Mark
  • Chong, Alberto E.

Abstract

Since efforts by industrial countries to increase the amount of foreign aid they provide have been on the rise recently, it is important to understand the determinants involved. This paper examines the factors affecting support for foreign aid among voters in donor countries. The theoretical model, which considers an endogenous determination of official and private aid flows, suggests that government efficiency is an important factor in this regard, and also ties individual income to aid support through the elasticity of substitution. An empirical analysis of individual attitudes, based on the World Values Surveys, reveals that two factors are positively related to an individual's willingness to support foreign aid: satisfaction with own government performance and individual relative income. Furthermore, when using donor country data, we find that aid is negatively tied to inequality, corruption and taxes. These results are quite consistent with the analytical framework.

Suggested Citation

  • Gradstein, Mark & Chong, Alberto E., 2006. "Who's Afraid of Foreign Aid?: The Donors' Perspective," IDB Publications (Working Papers) 1573, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:1573
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    Cited by:

    1. Bobba, Matteo & Powell, Andrew, 2006. "Multilateral Intermediation of Foreign Aid: What is the Trade-Off for Donor Countries?," IDB Publications (Working Papers) 1602, Inter-American Development Bank.
    2. 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.
    3. Matteo Bobba & Andrew Powell, 2006. "Mediación multilateral de la ayuda extranjera," Research Department Publications 4501, Inter-American Development Bank, Research Department.
    4. 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.
    5. Paxton, Pamela & Knack, Stephen, 2008. "Individual and country-level factors affecting support for foreign aid," Policy Research Working Paper Series 4714, The World Bank.
    6. Matteo Bobba & Andrew Powell, 2007. "Aid and Growth: Politics Matters," Research Department Publications 4511, Inter-American Development Bank, Research Department.
    7. Berrittella, Maria, 2017. "Can stability of foreign aid agreement reduce global income inequality?," Economic Analysis and Policy, Elsevier, vol. 54(C), pages 105-111.
    8. Matteo Bobba & Andrew Powell, 2007. "Ayuda y crecimiento: La política importa," Research Department Publications 4512, Inter-American Development Bank, Research Department.
    9. 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.
    10. 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.
    11. 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.
    12. Bobba, Matteo & Powell, Andrew, 2007. "Aid Effectiveness: Politics Matters," IDB Publications (Working Papers) 1598, Inter-American Development Bank.

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