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Targeting Aid to the Needy and Deserving: Nothing But Promises?

  • Peter Nunnenkamp
  • Gustavo Canavire
  • Luis Triveño

By reallocating aid to where it is needed most and where a productive use is most likely, donors could help alleviate poverty in developing countries. The rhetoric of donors suggests that this insight has increasingly shaped the allocation of aid. However, we find little evidence supporting the view that the targeting of aid has improved significantly. Most donors provide higher aid to relatively poor countries, but so far the fight against poverty has not resulted in a stronger focus on recipient countries with particularly high incidence of absolute poverty. Many donors failed to direct aid predominantly to where local conditions were conducive to a productive use of inflows. The response of donors to changing institutional and policy conditions in recipient countries turns out to be fairly weak. In particular, we reject the proposition that multilateral donor institutions provide better targeted aid than bilateral donors.

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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1229.

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Length: 51 pages
Date of creation: Oct 2004
Date of revision:
Handle: RePEc:kie:kieliw:1229
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  1. Michael A. Clemens & Steven Radelet, 2003. "The Millennium Challenge Account: How Much is Too Much, How Long is Long Enough?," Working Papers 23, Center for Global Development.
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  12. Oecd, 2002. "Aid volume, channels and allocations for poverty reduction," OECD Journal on Development, OECD Publishing, vol. 3(3), pages 33-46.
  13. Nunnenkamp, Peter, 2002. "IWF und Weltbank: trotz aller Mängel weiterhin gebraucht?," Kiel Discussion Papers 388, Kiel Institute for the World Economy (IfW).
  14. William Easterly, 2002. "The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262550423, June.
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  16. Berthelemy, Jean-Claude & Tichit, Ariane, 2004. "Bilateral donors' aid allocation decisions--a three-dimensional panel analysis," International Review of Economics & Finance, Elsevier, vol. 13(3), pages 253-274.
  17. Boone, Peter, 1996. "Politics and the effectiveness of foreign aid," European Economic Review, Elsevier, vol. 40(2), pages 289-329, February.
  18. Peter Nunnenkamp, 2002. "Shooting the Messenger of Good News: A Critical Look at the World Bank's Success Story of Effective Aid," Kiel Working Papers 1103, Kiel Institute for the World Economy.
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