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Needs-Based Targeting or Favoritism? The Regional Allocation of Multilateral Aid within Recipient Countries

  • Hannes Öhler
  • Peter Nunnenkamp

The regional allocation of aid within recipient countries has been largely ignored in the aid allocation literature. We use geocoded data on the location of aid projects financed by the World Bank and the African Development Bank within a sample of 27 recipient countries to assess the claim of donors that their aid targets needy population segments. We also assess whether political leaders in these countries direct aid funds to their home region, irrespective of regional needs. We do not find that the multilateral aid institutions take regional needs into account. Instead, favoritism appears to play an important role for location choices, in particular for physical infrastructure projects

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File URL: https://www.ifw-members.ifw-kiel.de/publications/needs-based-targeting-or-favoritism-the-regional-allocation-of-multilateral-aid-within-recipient-countries/KWP_1838.pdf
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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1838.

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Length: 35 pages
Date of creation: Mar 2013
Date of revision:
Handle: RePEc:kie:kieliw:1838
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  1. Robert K. Fleck & Christopher Kilby, 2009. "Changing Aid Regimes? U.S. Foreign Aid from the Cold War to the War on Terror," Villanova School of Business Department of Economics and Statistics Working Paper Series 1, Villanova School of Business Department of Economics and Statistics.
  2. Stijn Claessens & Danny Cassimon & Bjorn Van Campenhout, 2009. "Evidence on Changes in Aid Allocation Criteria," World Bank Economic Review, World Bank Group, vol. 23(2), pages 185-208, June.
  3. Dollar, David & Levin, Victoria, 2006. "The Increasing Selectivity of Foreign Aid, 1984-2003," World Development, Elsevier, vol. 34(12), pages 2034-2046, December.
  4. Roland Hodler & Paul A. Raschky, 2010. "Foreign Aid and Enlightened Leaders," Working Papers 10.05, Swiss National Bank, Study Center Gerzensee.
  5. Peter Nunnenkamp & Hannes Öhler & Maximiliano Sosa Andrés, 2012. "Need, Merit, and Politics in Multilateral Aid Allocation: A District-Level Analysis of World Bank Projects in India," Kiel Working Papers 1783, Kiel Institute for the World Economy.
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