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Survey of Foreign Aid: History, Trends and Allocation

Author

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  • Peter Hjertholm

    (Institute of Economics, University of Copenhagen)

  • Howard White

    (University of Sussex, IDS)

Abstract

This paper (i) traces the historical origins of foreign aid, (ii) investigates tren­ds in the volume, composition, allocation and quality of aid flows, and (iii) reviews the empirical literature on aid allocation. The paper concludes that, historically, aid has served a multitude of objectives. For some donors, the allocation and quality of aid have been largely shaped by concern for the development needs of recipients. By contrast, the foreign aid of some larger donors has been used principally as a foreign and commercial policy tool. Yet while this particular character of aid flows may well have impaired the effectiveness of aid, there is no automatic contradiction between donor and recipient objectives. Perhaps the most important change in the aid picture is the reversal after 1992 of the historic upward trend in aid volumes. This may not be a problem when smaller aid flows are compensated by private flows, as has happened in several developing countries. Yet it may be a problem in low-income countries without access to private capital, which continue to rely on aid for financial resources. The underlying premises of donor-recipient cooperation are very different when aid resources become more limited, especially when debt service is still a factor of significance. The need to keep objectives and rationales clear turn out to be even more important.

Suggested Citation

  • Peter Hjertholm & Howard White, 2000. "Survey of Foreign Aid: History, Trends and Allocation," Discussion Papers 00-04, University of Copenhagen. Department of Economics.
  • Handle: RePEc:kud:kuiedp:0004
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    File URL: http://www.econ.ku.dk/english/research/publications/wp/2000/0004.pdf/
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Alessandra Cepparulo & Luisa Giuriato, 2012. "Global Challenges and Country-Specific Responses through Aid Financing of Global Public Goods," Working Papers 156, University of Rome La Sapienza, Department of Public Economics.
    2. Philip Michael Kargbo & Kunal Sen, 2014. "Aid Categories that Foster Pro-Poor Growth: The Case of Sierra Leone," African Development Review, African Development Bank, vol. 26(2), pages 416-429, June.
    3. Hasret Balcioglu, 2016. "Foreign Aid and Economic Growth: A Panel Cointegration for Selected Turkic Republics," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 6(6), pages 17-23, June.
    4. Atsuko Tanaka, "undated". "Notes on Foreign Aid Selectivity Based on Human Capital," Working Papers 2015-23, Department of Economics, University of Calgary, revised 27 Sep 2015.
    5. Martinez, Pablo, 2015. "The impact of foreign aid on economic growth," MPRA Paper 66588, University Library of Munich, Germany.
    6. Pierre Jacquet & Jean-Michel Severino, 2004. "Prêter, donner : comment aider ?," Revue d'Économie Financière, Programme National Persée, vol. 74(1), pages 285-317.
    7. Harrigan, Jane & Wang, Chengang, 2011. "A New Approach to the Allocation of Aid Among Developing Countries: Is the USA Different from the Rest?," World Development, Elsevier, vol. 39(8), pages 1281-1293, August.
    8. Cepparulo, Alessandra & Giuriato, Luisa, 2009. "Aid Financing of Global Public Goods: an Update," MPRA Paper 22625, University Library of Munich, Germany.

    More about this item

    Keywords

    Foreign Aid; Aid Allocation;

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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