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Donor ideology and types of foreign aid

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  • Brech, Viktor
  • Potrafke, Niklas

Abstract

We examine how donor government ideology influences the composition of foreign aid flows. We use data for 23 OECD countries over the period 1960-2009 and distinguish between multilateral and bilateral aid, grants and loans, recipient characteristics such as income and political institutions, tied and untied aid, and aid by sector. The results show that leftist governments increased the growth of bilateral grant aid, and more specifically grant aid to least developed and lower middle-income countries. Our findings confirm partisan politics hypotheses because grants are closely analogous to domestic social welfare transfer payments, and poverty and inequality are of greatest concern for less developed recipient countries.

Suggested Citation

  • Brech, Viktor & Potrafke, Niklas, 2013. "Donor ideology and types of foreign aid," Munich Reprints in Economics 20229, University of Munich, Department of Economics.
  • Handle: RePEc:lmu:muenar:20229
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    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • F59 - International Economics - - International Relations, National Security, and International Political Economy - - - Other
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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