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Are 'new' donors different? Comparing the allocation of bilateral aid between non-DAC and DAC donor

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  • Dreher, Axel
  • Nunnenkamp, Peter
  • Thiele, Rainer

Abstract

Major DAC donors are widely criticized for weak targeting of aid, selfish aid motives and insufficient coordination. The emergence of an increasing number of new donors may further complicate the coordination of international aid efforts. On the other hand, new donors (many of which were aid recipients until recently) may have competitive advantages in allocating aid according to need and merit. Project-level data on aid by new donors, as collected by the PLAID initiative, allow for empirical analyses comparing the allocation behavior of new versus old donors. We employ Probit and Tobit models and test for significant differences in the distribution of aid by new and old donors across recipient countries. We find that new donors (i) focus on closer neighbors, (ii) care less for recipient need, (iii) exhibit a weaker bias towards badly governed countries, (iv) respond to disasters, but with fewer resources than old donors, and (v) do not pursue commercial self interest.

Suggested Citation

  • Dreher, Axel & Nunnenkamp, Peter & Thiele, Rainer, 2010. "Are 'new' donors different? Comparing the allocation of bilateral aid between non-DAC and DAC donor," University of Göttingen Working Papers in Economics 96, University of Goettingen, Department of Economics.
  • Handle: RePEc:zbw:cegedp:96
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    Cited by:

    1. Peter Nunnenkamp & Rainer Thiele, 2013. "Financing for Development: The Gap between Words and Deeds since Monterrey," Development Policy Review, Overseas Development Institute, vol. 31(1), pages 75-98, January.
    2. Daniele Pianeselli, 2016. "Does The one who pays the piper really call the tune? OECD and Chinese aid to infrastructure in Sub-Saharan Africa," Departmental Working Papers of Economics - University 'Roma Tre' 0204, Department of Economics - University Roma Tre.
    3. Giles Mohan, 2012. "China in Africa: Impacts and prospects for accountable development," Global Development Institute Working Paper Series esid-012-12, GDI, The University of Manchester.

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    More about this item

    Keywords

    aid allocation; new donors; donor motives; Probit; Tobit;
    All these keywords.

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid

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