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Need, merit, and politics in multilateral aid allocation: A district-level analysis of World Bank projects in India

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  • Nunnenkamp, Peter
  • Öhler, Hannes
  • Sosa Andrés, Maximiliano

Abstract

The targeting of foreign aid within recipient countries is largely unexplored territory. We help close this gap in empirical research on aid allocation by employing Poisson estimations on the determinants of the World Bank's choice of project locations at the district level in India. The evidence of needs-based location choices is very weak, even though World Bank activities tend to concentrate in relatively remote districts. Spatial lags prove to be significant and positive pointing to regional clustering. Institutional conditions matter insofar as project locations cluster in districts belonging to states with greater openness to trade. We do not find any evidence that location choices are affected by political patronage at the state or district level. However, the World Bank prefers districts where foreign direct investors may benefit from projects related to infrastructure.

Suggested Citation

  • Nunnenkamp, Peter & Öhler, Hannes & Sosa Andrés, Maximiliano, 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 (IfW).
  • Handle: RePEc:zbw:ifwkwp:1783
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    References listed on IDEAS

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    Cited by:

    1. Isaksson, Ann-Sofie & Kotsadam, Andreas, 2018. "Racing to the bottom? Chinese development projects and trade union involvement in Africa," World Development, Elsevier, vol. 106(C), pages 284-298.
    2. Mohamed Mounir Sraieb, 2015. "An Empirical Model for U.S. Foreign Aid Allocation," Working Papers ECARES ECARES 2015-48, ULB -- Universite Libre de Bruxelles.

    More about this item

    Keywords

    Aid allocation; World Bank; Indian districts; Political constituency;

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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