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Why donors of foreign aid do not coordinate: The role of competition for export markets and political support

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  • Fuchs, Andreas
  • Nunnenkamp, Peter
  • Öhler, Hannes

Abstract

Development assistance has been criticized for a lack of coordination between aid donors. This paper argues that competition for export markets and political support prevents donor countries from closer coordination of aid activities. To test these hypotheses, we perform logit and fractional logit estimations for a large sample of recipient countries and aid activities since the early 1970s. Our empirical results reveal that export competition between donors is a major impediment to aid coordination. Tough less conclusive, we also find some evidence that donors' competition over political support prevents them from coordinating aid activities more closely.

Suggested Citation

  • Fuchs, Andreas & Nunnenkamp, Peter & Öhler, Hannes, 2013. "Why donors of foreign aid do not coordinate: The role of competition for export markets and political support," Kiel Working Papers 1825, Kiel Institute for the World Economy (IfW).
  • Handle: RePEc:zbw:ifwkwp:1825
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    References listed on IDEAS

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    1. Matteo Bobba & Andrew Powell, 2006. "Multilateral Intermediation of Foreign Aid: What is the Trade-Off for Donor Countries?," IDB Publications (Working Papers) 1602, Inter-American Development Bank.
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    6. Klasen, Stephan & Davies, Ronald B., 2011. "Of Donor Coordination, Free-Riding, Darlings, and Orphans: The dependence of bilateral aid commitments on other bilateral giving," Proceedings of the German Development Economics Conference, Berlin 2011 47, Verein für Socialpolitik, Research Committee Development Economics.
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    Citations

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    Cited by:

    1. Peter Nunnenkamp & Albena Sotirova & Rainer Thiele, 2016. "Do Aid Donors Specialize and Coordinate within Recipient Countries? The case of Malawi," Development Policy Review, Overseas Development Institute, vol. 34(6), pages 831-849, November.
    2. repec:spr:revint:v:13:y:2018:i:3:d:10.1007_s11558-017-9280-5 is not listed on IDEAS
    3. Mohamed Mounir Sraieb, 2015. "An Empirical Model for U.S. Foreign Aid Allocation," Working Papers ECARES ECARES 2015-48, ULB -- Universite Libre de Bruxelles.
    4. repec:spr:revint:v:12:y:2017:i:2:d:10.1007_s11558-017-9275-2 is not listed on IDEAS
    5. Bernhard Reinsberg & Centre for Business Research, 2018. "Blockchain Technology and the Governance of Foreign Aid," Working Papers wp505, Centre for Business Research, University of Cambridge.
    6. Barthel, Fabian & Neumayer, Eric & Nunnenkamp, Peter & Selaya, Pablo, 2014. "Competition for Export Markets and the Allocation of Foreign Aid: The Role of Spatial Dependence among Donor Countries," World Development, Elsevier, vol. 64(C), pages 350-365.
    7. Bickenbach, Frank & Mbelu, Asithandile & Nunnenkamp, Peter, 2017. "Is foreign aid concentrated increasingly on needy and deserving recipient countries? An analysis of Theil indices, 1995-2015," Kiel Working Papers 2078, Kiel Institute for the World Economy (IfW).
    8. Schrader, Klaus & Bencek, David & Laaser, Claus-Friedrich, 2013. "IfW-Krisencheck: Alles wieder gut in Griechenland?," Kiel Discussion Papers 522/523, Kiel Institute for the World Economy (IfW).
    9. repec:bla:devpol:v:35:y:2017:i::p:o64-o79 is not listed on IDEAS
    10. repec:bla:devpol:v:35:y:2017:i:4:p:531-548 is not listed on IDEAS
    11. Gallemore, Caleb & Jespersen, Kristjan, 2016. "Transnational Markets for Sustainable Development Governance: The Case of REDD+," World Development, Elsevier, vol. 86(C), pages 79-94.

    More about this item

    Keywords

    development aid; donor coordination; trade interests; export similarity; UN voting;

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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