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Been much debate on this forum about it.
If both players are still avaliable who do you want?
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I expect to be in the minority here, but I don't think PG's and leaders are typically invented...they are born.
No doubt Westbrook's ceiling is higher, but I want to see some experience at PG. Unless someone can distinguish what Westbrook would bring versus Quis, I would stick with Augustin...
Westbrook is tempting because of his defense, but he seems less likely to be a starter than Augustin down the road because he's not a PG but is the size of one. At least Augustin seems capable of being a respectable, if unspectacular, starting PG down the road.
I voted other because I think either would help the Pacers. Since we need both a big and a point, I think Bird and company will take who they think is best and then try to trade for what they didn't get.
my god, NEITHER please...this augustin or westbrook talk is becoming very annoying and really pains me as a pacers fan...
Last edited by croz24; 05-22-2008 at 12:56 AM.
We should be looking to move up in the draft. Besides, if we should keep the 11th there should be enough decent bigs to get at 11
Haggard's Blog: Can't Buy a Basket. Covering the highs and lows of the NBL
Neither of these players are going to excel at the NBA level. They will both be career backups. The temptation for Bird to draft another 6'7 guy who can play multiple positions (Brandon Rush) will prove too tempting.
Sometimes a player's greatest challenge is coming to grips with his role on the team. -- Scottie Pippen
I think the big man options at 11 are better than the guard options, I voted neither.
I would trade for a point (chicago) then draft a big (Love)
I think Westbrook has the potential to be a Bruce Bowen type at worst, which is sorely needed on any team.
I think Augustin would make a difference now on this team that lacks a starting caliber point guard.
Westbrook has that very very high ceiling and seems to be willing to work as well. You have to be patient with him, but in 5 years from now it could be Westbrook is a potential all defense 2nd teamer and Augustin is a nominal starting point guard.
I understand the opposite side where Augustin could be a very good starting point guard and Westbrook is Freddie Jones annd though I don't think you should reach on potential only at 11 and for this team.
I think you keep the future in mind and say Westbrook could be a key cog in a contending team, potentially. So I picked Westbrook, I teetered on picking other and saying Love.
If its any conselation, I don't think 2 of the 3 will be there and Augustin is probably the pick, but its early in the process.
I would fine with either...I think Augustin is a purer point guard and more likely to be an NBA starter, but I think Westbrook could be a really good pro.
I think both could contribute next year.
How long has it been since the fastest man on the floor was in a Pacer uniform?
And I won't be here to see the day
It all dries up and blows away
I'd hang around just to see
But they never had much use for me
In Levelland. (James McMurtry)
Augustin. Westbrook is more versatile but he isn't a real good SG or a real good PG - he's sort of a morph between the two and typically those aren't as successful in the NBA as players who are a "pure" one or the other.
Augustin is a pure PG.
That said, I think the Pacers should find a way to trade either up to the top 5 or down to about 20. I'm not sold on either of these guys. The top 5 are the monster talents while I think you can get someone at around 20 who'll help you as much as picking at 11.
The poster formerly known as Rimfire
A repeat of stuff I've already said.
1) This team is not "one PG away". This is a rebuild with plenty of holes to patch.
2) DJ doesn't appear to be much of a step up from Diener to me. Calls his own number too much and he's not a great defender.
3) Westbrook is not a PG solution. That's not why I take him. He's a defensive SG that will be forced to drive more than spot up. You have a lanky SF who likes to spot up so you don't really need your SG to be the same. Let Westbrook be the off-the-dribble threat and the break out on a steal threat. Let Danny be the bomber. Then go fix the PG, PF, C and contract issues that are still on the board.
Other than much better hops, quickness, speed, defense and nose for the ball, not much.Unless someone can distinguish what Westbrook would bring versus Quis,
BTW, I don't dislike DJ or Quis. And Kofi spent months ticked off that I wasn't lapping up W'brook as a PG solution. But I've seen these guys play enough to know that W'Brook isn't just flukey, he's got insane physical talent and does apply it in a scrappy jack-of-all-trades way. The Pacers can certainly use a bit of that, even if its nowhere near solving all their problems or even a good chunk of them.
Don't expect this pick to be the new star and it shouldn't be a problem. Barring Bease-Rose falling to 11.
Travis Best? Mike Williams? Dudley Bradley? Not sure if that was true on a regular basis in any of those cases even.How long has it been since the fastest man on the floor was in a Pacer uniform?
Last edited by Naptown_Seth; 05-22-2008 at 11:20 AM.
Westbrook reminds me too much of Antonio Daniels and Keyon Dooling. I'm not too high on Augustin either. He'll be a Travis Best-type: too good to be a backup but not quite good enough to start. But the thought of Diener playing 40 mins a night next year while Tins nurses another random injury makes me slightly nauseous.
basketbawful.com- The best of the worst of professional basketball. And there's a lot of it.
pretty much spot on...i'd rather have one of the players available at 20, than reaching for westbrook or augustin. neither of those two will amount to much at the nba level.
I put Westbrook and other. If I had to choose between the 2, then I'd go with Westbrook. I think he could compliment Dunleavy well in our starting lineup.
I put other because I'd rather see us trade up or trade down or even take a big rather than either of those guards.
I'm starting to think I'd rather see us take Love than either of these PG's.
I'd rather trade down into the 20's and see what kind of guard we could scoop up there.
You, Never? Did the Kenosha Kid?
I still think CDR will be a very effective NBA SG - and I'm gonna stick with that until he proves me wrong.
The poster formerly known as Rimfire
Oh, I think we'd take Love easy, but he'd have to fall to us first.
And I've gotten to the point where I just don't believe these mock drafts. We'd trade down into the mid-20s and Rush and CDR would have been taken 15-20.
Come to the Dark Side -- There's cookies!
I went with Westbrook. His upside is just too high to pass up. Chad Ford compared him to Rajon Rondo, but Westbrook is bigger, stronger, and a better shooter than Rondo. Westbrook has 20 ppg, 6 apg, 4 rpg potential to go along with some top-tier defense. That's too good to pass up. Of course other teams realize how good Westbrook is, so there's no way he's still there at #11, but we can dream, can't we?
Last edited by Jared Jammer; 05-22-2008 at 12:24 PM.
I hope we just choose the best talent available and then hit the trade market if necessary.
IMO, who the Pacers draft will depend greatly on three primary factors:
1) who Bird/O'Brien views as the core players. (We'll get to that in a moment);
2) what position they feel is in need of an upgrade; and,
3) whether they feel a desperate need to upgrade said position now or if they believe they can afford to wait a year or 2 for the draftee to develop.
Of course, there is a forth option if you will:
4) picking the best players available @ #11 and trading him to get the more experienced player(s) you want.
Now, let's talk about each of the above factors.
1. Both Bird and coach O'Brien agree that Granger, Dunleavy and JO make up the core players. (For Bird's assessment of the core players, see the question from the linked article herein that inquires about the nucleus of the team right above JO's picture; for Jim O'Brien's perspective, listen to his last radio show; link provided below.)
Key reserves: Diener, Graham (recently signed new contract w/the Pacers), Shawn Williams and Jeff Foster
Looking at this list of seven players, the one position that cannot easily be changed by one of the inner-changeable players is PG.
2. In an April 17th interview w/Conrad Brunner, as well as coach O'Brien's last radio show of the season, coach was very specific about the need to "shore up the PG position" with "defensive toughness". The question then becomes how desperate are they to upgrade this position? Which leads us to item #3.
3. The Pacers used five different players at the Point last year: Tinsley, Diener, Flip Murray, Quis and Owens. It's clear that neither Owens nor Murray will be back next year - Owens moreso because he lacks overall skill at the Point, and Murray because he's not a true PG and because the Pacers already have a unique "combo-Guard" in Quis, but in truth he didn't run the Point very well either. That leaves Tinsley and Diener as the Pacers only two viable PGs. Odds are Tinsley won't be back next year (per the radio show link above), but if he does return, it's likely he'll lose his starting role because of his lack of dependability (health wise, but there are obviously other factors that go along with his dependability issues). So, how desperate are the Pacers to upgrade at the Point? I'd say very, but they're not in panic mode just yet. Which leads me to item #4 - picking the best player available and trading him to get a more experienced player (or players). I doubt that will happen, but it remains a plausable option.
Admittedly, the Pacers haven't faired very well when trying to pick up a PG through FA. They had a solid backup in Darrel Armstrong, but let him go due to his age and lack of quickness (though you had to admire the defensive effort he put forth, as well as his seemingly tireless energy; I'd have kept him myself, but I'm not the team's decision maker...). Over the years, they've played "patch-work" at the Point continuously seeking out a viable backup for Tinsley. But in recent years, it's become more and more apparent that despite Tinsley's talents at running the offense, he's not very durable and, thus, can't be relied on for extended play throughout any given season. So, now TPTB are re-thinking their approach to the PG position. Instead of finding "patches" to fill the reserve PG spot in case Tinsley goes down, they want to find a reliable PG for the near future who can defend, score and create shots for himself. And that leds us to where we are now trying to guess who the Pacers might take in the draft.
Among the three leading candidates, D. J. Augustin, Russell Westbrook and Eric Gordon, it is my opinion based on details as outlined above that the Pacers will select Westbrook. NBADraft.net describes Westbrook as follows:
"Attacks the basket with a lethal first step and crossover ability … Can handle the rock well and gets into the lane effortlessly … Huge wingspan allows him to play much bigger than his 6-3 height … Solid passer with unselfishness, always looks for the open man … Has an excellent mid-range game … A gym rat, really works hard to improve … Has a great attitude, extremely coachable … Has the potential to be a big-time scorer when given the chance … Really excels defensively and has a chance to develop into a great defender …Must become better at handling ball pressure at the point guard position."
The only negative on this guy seems to be that he gets alittle rattled when pressed hard (either in the half-court or when doubled). In time, this is something that he can overcome. The key selling point, obviously, is his ability to play solid defense which is what Bird and JOB have both stressed as vital from this position. Now, I'd love to get Augustin because this guy he's a bonafied play maker (based on the scouting report and what I've seen of him), but we've got Granger, Graham and to a limited degree Dunleavy and Quis for that. What the Pacers need is a solid, all-around PG who can pass, shot well from the field, has the ability to finish at the rim AND defend well. Westbrook seems to have all those traits. Of course, the debate will continue until draft night. So, let the debates go on...
Last edited by NuffSaid; 05-22-2008 at 02:37 PM.


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Looks like the Polish Hammer is establishing himself as the long term center for the Suns.
That leaves last year's darling Robin Lopez a bit out in the cold. Granted he was not having a good year even before the trade that brought Gortat. But he's still a fairly decent big man prospect. And as the Suns roster stands now, the front court of Gortat and Frye seems set for the immediate future, so they might be willing to move Robin if it relieves them of one of their mediocre players with long contracts. In particular, Childress and Warrick can't get playing time despite getting signed to long contracts just last summer.
How about something like R. Lopez and Warrick for Foster? Warrick's contract (2 years $9m after this one) isn't that bad, and we could use another PF. I think that the Suns would ask us to take back Childress instead that though - his 4 years $28m remaining is as ugly as any of the other contracts that went out to mediocre players last summer.
Thoughts? Would you do either version - Lopez + Warrick or Lopez + Childress, for expiring contracts?

subset: commoncrawl


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Replication Datasets
AidData has assembled a collection of replication datasets associated with scholarly research on aid allocation and aid effectiveness. Whenever possible, there is a link to the computer code that is necessary to replicate the results reported in a particular publication. If you have published a peer-reviewed journal article or book and would like to have your replication dataset and computer code posted in this collection, please send an email to firstname.lastname@example.com.
Datasets by Year
Foreign Aid and Domestic Taxation: Multiple Sources, One Conclusion
Author: Paul Clist
Journal: Development Policy Review Vol. 34, Iss. 3, 2016
Replication Data: Access Here
Abstract: There are influential studies that argue that foreign aid displaces domestic tax revenue when it is given in the form of grants. These claims are based on data that are deeply problematic: several different sources are amalgamated into one dataset, with no apparent checks on compatibility. In this article, a variety of econometric strategies are used to overcome these issues of data quality. The resulting weight of evidence points to a modest but positive effect on the part of foreign aid generally on domestic tax revenue. Fears over a negative effect for aid grants appear unwarranted, and are accounted for by the inappropriate use of data or endogeneity issues.
Take the Money and Run: The Determinants of Compliance with Aid Agreements
Author: Desha M. Girod and Jennifer L. Tobin
Journal: International Organization Vol. 70, Iss. 1, 2016
Replication Data: Access Here Under Supplementary Materials
Abstract: Conditions on aid agreements aim to increase aid effectiveness, and are, therefore, an important component of aid agreements. Yet little is known about why aid-recipient governments comply with these conditions. Some scholars have suggested a strategic-importance hypothesis: recipients comply when donors enforce conditions—and donors enforce conditions when recipients are not strategically important. However, there are many cases where strategically important countries comply with conditions and strategically unimportant countries fail to do so. We argue that to explain compliance, we must also understand how the desire to maximize revenue from major income sources, such as FDI and natural resource rents, changes the recipient's incentive to comply. Using data on World Bank records of compliance from 1964 to 2010, we find strong support for our hypotheses even after accounting for different model specifications and potential endogeneity. Paradoxically, donors can secure compliance from recipients for reasons unrelated to the promise of additional aid.
Democracy or Accountability? Governance and Social Spending in Africa
Author: Stephanie Kumah and Samuel Brazys
Journal: Development Studies Vol. 52, Iss. 2, 2016
Replication Data: Download Here
Abstract: In recent years, democracy has often served as shorthand for good governance when considering what facilitates development-friendly public expenditure. While recognising the sufficiency of democracy, we argue that it is accountability, achievable outside full democracy, that is the necessary component of governance. However, vague conceptualisations of accountability as 'responsiveness' or 'answerability' have prevented empirical work from exploring the relationship between accountability and public spending. In this paper we develop an understanding of accountability as the interaction between opposition, transparency, and enforcement and test its impact on social spending in Africa in both the presence and absence of electoral institutions.
Do Performance Measures of Donors' Aid Allocation Underperform?
Author: Paul Clist
Journal: The World Economy Vol. 38, Iss. 5, 2016
Replication Data: Access Here
Abstract: Indices of donor performance abound. Their recent popularity has occurred within the context of pessimism over aid's impact and optimism over the effect of changes in donor behaviour. Rankings of donor allocative performance aim to change donor behaviour, either through direct pressure on governments or indirectly through public engagement. The indices themselves rely on descriptive measures, and typically claim methodological superiority over positive alternatives due to their simplicity. However, there are two problems. First, measures do not seem robust to simple variations in methodology. Second, correlation amongst competing indices is low, leading to a host of contradictory judgements. This offers neither clear technical guidance nor consistent political pressure. The advantages and disadvantages of the approach are discussed, building upon the more general critique of aggregate indices. I suggest a graphical solution that embraces the advantages of the descriptive approach (including ease of public communication) while avoiding some of its major weaknesses (which typically stem from aggregation).
Rogue Aid? An Empirical Analysis of China's Aid Allocation
Authors: Axel Dreher and Andreas Fuchs
Journal: Canadian Journal of Economics Vol. 48, Iss. 3, 2015
Replication Data: Download Here
Abstract: Foreign aid from China is often characterized as "rogue aid" that is guided by selfish interests alone. We collect data on Chinese project aid, food aid, medical staff and total aid money to developing countries, covering the 1956–2006 period, to empirically test to what extent self-interests shape China's aid allocation. While political considerations shape China's allocation of aid, China does not pay substantially more attention to politics compared to Western donors. What is more, China's aid allocation seems to be widely independent of recipients' endowment with natural resources and institutional characteristics. Overall, denoting Chinese aid as "rogue aid" seems unjustified.
Tracking Under-Reported Financial Flows: China's Development Finance and the Aid-Conflict Nexus Revisited
Author: Austin M. Strange, Axel Dreher, Andreas Fuchs, Bradley Parks, and Michael J. Tierney
Journal: Forthcoming, Journal of Conflict Resolution, 2015
Replication Data: Download Here
Abstract: China's provision of development finance to other countries is sizable but reliable information is scarce. We introduce a new open-source methodology for collecting project-level development finance information and create a database of Chinese official finance to Africa from 2000-2011. We find that China's commitments amounted to approximately US$ 73 billion, of which US$ 15 billion are comparable to Official Development Assistance following OECD definitions. We provide details on 1,511 projects to 50 African countries. We use this database to extend previous research on aid and conflict, which suffers from omitted-variable bias due to the exclusion of Chinese development finance. Our results show that sudden withdrawals of 'traditional' aid no longer induce conflict in the presence of sufficient alternative funding from China. Our findings highlight the importance of gathering more complete data on the development activities of 'non-traditional donors' to better understand the link between aid and conflict.
Citation: Strange, Austin M., Axel Dreher, Andreas Fuchs, Bradley Parks, and Michael J. Tierney. Forthcoming. Tracking Under-Reported Financial Flows: China's Development Finance and the Aid-Conflict Nexus Revisited. Journal of Conflict Resolution.
Did Aid Promote Democracy in Africa? The Role of Technical Assistance in Africa's Transitions
Author: Clark Gibson, Barak Hoffman, Ryan Jablonski
Journal: World Development Vol. 68, pp. 323-335, 2015
Replication Data: Download Here
Abstract: Did foreign aid impede or catalyze democratization in Africa in the 1990s? We argue that after the Cold War, donors increased their use of technical assistance in aid packages, improving their monitoring capacity and thus reducing autocrats' ability to use aid for patronage. To remain in power, autocrats responded by conceding political rights to their opponents—from legalizing opposition parties to staging elections. We test our theory with panel data for all sub-Saharan African countries. While other factors played pivotal roles in Africa's political liberalization, we find technical assistance helps to explain the timing and extent of Africa's democratization.
Author: Matthew S. Winters and Gina Martinez
Journal: World Development 66, 516-531, 2015
Replication Data: Download Here
Abstract: We hypothesize that selective donors will use types of aid over which they have more control when providing assistance to poorly governed countries. We use an original classification of project purpose codes in the AidData dataset to categorize aid flows from the period 2004 to 2010. Results from fixed effect and compositional data models provide evidence of selectivity in terms of overall aidflows, a tradeoff between technical assistance and programmatic lending, and a tradeoff between social sector and infrastructure projects.
How Aid Targets Votes: The Impact of Electoral Incentives on Foreign Aid Distribution
Author: Ryan S. Jablonski
Journal: World Politics Vol. 66, Iss. 2, 2014
Replication Data: Download Here
Abstract: Despite allegations that foreign aid promotes corruption and patronage, little is known about how recipient governments' electoral incentives influence aid spending. This article proposes a distributional politics model of aid spending in which governments use their informational advantages over donors in order to allocate a disproportionate share of aid to electorally strategic supporters, allowing governments to translate aid into votes. To evaluate this argument, the author codes data on the spatial distribution of multilateral donor projects in Kenya from 1992 to 2010 and shows that Kenyan governments have consistently influenced the aid allocation process in favor of copartisan and coethnic voters, a bias that holds for each of Kenya's last three regimes. He confirms that aid distribution increases incumbent vote share. This evidence suggests that electoral motivations play a significant role in aid allocation and that distributional politics may help explain the gap between donor intentions and outcomes.
Aid and Democracy Redux
Author: Erasmus Kersting and Christopher Kilby
Journal: European Economic Review 67: 125-143, April 2014
Replication Data: Download Here
Abstract: This paper uses Freedom House ratings to assess the impact of foreign aid on democracy. We employ an interval regression to account for Freedom House׳s method of rating countries. A cross-sectional analysis examining the long run effect of aid on democracy in 122 countries between 1972 and 2011 finds a significant positive relationship that survives various tests for endogeneity. A short run annual panel analysis of 156 countries between 1985 and 2011 explores whether aid operates through leverage and conditionality. We present evidence that (i) donors allocate aid in response to democratization and (ii) recipient countries respond to this incentive for democratic reform. Our identification strategy relies on the reduced importance of democratization in the allocation of aid to geopolitically important countries.
Targeting, Accountability and Capture in Development Projects
Author: Matthew Winters
Journal: International Studies Quarterly
Replication Data: Download Here
Abstract: If development projects are to be effective, a minimum requirement is that the funding reaches its intended destination. Yet the history of international development is replete with examples of this not happening. I argue that there will be fewer problems with corruption or other diversions of funding | which I jointly label capture | in more precisely targeted projects. More well-dened targeting results in superior accountability relationships because there is greater clarity of responsibility, clearer information about outcomes and improved identiability of stakeholders. I use an original cross-country, cross-project dataset on the incidence of capture in World Bank-funded investment projects to test the theory. The data show a negative relationship between targeting and capture, and I demonstrate that this relationship is robust to a variety of specifications. In addition, I find that there is a higher baseline likelihood of project capture in countries perceived as more corrupt according to commonly used survey-based measures from Transparency International and the Worldwide Governance Indicators, cross-validating those measures and my own.
Selectivity on Aid Modality: Determinants of Budget Support from Multilateral Donors
Author: Paul Clist, Alessia Isopi and Oliver Morrissey
Journal: Review of International Organizations, 7(3), pp.267-284, 2012
Replication Data: Download Here
Abstract: Since the late 1990s a selection on policy approach to aid was advocated such that more aid should be allocated to countries with good policies, but there is little evidence that this has occurred. This paper argues that donors may exercise selectivity over the aid modality. Specifically, multilateral donors will cede more recipient control over aid by granting more budget support to those recipients with better expenditure systems and spending preferences (towards the poor) aligned with the donor. We test this for European Commission and World Bank budget support over 1997–2009 and find some support. Both donors have given budget support to almost half of the countries they give aid, and it is usually a significant share of their aid. The principal determinants of receiving budget support are having a poverty reduction strategy in place, which can be considered a good indicator of aligned preferences, and indicators of government efficiency. These variables did not, however, influence the amount of budget support given. Multilateral donors have been more likely to give budget support to countries with aligned spending preferences and better quality systems, even if they have not reallocated the total aid envelope in that way. Note: An earlier version is available as the CREDIT Research Paper 11(1) 2011.
Foreign Aid Shocks as a Cause of Violent Armed Conict
Author: Richard A. Nielsen, Michael G. Findley, Zachary S. Davis, Tara Candland, and Daniel L. Nielson.
Journal: American Journal of Political Science, 55(2): 219–232, 2011
Replication Data: Download Here
Abstract: In this study we resolve part of the confusion over how foreign aid affects armed conflict. We argue that aid shocks—severe decreases in aid revenues—inadvertently shift the domestic balance of power and potentially induce violence. During aid shocks, potential rebels gain bargaining strength vis-à-vis the government. To appease the rebels, the government must promise future resource transfers, but the government has no incentive to continue its promised transfers if the aid shock proves to be temporary. With the government unable to credibly commit to future resource transfers, violence breaks out. Using AidData's comprehensive dataset of bilateral and multilateral aid from 1981 to 2005, we evaluate the effects of foreign aid on violent armed conflict. In addition to rare-event logit analysis, we employ matching methods to account for the possibility that aid donors anticipate conflict. The results show that negative aid shocks significantly increase the probability of armed conflict onset.
Aid and Tax Revenue: Signs of a Positive Effect Since the 1980s
Author: Paul Clist and Oliver Morrissey
Journal: Journal of International Development, 23(2), pp165-180, 2011
Replication Data: Download Here
Abstract: This paper addresses the effect of aid loans and grants on tax effort using data for 82 developing countries over 1970-2005. We find no robust evidence for a negative effect of aid (grants or loans) on the tax/GDP ratio, other than a contemporaneous correlation, but find some evidence that the effect of grants on tax revenue is positive (if significant) since the mid 1980s and that grants tend to increase tax revenue over the medium term. For poor aid recipients, grants are to be preferred to loans because they create no debt and have no adverse fiscal effects.
Transnational terrorism, US military aid, and the incentive to misrepresent
Author: Navin A Bapat
Journal: Journal of Peace Research, 48 (3): 303-318, May 2011
Replication Data: Download Here
Abstract: This study proposes a strategic explanation for the USA's continued provision of military aid to host states with problems of terrorism, despite its poor empirical record. Using a game theoretic model, I demonstrate that US military aid creates a moral hazard problem. If host states are provided with the tools to pacify their territory only if terrorist campaigns are ongoing, but will lose this aid once the problem of terrorism ceases, host states have little incentive to accelerate the demise of terrorist groups. However, the model demonstrates that while military aid does not accomplish the US goal of disarming terrorists, military aid is effective at preventing host states from negotiating with terrorist organizations. The provision of military aid provides a disincentive for host states to reach a negotiated settlement with terrorist groups, and therefore prevents terrorist organizations from altering the status quo that is favorable to the USA. This suggests that while military aid may not be effective at actually disarming terrorist groups, it can be effective at keeping terrorist groups out of power. These hypotheses are tested using the Jones & Libicki (2008) data on terrorism from 1997 to 2006. The empirical results support the conclusions of the theoretical mode.
The Ineffectiveness of Development Aid on Growth: An update.
Author: Chris Doucouliagos and Martin Paldam
Journal: European Journal of Political Economy, 27 (2): 399-404, June 2011
Replication Data: Download Here
Abstract: This note deals with a paradox: A literature growing exponentially even though it keeps finding the same (disappointing) results. We draw upon 1217 estimates of aid effectiveness of which 676 are reported in recent years, to examine three subjects: (S1) Has the literature finally overcome the aid ineffectiveness result? (S2) Increasingly studies try to adjust for simultaneity bias. Has the evidence shown the existence of this bias? To these two questions the answer remains "no". However, (S3) new evidence suggests that some aid components may have a positive effect on growth. This is a promising new result, but it is not yet confirmed by independent replication.
Foreign Aid and Global Governance: Buying Bretton Woods - The Swiss-bloc case.
Author: James Raymond Vreeland
Journal: Journal of Peace Research, 48 (3): 303-318, May 2011
Replication Data: Download Here
Abstract: Power in the world's preeminent international financial institutions—the World Bank and the International Monetary Fund—resides in their Executive Boards. How do governments get elected to these international committees? This study quantitatively explores whether wealthy governments provide more foreign aid to poor governments that offer them political support. The focus is on Switzerland, which is elected to the Executive Board of the Bretton Woods Institutions by a group of countries from Central and Western Asia, and Eastern and Southern Europe. Results confirm the hypothesis. Implications for governance in a multipolar world are discussed.
Rhetoric Versus Reality: The Best and Worst of Aid Agency Practices
Author: William Easterly and Claudia R. Williamson
Journal: World Development, forthcoming
Replication Data: Coming soon
Abstract: Foreign aid critics, supporters, recipients and donors have produced eloquent rhetoric on the need for better aid practices – has this translated into reality? This paper attempts to monitor the best and worst of aid practices among bilateral, multilateral, and UN agencies. We create aid practice measures based on aid transparency, specialization, selectivity, ineffective aid channels and overhead costs. We rate donor agencies from best to worst on aid practices. We find that the UK does well among bilateral agencies, the US is below average, and Scandinavian donors do surprisingly poorly. The biggest difference is between the UN agencies, who mostly rank in the bottom half of donors, and everyone else. Average performance of all agencies on transparency, fragmentation, and selectivity is still very poor. The paper also assesses trends in best practices over time – we find modest improvement in transparency and more in moving away from ineffective channels. However, we find no evidence of improvements (and partial evidence of worsening) in specialization, fragmentation, and selectivity, despite escalating rhetoric to the contrary.
25 Years of Aid Allocation Practice: Whither Selectivity?
Author: Paul Clist
Journal: World Development, 39(10), pp. 1724-1734, 2011
Replication Data: Download Here
Abstract: The 4P framework (Poverty, Population, Policy, and Proximity) is introduced as a way of understanding a donor's aid allocation. We use the two-part model and examine the period 1982–2006. The results indicate that recent conclusions of increasing selectivity are misplaced for the seven major donors analyzed, who together represent the majority of development aid. Indeed, the effect of each of the commonly mentioned time-trends (selectivity, the end of the Cold War, and the commencement of the Global War on Terror) is much smaller than the role of donor heterogeneity, which appears sizeable and entrenched.
Note: Working paper versions of this article are available under the title '25 Years of Aid Allocation Practice: Comparing Donors and Eras', Credit Working Paper 2009 (09/11) and CSAE Conference Paper 2010 (155) The CREDIT WP contains more information on the choice between Two-Part, Heckman and Tobit models.
Can Hearts and Minds Be Bought? The Economics of Counterinsurgency in Iraq
Author: Eli Berman, Jacob N. Shapiro, Joseph Felter
Journal: Journal of Political Economy, 119 (4): 766-819, October 2011
Replication Data: Download Here
Abstract: We develop and test an economic theory of insurgency motivated by the informal literature and by recent military doctrine. We model a three-way contest between violent rebels, a government seeking to minimize violence by mixing service provision and coercion, and civilians deciding whether to share information about insurgents. We test the model using panel data from Iraq on violence against Coalition and Iraqi forces, reconstruction spending, and community characteristics (sectarian status, socioeconomic grievances, and natural resource endowments). Our results support the theory's predictions: improved service provision reduces insurgent violence, particularly for smaller projects and since the "surge" began in 2007.
The Localized Geography of Foreign Aid: A New Dataset and Application to Violent Armed Conflict
Author: Michael G. Findley, Josh Powell, Daniel Strandow, and Jeff Tanner
Journal: World Development. 39.11 (2011): 1995-2009
Replication Data: Download Here
Abstract: Existing foreign aid databases – the OECD's CRS data and now AidData – are project-based. And yet nearly all empirical analyses using these data aggregate to the country-year level, thereby losing project-specific information. In this paper, we introduce new data on the geographic location of aid projects that have been committed to many African countries between 1989 and 2008. The data enable an examination of project-level information in a wider variety of systematic research contexts. To demonstrate the utility of the new data, we discuss how geographically disaggregated foreign aid and armed conflict data are needed to capture the theoretical mechanisms in the aid-conflict literature. We then map the disaggregated aid and conflict data in Sierra Leone, Angola, and Mozambique as specific examples of how these data could help disentangle competing causal mechanisms linking aid to conflict onset and dynamics. The research provides an important new perspective on the connections between aid and conflict. More generally, it is a crucial first step in geo-referencing and comparing foreign aid projects to various localized development outcomes.
Dodging Adverse Selection: How Donor Type and Governance Condition Aid's Effects on School Enrollment
Author: Zachary Christiansen, Dustin Homer, and Daniel Nielson.
Journal: World Development 39 (11), 2044-2053, November 2011.
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Abstract: We employ AidData to test the effects of primary-education aid on school enrollment. We argue that the problem of adverse selection complicates both the allocation and the effectiveness of aid. We hypothesize that bilateral donors ought to have greater freedom to condition aid on recipient governance quality than multilateral donors, which are often bound by institutional rules to provide aid more impartially. AidData's extensive coverage of multilateral aid enables this analysis for up to 100 low- and low-middle-income countries from 1995 to 2008. Latent growth regression analysis suggests that, compared to multilateral donors, bilateral donors indeed condition their primary education aid on recipient control of corruption, and that bilateral aid is significantly related to improved enrollments.
Who Supports Global Economic Engagement? The Sources of Preferences in American Foreign Economic Policy
Author: Helen V. Milner and Dustin Tingley
Journal: International Organization, 65 (Winter):37–68, 2011
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Abstract: In this article we bring together opposing international relations theories to better understand U.S. foreign policy, in particular foreign trade and aid. Using votes in the U.S. House of Representatives from 1979–2004, we explore different theoretical predictions about preferences for foreign economic policy. We assess the impact of domestic factors, namely political economy and ideological preferences, versus foreign policy pressures. Our three main results highlight the differential effect of these factors in the two issue areas. First, aid preferences are as affected by domestic political economy factors as are trade preferences. Second, trade preferences, but not economic aid ones, are shaped by the president's foreign policy concerns; for economic aid, domestic political economy factors matter more than foreign policy ones. Third, aid preferences are shaped more by ideological factors than are trade ones, but ideology plays a different substantive role in each. Different constituencies support aid and trade. This finding has implications for foreign policy substitutability, "the internationalist coalition" in U.S. foreign policy, "statist" theories of foreign policy, and the connection between public opinion and legislative voting.
Coming into Money: The Impact of Foreign Aid on Leader Survival
Author: Amanda A. Licht
Journal: Journal of Conflict Resolution, 54(1): 58-87, February 2010
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Abstract: Donors are more likely to send aid to leaders facing elevated risks of losing power, but targets' ability to benefit from this assistance is conditioned by regime type and political processes. The institutionalization of winning coalitions' loyalty across regime type follows opposite patterns, supporting opposite temporal dynamics across regime types. Democratic leaders' coalitions are firmest immediately after taking office, and aid is of most assistance to them at that time. As competition and dissatisfaction grow, aid becomes a political liability. In small winning coalition systems, however, coalitions become more solid over time, facilitating increasing benefits from aid. Without a firm coalition, however, external resources are destabilizing to autocratic leaders. Analysis of 4,692 leader years from 1960 to 2001 using a censored probit model supports these expectations.
Development aid and economic growth: A positive long-run relation
Author: Camelia Minoiu and Sanjay G. Reddy
Journal: The Quarterly Review of Economics and Finance, 50 (1): 27-39, February 2010
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Abstract: We analyze the growth impact of official development assistance to developing countries. Our approach is different from that of previous studies in two major ways. First, we disentangle the effects of two kinds of aid: developmental and non-developmental. Second, our specifications allow for the effect of aid on economic growth to occur over long periods. Our results indicate that developmental aid promotes long-run growth. The effect is significant, large and robust to different specifications and estimation techniques.
Donors and Domestic Politics: Political Influences on Foreign Aid Commitments
Author: Dustin Tingley
Journal: Quarterly Review of Economics and Finance, 50(1): 40-49, 2010
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Abstract: The vast majority of scholarship on foreign aid looks at either the effectiveness of foreign aid or why particular countries receive aid from particular donors. This paper takes a different approach: what are the domestic sources of support for foreign aid? Specifically, how does the donor's domestic political and economic environment influence 'aid effort'? This paper uses a time-series cross-sectional data set to analyze the influence of changes in political and economic variables. As governments become more conservative, their aid effort is likely to fall. Domestic political variables appear to influence aid effort, but only for aid to low income countries and multilaterals while aid effort to middle income countries is unaffected. This suggests that models solely emphasizing donor economic and international strategic interests as determinants of donor aid policy may be mis-specified. These results also suggest sources of aid volatility that might influence recipient growth prospects.
Changing aid regimes? U.S. foreign aid from the Cold War to the War on Terror
Author: Robert K. Fleck and Christopher Kilby
Journal: Journal of Development Economics, 91 (2): 185-197, March 2010
Replication Data: Available upon request from the author. Please contact Dr. Christopher Kilby at firstname.lastname@example.com.
Abstract: This paper explores how U.S. bilateral economic aid has changed over time, focusing on how the recent era–in which the War on Terror has played a prominent role in the Bush administration's aid policy–differs from previous eras. In particular, has the renewed geopolitical role of aid coincided with a reduction of aid to the poorest countries or less weight on need in U.S. aid allocation decisions? We start with an analysis of annual U.S. aid budgets from 1955 to 2006. Controlling for domestic political and economic conditions, we find that the War on Terror's effect on the aid budget is significantly larger than is immediately apparent. To explore how the emphasis on need may have changed over time, we use country-level panel data on aid allocations to 119 countries across the same time period. This shows that U.S. aid flows–for the poorest as well as other developing countries–increased with the War on Terror. However, after rising for 35 years, the emphasis placed on need has been falling steadily for core aid recipients during the War on Terror.
On Aid, Growth and Good Policies
Author: Carl-Johan Dalgaard and Henrik Hansen
Journal: Journal of Development Studies, 37(6): 17-41, 2010.
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Abstract: This study provides a critical analysis of the growth regressions in Burnside and Dollar [2000]. First, we analyze the relationship between aid and government expenditure in a modified neo-classical growth model. One of the main results of the analysis is that while good policies spur growths they may at the same time reduce the effectiveness of foreign aid. Second, we show that the econometric results in Burnside and Dollar emphasizing the crucial role of interaction between aid and good policies in the growth process are fragile, as they are extremely data dependent. Finally, we demonstrate that the Burnside and Dollar data lend support to the idea that the association between aid and growth can be approximated by decreasing returns to aid. This finding conforms well to regression results in other recent studies.
Aid Effectiveness and the Politics of Personalism
Author: Joseph Wright
Journal: Comparative Political Studies, 43 (6): 735-762, June 2010
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Abstract: This article examines how political institutions that provide an incentive to cultivate a personal vote condition the relationship between foreign aid and economic growth in developing country democracies. Politicians in aid-recipient countries with high levels of personalism are more likely to pursue corruption and target government spending to narrow constituencies. Because personalism affects these outcomes, it provides incentives to use foreign aid for politically motivated spending at the expense of investing foreign aid in growth-promoting public goods. Using panel data from 61 aid-recipient democracies from 1961 to 2001, the author finds that aid increases growth in democracies with less personalist institutions but decreases growth in countries with high personalism. The author also shows that personalism conditions the relationship between aid and the composition of government spending: Aid increases spending on public goods (relative to narrow, particularistic goods) in countries with low personalism but has the opposite effect in highly personalist countries.
The Impact of Aid on Growth Revisited: Do Donor Motives Matter?
Author: Christopher Kilby and, Axel Dreher
Journal: Economic Letters, 107 (3):338-340, June 2010.
Replication Data: Available upon request from the author. Please contact Dr. Christopher Kilby at firstname.lastname@example.com.
Abstract: The typical identification strategy in aid effectiveness studies assumes that donor motives do not influence the impact of aid on growth. We call this homogeneity assumption into question, constructing a model in which donor motives matter and testing the assumption empirically.
Choosing to Target: What Types of Countries Get Different Types of World Bank Projects
Author: Matthew S. Winters
Journal: World Politics 62 (03): 422-458, 2010
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Abstract: Well-governed countries are more likely to make use of foreign aid for the purposes of economic development and poverty alleviation. Therefore, if aid agencies are operating in the name of development, these countries should receive more aid and categorically different types of aid as compared to poorly-governed countries. In poorly-governed countries, aid should be given in a form that allows for less discretion. Using an original dataset of all World Bank projects from 1996 to 2002, I distinguish programmatic projects from investment projects and national from sub-national investment projects. If the World Bank allows for more discretion in well-governed countries, then it will choose to provide programmatic and national aid for these recipients. I show evidence that the World Bank provides a larger proportion of national investment lending in better governed countries. With regard to programmatic lending, however, I find mixed evidence. Among IDA-eligible countries, good governance is surprisingly associated with lower proportions of programmatic aid, whereas for IBRD borrowers, good governance is associated with a higher proportion. I subject these results to a number of robustness tests. I also confirm the existing result in the literature that the World Bank provides larger overall amounts of aid to better-governed countries.
Foreign Aid Effectiveness and the Strategic Goals of Donor Governments.
Author: David H. Bearce and Daniel C. Tirone
Journal: Journal of Politics, 72 (3): 837-51, 2010
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Abstract: This paper argues that foreign aid can promote economic growth in recipient countries by facilitating economic reform, but only when the strategic benefits associated with providing aid are small for donor governments. When the strategic benefits are large, foreign aid becomes ineffective because Western governments cannot credibly enforce their conditions for economic reform. This paper presents evidence consistent with both the cause and effect of this argument. Based on the understanding that Western aid was driven more (less) by strategic factors during the Cold War era (post-Cold War era), it shows that aid has been positively associated with economic reform, but only after 1990 when Western governments could more credibly threaten to curtail their aid if such reform was not forthcoming. It also shows that aid has promoted economic growth, but only after 1990 when the strategic benefits associated with aid provision declined for most Western donors.
The Political Economy of U.S. Foreign Aid: American Legislators and the Domestic Politics of Aid
Author: Helen V. Milner and Dustin Tingley
Journal: Economics & Politics, 22 (2): 200-232, July 2010
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Abstract: Are there systematic political economy factors that shape preferences for foreign aid, a key component of American foreign policy? We analyze votes in the House of Representatives from 1979 to 2003 that would increase or decrease foreign aid by considering the political, economic, and ideological characteristics of legislators and their districts. To understand who supports and opposes foreign aid, we utilize theories of foreign economic policy preferences. By examining different types of aid policy, we show that domestic politics and especially the distributional consequences of economic aid can matter. The economic characteristics of a district and its left-right ideological predispositions influence support for aid in a systematic fashion over the nearly twenty-five year period. Stolper-Samuelson models along with political ideology can help explain legislators' preferences toward aid.
The Political Economy of U.S. Foreign Aid: American Legislators and the Domestic Politics of Aid
Author: Helen V. Milner and Dustin Tingley
Journal: Economics & Politics, 22 (2): 200-232, July 2010
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Abstract: Are there systematic political economy factors that shape preferences for foreign aid, a key component of American foreign policy? We analyze votes in the House of Representatives from 1979 to 2003 that would increase or decrease foreign aid by considering the political, economic, and ideological characteristics of legislators and their districts. To understand who supports and opposes foreign aid, we utilize theories of foreign economic policy preferences. By examining different types of aid policy, we show that domestic politics and especially the distributional consequences of economic aid can matter. The economic characteristics of a district and its left-right ideological predispositions influence support for aid in a systematic fashion over the nearly twenty-five year period. Stolper-Samuelson models along with political ideology can help explain legislators' preferences toward aid.
Health Aid Governance in Fragile States: The Global Fund Experience
Author: Olga Bornemisza, Jamie Bridge, Michael Olszak-Olszewski, George Sakvarelidze, and Jeffrey V Lazarus
Journal: Global Health Governance, 4(1): 1-18, 2010
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Abstract: Fragile states represent key challenges for global health governance. This study analyzes Global Fund grant data from 122 recipient countries as an initial exploration into how well these grants are performing in fragile states as compared to other countries. Since 2002, the Global Fund has invested nearly US$ 5 billion in 41 fragile states, and most grants have been assessed as performing well. Nonetheless, statistically significant differences in performance exist between fragile states and other countries, which were further pronounced in states with humanitarian crises. This indicates that further investigation of this issue is warranted: variations in performance may be unavoidable given the complexities of health governance in fragile states, but may also have implications for how the Global Fund and others provide aid. For example, faster aid disbursements might allow for a better response to rapidly changing contexts, and there may need to be more of a focus on building capacity and strengthening health governance in these countries.
Does the Asian Development Bank Respond to Past Environmental Performance when Allocating Environmentally Risky Financing?
Author: Mark T. Buntaine
Journal: World Development 39(3): 336-350, June 2010.
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Abstract: This paper provides an empirical test of whether the Asian Development Bank (ADB) adjusts allocation decisions about environmentally risky projects to reflect borrower environmental performance in previous projects. This type of performance-based decision-making has been repeatedly highlighted as key to achieving favorable development assistance outcomes in a variety of programming areas. I collect recipient environmental performance information from all available post-project evaluations since 1990 and create an indicator of environmental reputation using a Bayesian updating model. I use this environmental reputation indicator to demonstrate that the ADB responds to previous borrower environmental performance when approving environmentally risky projects, but that past environmental performance does not positively influence the allocation of projects with no environmental risks. These results demonstrate that performance-based allocation decisions are possible for development organizations within specific programmatic areas when low performance is a significant risk to the core functions of the organization, which in this case is the ability to approve and disburse lending projects.
Development Aid and International Politics: Does membership on the UN Security Council influence World Bank decisions?
Author: Axel Dreher, Jan-Egbert Sturm, and James Raymond Vreeland
Journal: Journal of Development Economics, 88(1): 1-18, January 2009
Replication Data: Available upon request from the author. Please email Dr. Axel Dreher at email@example.com for more information.
Abstract: We investigate whether temporary members of the UN Security Council receive favorable treatment from the World Bank, using panel data for 157 countries over the period 1970-2004. Our results indicate a robust positive relationship between temporary UN Security Council membership and the number of World Bank projects a country receives, even after accounting for economic and political factors, as well as regional and country effects. The size of World Bank loans, however, is not affected by UN Security Council membership.
Oil, Nontax Revenue, and the Redistributional Foundations of Regime Stability
Author: Kevin M. Morrison
Journal: International Organization 63 (1): 107-138, January 2009.
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Abstract: Nontax revenues make up a substantial amount of government revenue around the world, though scholars usually focus on individual sources of such revenue (for example, foreign aid and state-owned oil companies). Using a theory of regime change that builds on recent models of the redistributional foundations of dictatorships and democracies, I generate hypotheses regarding all nontax revenue and regime stability. I argue that an increase in nontax revenue should be associated with less taxation of elites in democracies, more social spending in dictatorships, and more stability for both regime types. I find support for all three of these hypotheses in a cross-sectional time-series analysis, covering all countries and years for which the necessary data are available. Significantly, I show that the particular source of nontax revenue does not make a difference: they all act similarly with regard to regime stability and the causal mechanisms.
The Cost of Shame: International Organizations and Foreign Aid in the Punishing of Human Rights Violators
Author: James H. Lebovic and Erik Voeten
Journal: Journal of Peace Research, 46 (1): 79-97, January 2009.
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Abstract: Are violators of international human rights norms punished with lower levels of foreign aid? Despite their abstract preferences, governments often lack the incentive to punish norm violators bilaterally. Multilateral lending institutions, such as the World Bank, could fill the void if they wanted to consider human rights abuses and could bypass restrictions on evaluating the political character of recipients. This article argues that `shaming' in the United Nations Commission on Human Rights, through resolutions that explicitly criticized governments for their human rights records, provided substantive information about rights abuses and gave political cover for the World Bank and other liberal multilateral aid institutions seeking to sanction human rights violators. Statistical analyses support these theoretical claims. The adoption of a UNCHR resolution condemning a country's human rights record produced a sizeable reduction in multilateral, and especially World Bank, aid but had no effect on the country's aggregate bilateral aid receipts. The analyses also support predictions that `objective' measures of human rights have no independent effect on multilateral aid allocations. The findings, which are robust to different model techniques and specifications, suggest that punishment for violating international human rights norms is selective, that international organizations play an important role in the selection process and, thus, that seemingly symbolic resolutions of a politically motivated IO can carry tangible consequences.
Does Foreign Aid Support Autocrats, Democrats, or Both?
Author: Daniel Yuichi Kono and Gabriella R. Montinola
Journal: Journal of Politics 71(2): 704-718, 2009.
Abstract: Does foreign aid prop up recipient governments? Although many people argue that it does, there is little systematic evidence to support this claim. We argue that aid's effects on government survival depend on both the recipient's regime type and the analyst's time horizons. In the long run, continued aid helps autocrats more than democrats because the former can stockpile this aid for use against future negative shocks. However, because large stocks of aid reduce the marginal impact of current aid, current aid helps democrats more than autocrats. We test and find support for our argument with a survival analysis of 621 leaders in 123 countries from 1960 to 1999. Our results imply that donors should make both the nature of aid and the use of aid conditionality contingent on the domestic regime type of aid recipients.
The Political Economy of Conditionality: an Empirical Analysis of World Bank Loan Disbursements
Author: Chris Kilby
Journal: Journal of Development Economics, 89(1):51-61, 2009.
Replication Data: Replication data: Available upon request from the author. Please contact Dr. Christopher Kilby at firstname.lastname@example.com.
Abstract: Abstract: Traditional aid conditionality has been attacked as ineffective in part because aid agencies – notably the World Bank – often fail to enforce conditions. This pattern undermines the credibility of conditionality, weakening incentives to implement policy reforms. The standard critique attributes this time inconsistency to bureaucratic factors within the aid agency such as pressure to lend, defensive lending, or short-sighted altruism. Pressure from powerful donors provides another potential explanation for lax enforcement. This paper presents an empirical analysis of the political economy of conditionality in international organizations using the case of the World Bank and the United States. The analysis examines panel data on World Bank disbursements to 97 countries receiving structural adjustment loans between 1984 and 2005. Using UN voting as an indicator of alignment with the U.S., the paper presents evidence that World Bank structural adjustment loan disbursements are less dependent on macroeconomic performance in countries aligned with the United States.
Greenwashing or Mainstreaming? New Measures of Environmental Rhetoric and Funding at the World Bank
Author: Ryan Powers, J. Timmons Roberts, and Michael J. Tierney
Journal: Paper prepared for the PLAID Data Vetting Workshop, Washington D.C., September 17-18, 2009.
Replication Data: Data coming soon
Abstract: Recent improvements in the quantity and quality of data available on World Bank development projects allow us to more accurately assess whether the Bank has "mainstreamed" environmental concerns into the IBRD/IDA portfolio. We argue that project-level budgets provide a more valid and accurate measure of environmental spending than traditional portfolio-level or project description-level measures of environmental spending at multilateral development banks. We construct an original dataset of all World Bank project documents with budgets from 1994-2007 and employ a principal-agent model to empirically test the "greenwashing" hypothesis. We find that the Bank has not increased mainstreamed environmental funding levels despite the approval of the Bank's first official environment strategy in 2001. At the same time, we find that the Bank's institution-level environmental rhetoric increased significantly during the study period. Nevertheless, at an operational-level, we find that when the Bank talks more about the environment, they spend more money on the environment.
Does Aid for Education Educate Children? Evidence from Panel Data
Author: Axel Dreher, Peter Nunnenkamp and Rainer Thiele
Journal: World Bank Econ Rev 22(2): 291-314, 2008
Replication Data: Available upon request from the authors. Please email Dr. Axel Dreher at email@example.com for more information.
Abstract: Most of the aid effectiveness literature has focused on the potential growth effects of aggregate aid, with inconclusive results. Considering that donors have repeatedly stressed the multidimensionality of their objectives, a more disaggregated view on aid effectiveness is warranted. The impact of aid on education is analyzed empirically for almost 100 countries over 1970–2004. The effectiveness of sector-specific aid is assessed within the framework of social production functions. The Millennium Development Goals related to education, particularly the goal of achieving universal primary school enrollment, are considered as outcome variables. The analysis suggests that higher per capita aid for education significantly increases primary school enrollment, while increased domestic government spending on education does not. This result is robust to the method of estimation, the use of instruments to control for the endogeneity of aid, and the set of control variables included in the estimations.
Greening Aid? Understanding the Environmental Impact of Development Assistance
Author: Robert L. Hicks, Bradley C. Parks, J. Timmons Roberts and Michael J. Tierney
Journal: Oxford University Press
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Abstract: From the first Earth Summit in Stockholm in 1972 to the G8 Gleneagles meeting in 2005, the issue of the impact of aid on the global environment has been the subject of vigorous protest and debate. How much progress has there been in improving environmental protection and clean-up in the developing world? What explains the patterns of environmental aid spending and distribution - is it designed to address real problems, achieve geopolitical or commercial gains abroad, or buy political mileage at home? And what are the consequences for the estimated 4 million people that die each year from air pollution, unsafe drinking water, and lack of sanitation? All of these questions and many more are addressed in this groundbreaking text, which is based on the authors' work compiling the most comprehensive dataset of foreign aid ever assembled. By evaluating the likely environment impact of over 400,000 development projects by more than 50 donors to over 170 recipient nations between 1970 and 2001, Greening Aid represents a unique, state of the art picture of what is happening in foreign assistance, and its impact on the environment. Greening Aid explains major trends and shifts over the last three decades, ranks donors according to their performance, and offers case studies which compare and contrast donors and types of environmental aid.
To Invest or Insure? How Authoritarian Time Horizons Impact Foreign Aid Effectiveness
Author: Joseph Wright
Journal: Comparative Political Studies, 41 (7): 971-1000, July 2008
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Abstract: In this article, the author argues that the time horizon a dictator faces affects his incentives over the use of aid in three ways. First, dictators have a greater incentive to invest in public goods when they have a long time horizon. Second, dictators with short time horizons often face the threat of challengers to the regime; this leads them to forgo investment and instead consume state resources in two forms that harm growth: repression and private pay-offs to political opponents. Third, dictators with short time horizons have a strong incentive to secure personal wealth as a form of insurance in case the regime falls. Using panel data on dictatorships in 71 developing countries from 1961 to 2001, the author finds that time horizons have a positive impact on aid effectiveness: Foreign aid is associated with positive growth when dictators face long time horizons and negative growth when time horizons are short.
Private Voluntary Organizations Engaged in International Assistance, 1939-2004
Author: Robert J. Barro with Rachel M. McCleary
Journal: Nonprofit and Voluntary Sector Quarterly, 37 (3): 512-536, September 2008.
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Abstract: U.S.-based private and voluntary organizations (PVOs) play an important role in international assistance. To assess this role, the authors constructed a new data set that covers more than 1,600 secular and religious PVOs that registered with the U.S. federal government between 1939 and 2004. In the post—World War II period, major revenue patterns are the rise of Evangelical PVOs, decline of Jewish PVOs, and rapid growth of secular PVOs from the mid-1980s to mid-1990s. The authors analyze the determinants of changes in PVO size, gauged by real revenue. They focus on the interplay between public revenue (from the federal government, international organizations, and other governments) and private revenue. Specifically, they investigate whether funds from the federal government and other public entities serve as a magnet for subsequent private support.
Aid and growth: What does the cross-country evidence really show?
Author: Raghuram G. Rajan and Arvind Subramania
Journal: Review of Economics and Statistics, 90(4), 643-665, October 2008
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Abstract: We examine the effects of aid on growth in cross-sectional and panel data—after correcting for the possible bias that poorer (or stronger) growth may draw aid contributions to recipient countries. Even after this correction, we find little robust evidence of a positive (or negative) relationship between aid inflows into a country and its economic growth. We also find no evidence that aid works better in better policy or geographical environments, or that certain forms of aid work better than others. Our findings suggest that for aid to be effective in the future, the aid apparatus will have to be rethought.
The Pattern of Aid Giving - The Impact of Good Governance on Development Assistance
Author: Eric Neumayer
Journal: Routledge
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Abstract: Practically all donor countries that give aid claim to do so on the basis on the recipient's good governance, but do these claims have a real impact on the allocation of aid? Are democratic, human rights-respecting, countries with low levels of corruption and military expenditures actually likely to receive more aid than other countries? Using econometric analysis, the author examines the factors that really determine the patterns of aid giving. The author analyses such examples as: aggregate aid flows aid from multilateral organisations such as the EU, and the UN aid from bilateral donors such as Germany, Japan, the US as well as Arab donors.
The Effects of U.S. Foreign Assistance on Democracy Building, 1990–2003
Author: Steven E. Finkel. Anibal S. Pérez Liñan, and Mitchell A. Seligson
Journal: World Politics 59(3): 404-440, 2007
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Abstract: Democracy promotion has been an explicit doctrine of U.S. foreign policy since the end of the cold war. Between 1990 and 2003 resources for democracy programs increased by over 500 percent. Has this policy worked? Prior research has been inconclusive, relying either on case studies or on quantitative efforts that have not distinguished overall foreign assistance from democracy promotion. The authors answer this question using a new data set that includes program information for 165 countries for the years 1990–2003. The analysis distinguishes between direct and indirect causal mechanisms and employs a variety of statistical models that allow the authors to control for the unique democratization trend in each country when assessing causal effects, as well as for the potential endogeneity of U.S. democracy assistance. The analysis shows that democracy assistance does indeed have a significant impact.
European Aid: Human Rights Versus Bureaucratic Inertia?
Author: Sabine C. Carey
Journal: Journal of Peace Research, 44 (4): 447-464, July 2007.
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Abstract: Most studies on foreign aid and human rights have ignored the role of bureaucratic inertia in the allocation process. By not controlling for which developing countries have received aid in the past and how much aid they have received, continuity of aid flows remains unaccounted for. Additionally, previous studies have not allowed for a possible non-linear relationship between human rights and aid. This study investigates aid commitments from the European Commission, Germany, France, and the UK, paying attention to non-linear effects of human rights on aid commitments and the role of bureaucratic inertia. Using data from 1978 to 2003, the study investigates how past aid commitments, the level of human rights violations, and substantial changes in the respect for human rights influence the decision of European donors on whom to give aid to, how to choose a new recipient country that did not receive aid previously, and how much aid to give to countries that made it past the gatekeeping stage. Controlling for various donor interests and recipient needs, the results show that, despite donors' emphasis on human rights in official documents, the human rights situation in developing countries does not consistently shape European aid commitments. Only Germany commits less aid to more repressive countries. However, recent substantial improvements of the human rights records are rewarded by both Germany and France when deciding whom to give aid to. Bureaucratic inertia seems to be a major obstacle to the consistent implementation of human rights consideration in European aid allocation.
The Anarchy of Numbers: Aid, Development, and Cross-Country Empirics
Author: David Roodman
Journal: World Bank Economic Review 21 (2): 255-277
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Abstract: Recent literature contains many stories of how foreign aid affects economic growth: aid raises growth in countries with good policies, or in countries with difficult economic environments, or mainly outside the tropics, or on average with diminishing returns. The diversity of these results suggests that many are fragile. I test 7 important aid-growth papers for robustness. The 14 tests are minimally arbitrary, deriving mainly from differences among the studies themselves. This approach investigates the importance of potentially arbitrary specification choices while minimizing arbitrariness in testing choices. All of the results appear fragile, especially to sample expansion.
Self-interest, foreign need and good governance: Are bilateral investment treaty programs similar to aid allocation?
Author: Eric Neumayer
Journal: Foreign Policy Analysis 2 (3): 245-267, 2006
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Abstract: Bilateral investment treaties (BITs) have become the most important legal mechanism for the encouragement and governance of foreign direct investment (FDI) in developing countries. Yet practically no systematic evidence exists on what motivates capital-exporting developed countries to sign BITs earlier with some developing countries than with others, if at all. The theoretical framework from the aid allocation literature suggests that developed countries pursue a mixture of self-interest, foreign need and, possibly, good governance. We find evidence that both economic interests of developed countries' foreign investors and political interests of developed countries determine their scheduling of BITs. However, foreign need as measured by per capita income is also a factor, whereas good governance by and large does not matter. These results suggest that BIT programs can be explained employing the same framework successfully applied to the allocation of aid. At the same time, self-interest seems to be substantively more important than developing country need when it comes to BITs.
How Much is a Seat on the Security Council Worth? Foreign Aid and Bribery at the United Nations
Author: Ilyana Kuziemko and Eric Werker
Journal: Journal of Political Economy, 114 (5): 905-930, October 2006
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Abstract: Ten of the 15 seats on the U.N. Security Council are held by rotating members serving two‐year terms. We find that a country's U.S. aid increases by 59 percent and its U.N. aid by 8 percent when it rotates onto the council. This effect increases during years in which key diplomatic events take place (when members' votes should be especially valuable), and the timing of the effect closely tracks a country's election to, and exit from, the council. Finally, the U.N. results appear to be driven by UNICEF, an organization over which the United States has historically exerted great control.
Is the allocation of food aid free from donor interest bias?
Author: Eric Neumayer
Journal: Journal of Development Studies, 41 (3): 394-411, 2005
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Abstract: Many studies demonstrate that donor interest, particularly in the form of economic export and military-strategic interests, is an important determinant in the allocation of general development assistance. Does this hold true for food aid as well? This article analyses the allocation of food aid in the 1990s by the world's three biggest donors as well as non-governmental organisations (NGOs). It finds some evidence for donor interest bias, particularly in the form of preferential treatment of geographically close countries. However, neither military-strategic nor export interests seem to matter. Former Western colonies are also not treated differently. Instead, particularly European Union, multilateral and NGO food aid allocation appears quite sensitive towards recipient countries' needs.
IMF Programs: Who Is Chosen and What Are the Effects?
Author: Robert J. Barro and Jong-Wha Lee
Journal: Journal of Monetary Economics 52 (7): 1245-1269, October 2005.
Replication Data: Download Here
Abstract: IMF loans react to economic conditions but are also sensitive to political-economy variables. Loans tend to be larger and more frequent when a country has a bigger quota and more professional staff at the IMF and when a country is more connected politically and economically to the United States and major European countries. These results are of considerable interest for their own sake. More importantly for present purposes, the results provide instrumental variables for estimating the effects of IMF loan programs on economic growth and other variables. This instrumental estimation allows us to sort out the economic effects of the loan programs from the responses of IMF lending to economic conditions. The estimates show that a higher IMF loan-participation rate reduces economic growth. IMF lending does not have significant effects on investment, inflation, government consumption, and international openness. However, IMF loan participation has small negative effects on democracy and the rule of law. The reduction in the rule of law implies an additional, indirect channel whereby IMF lending reduces economic growth.
NGOs in Bangladesh: Activities, Resources, and Governance
Author: Varun Gauri, Julia Galef
Journal: World Development, 33 (12): 2045-2065, December 2005.
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Abstract: This paper reports results from one of the first large, nationally representative surveys of non-governmental organizations (NGOs) in a developing country. The NGO sector in Bangladesh is highly organized and relatively homogeneous. Most NGOs utilize a branch and headquarters structure in which branches have limited autonomy from headquarters. At the branch level, most NGOs in the country, whether big or small, focus on credit services, derive more of their income from fees for services than from grants, rely on salaried rather than voluntary staff, keep detailed financial accounts that are externally audited, and hire middle-class college educated men as managers. The convergence to a modal institutional form probably is the result of the persuasive power of ideas, sociological pressures toward acculturation and conformity, as well as material incentives.
Conditioning the Effects of Aid: Cold War Politics, Donor Credibility, and Democracy in Africa
Author: Thad Dunning
Journal: International Organization, 58 (2): 409-423, Spring 2004
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Abstract: The effect of foreign aid on regime type in recipient countries remains widely debated. In this research note, I argue that a recent focus on "moral hazard" has distracted attention from another mechanism linking foreign aid to domestic political institutions. During the Cold War, donors' geopolitical objectives diminished the credibility of threats to condition aid on the adoption of democratic reforms. The demise of the Soviet Union and the end of the Cold War, on the other hand, enhanced the effectiveness of Western aid conditionality. I reanalyze an important recent study and demonstrate that the small positive effect of foreign aid on democracy in sub-Saharan African countries between 1975 and 1997 is limited to the post–Cold War period. This new empirical evidence underscores the importance of geopolitical context in conditioning the causal impact of development assistance, and the evidence confirms that the end of the Cold War marked a watershed in the politics of foreign aid in Africa.
Aid, Policies, and Growth: Comment
Author: William Easterly, Ross Levine and David Roodman
Journal: American Economic Review 94 (3): 774–779, June 2004
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Abstract: The Burnside and Dollar (2000) finding that aid raises growth in a good policy environment has had an important influence on policy and academic debates. We conduct a data gathering exercise that updates their data from 1970—93 to 1970—97, as well as filling in missing data for the original period 1970—93. We find that the BD finding is not robust to the use of this additional data.
On the Empirics of Foreign Aid and Growth
Author: Carl-Johan Dalgaard, Henrik Hansen, and Finn Tarp
Journal: Economic Journal, 114 (496): F191-F216, June 2004.
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Abstract: The present paper re-examines the effectiveness of foreign aid theoretically and empirically. Using a standard OLG model we show that aid inflows will in general affect long-run productivity. The size and direction of the impact may depend on policies, 'deep' structural characteristics and the size of the inflow. The empirical analysis investigates these possibilities. Overall we find that aid has been effective in spurring growth, but the magnitude of the effect depends on climate-related circumstances. Finally, we argue that the Collier-Dollar allocation rule should be seriously reconsidered by donor agencies if aid effectiveness is related to climate.
Counting Chickens When They Hatch: Timing and The Effects of Aid on Growth
Author: Michael A. Clemens, Steven Radelet, Rikhil R. Bhavnani, and Samuel Bazzi
Journal: Economic Journal, forthcoming.
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Abstract: Recent research yields widely divergent estimates of the cross-country relationship between foreign aid receipts and economic growth. We propose and test two reasons for this divergence, both of which relate to the timing of effects between aid and growth. First, these studies have insufficiently considered the lag with which aid might affect growth, particularly certain kinds of aid. Second, they have sought to reduce the bias from contemporaneous reverse causation with the use of instrumental variables that appear to be invalid, weak, or both. We reanalyze data from the three most influential published aid-growth studies, strictly conserving their regression specifications, adding sensible assumptions about timing and avoiding questionable instruments. With these changes, the research designs from all of these studies yield one finding: that increases in aid have been followed on average by modest increases in investment and growth. The most plausible explanation is that aid causes some degree of growth in recipient countries, though the magnitude of this relationship is modest, varies greatly across recipients, and diminishes at high levels of aid.
The Political Economy of IMF Lending in Africa
Author: Randall W. Stone
Journal: American Political Science Review, 98 (4):577-591, 2004.
Replication Data: Available on Randall Stone's research page.
Abstract: Why has IMF lending achieved such poor results in Africa? Is it because the Fund imposes the wrong conditions, or because it fails to enforce them? Analysis of monthly data on 53 African countries from 1990 to 2000 shows that the IMF's loans-for-reform contract lacks credibility because donor countries intervene to prevent rigorous enforcement. Countries that have influence with developed-country patrons—as measured by U.S. foreign aid, membership in postcolonial international institutions, and voting profiles in the UN—are subject to less rigorous enforcement (shorter program suspensions). They have more frequent program suspensions, because they violate their conditions more often. The IMF will have to become more independent in order to become an effective champion of reform.
Effective Aid: How Democracy Allows Development Aid to Improve the Quality of Life
Author: Stephen Kosack
Journal: World Development, 31(1):1-22, 2003
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Abstract: Research into foreign aid has mostly focused on its ability to affect economic (i.e., GDP per capita) growth. Conclusions have been mixed. I consider aid's effectiveness differently: by its ability to improve quality of life. I find that, though aid does not affect quality of life in the aggregate, it is effective when combined with democracy, and ineffective (and possibly harmful) in autocracies. The results suggest that aid would be more effective if it were combined with efforts to encourage democratization.
Do human rights matter in bilateral aid allocation? A quantitative analysis of 21 donor countries
Author: Eric Neumayer
Journal: Social Science Quarterly, 84 (3): 650-666, 2003
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Abstract: This paper analyses the role of human rights in bilateral aid allocation decisions of 21 donor countries. Econometric analysis is applied to a panel of three-year averages from 1984 to 1995. Respect for civil/political rights plays a statistically significant role for almost all aid donors on whether a country is deemed eligible for the receipt of aid. Personal integrity rights, on the other hand, are insignificant. Civil/political rights remain significant for a bare majority of aid donors with respect to the amount of aid allocated to a country. Personal integrity rights gain some significance at this stage, but for a few donor countries only. There is no systematic difference apparent between countries commonly regarded as committed to human rights (Canada, Denmark, the Netherlands and Norway) and the rest of donor countries. Donor countries still have a long way to go in rewarding respect for human rights in their foreign aid allocation.
What Factors Determine the Allocation of Aid by Arab Countries and Multilateral agencies?
Author: Eric Neumayer
Journal: Journal of Development Studies, 39 (4), 2003, pp. 134-147
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Abstract: This article provides a statistical analysis of the determinants of Arab aid allocation using Heckman's two-step estimator. It is found that poorer, Arab, Islamic and Sub-Saharan African countries are more likely to receive some positive amount of Arab aid (gate-keeping stage). The same is true for countries not maintaining diplomatic relations with Israel as well as those with voting patterns in the United Nations General Assembly similar to Saudi Arabia. Arab and more populous countries also receive a higher share of the total aid allocated (level stage). The same is true for Islamic countries in the case of bilateral aid and countries with voting similarity in the case of multilateral aid. Donor interest, in particular Arab solidarity, plays a clear role at both stages, whereas recipient need as measured by a country's level of income only affects the gate-keeping stage, not the level stage.
The Determinants of Aid Allocation by Regional Multilateral Development Banks and United Nations Agencies
Author: Eric Neumayer
Journal: International Studies Quarterly 47 (1): 101-122, 2003
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Abstract: This paper examines which factors can explain the allocation of aid by four regional development banks as well as three United Nations agencies. The results suggest the following: Most donors examined also exhibit a bias apparent in bilateral aid allocation in favor of less populous countries. Some of them also share another bias of bilateral donors who give more aid to their former colonies. However, the three United Nations agencies contravene a third bias of bilateral aid allocation and provide more aid to countries geographically more distant from the centers of the Western world. While the regional development banks with the possible exception of the Inter-American one focus exclusively on economic need as measured by per capita income, the three United Nations agencies also take into account human development need in their aid allocation as measured by the Physical Quality of Life Index. Some tentative evidence is found that respect for political freedom is rewarded with higher aid receipts at the aggregate multilateral level and by the Inter-American Development Bank as well as perhaps, in a few estimations, by two of the three United Nations agencies. Neither respect for personal integrity rights nor low levels of perceived corruption play any role in the allocation of aid by the donors looked at. In general, higher military expenditures and arms imports are not associated with higher aid receipts, with a few notable exceptions.
Examining the Goals of US Foreign Assistance in the Post-cold War Period, 1991-96
Author: Brian Lai
Journal: Journal of Peace Research, 40 (1): 103-128, January 2003.
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Abstract: The current literature examining US foreign assistance goals in the post-Cold War period has found that security is declining in importance and that the USA is aiding democracies while also supporting abusers of human rights. This article examines a previously untested neorealist hypothesis about the changing nature of US security goals following the end of the Cold War. Security for the USA, according to neorealists, is changing as the distribution of power changes. This paper also tests hypotheses about different liberal goals the USA might pursue. Finally, this article uses more appropriate and novel methods to test these models, including analysis of what determines when a state initially gets aid and what their initial aid allocation is. Unlike previous studies, security is found to still be important but changing as the balance of power changes after the end of the Cold War. Also, human rights abusers are likely to receive less aid. Finally, this article demonstrates that the econometric methods used to analyze foreign aid data play a large role in discerning what factors actually affect aid decisions.
Lending Credibility: The International Monetary Fund and the Post-Communist Transition
Author: Randall W. Stone
Journal: Princeton University Press
Replication Data: Available on Randall Stone's research page.
Abstract: With the end of the Cold War, the International Monetary Fund emerged as the most powerful international institution in history. But how much influence can the IMF exert over fiercely contested issues in domestic politics that affect the lives of millions? In Lending Credibility, Randall Stone develops the first systematic approach to answering this question. Deploying an arsenal of methods from a range of social sciences rarely combined, he mounts a forceful challenge to conventional wisdom. Focusing on the former Soviet bloc, Stone finds that the IMF is neither as powerful as some critics fear, nor as weak as others believe, but that the answer hinges on the complex factor of how much credibility it can muster from country to country.
Give or Take: Foreign Aid and Foreign Policy Substitutability
Author: Glenn Palmer, Scott B. Wohlander, and T. Clifton Morgan
Journal: Journal of Peace Research, 39 (1): 5-26, January 2002.
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Abstract: The article attempts to explain state donations of foreign aid with the application of a general theory of foreign policy. This places foreign aid within the context of a state's creation of a foreign-policy portfolio. The general theory is based upon the assumption that states pursue two goods: `change', defined as the ability to alter the status quo in desirable ways, and `maintenance', the ability to prevent changes in favored aspects of the status quo. By applying the `two-good' model of foreign policy toward an explanation of foreign aid, we are able to derive hypotheses regarding the relationship between state power and foreign aid donations, as well as further implications regarding foreign policy substitutability. The two-good model posits a more complex but better specified conception of foreign policy substitutability, and it implies that state donations of foreign aid are substitutable for other foreign policy choices, such as the initiation of interstate conflict and participation in certain types of alliances, that are directed toward the same goal, namely change. We test these hypotheses using data on official development assistance obtained from the OECD, and additional data from the Correlates of War (COW) Project for 21 states over the 1966-92 period. Our findings indicate that aid allocation is affected by other aspects of a state's foreign policy portfolio. The application of a general framework of foreign policy to the study of foreign aid is fruitful.
Foreign Aid and Domestic Politics: Voting in Congress and the Allocation of USAID Contracts across Congressional Districts
Author: Robert K. Fleck and Christopher Kilby
Journal: Southern Economic Journal, 67 (3): 598-617, January 2001
Replication Data: Available upon request from the author. Please contact Dr. Christopher Kilby at firstname.lastname@example.com.
Abstract: This paper investigates the relationship between congressional support for foreign aid and the distribution of United States Agency for International Development (USAID) contract spending across congressional districts within the United States. The extent to which such a relationship matters has become increasingly important in recent years, as the end of the Cold War and the advent of the Republican-controlled Congress have eroded the traditional base of support for foreign aid. We develop a model to illustrate how the distribution of contract spending could be used to increase support for foreign aid, but at the expense of development impact, in effect trading quality for quantity. Data on domestic foreign aid contract spending and votes in the 104th Congress House of Representatives allow us to test whether the geographic distribution of USAID contract spending within the United States is consistent with a systematic attempt to build support for foreign aid in Congress. Econometric results provide little evidence of such attempts, apparently because voting on this issue is insensitive to the distribution of contract spending.
Supervision and Performance: The Case of World Bank Projects
Author: Christopher Kilby
Journal: Journal of Development Economics, 62 (1): 233-59, June 2000
Replication Data: Available upon request from the author. Please contact Dr. Christopher Kilby at email@example.com.
Abstract: This paper explores the impact of donor supervision on development project performance using data from World Bank-funded projects. Maximum likelihood estimation of a restricted ordered probit function finds that early supervision has a positive impact on performance. Given the size of World Bank-funded projects, gains from increasing supervision far outweigh the costs. The results provide evidence of an institutional bias toward lending at the expense of increased development impact.
Fiscal Effects of Foreign Aid in a Federal System of Governance: The Case of India
Author: Shikha Jha and Vinaya Swaroop.
Journal: Journal of Public Economics 77(3):307-330, 2000.
Replication Data: Download regression data here; all other data download here.
Abstract: This paper models fiscal effects of foreign aid in a federal system of governance. Our main innovation is to incorporate the inter-governmental fiscal link in examining economic fungibility of foreign aid. The model is applied to the expenditure decisions of the central government of India. The two main findings are: (i) Foreign aid intended for development purposes merely substitutes for spending that the government would have undertaken anyway; the funds freed by aid are spent on non-development activities, and (ii) In passing earmarked external assistance to states, the central government makes a reduction in its transfers to states. These findings indicate that the central government's expenditure choices are unaffected by external assistance. The implication for donors is that even though their projects may be associated with very high rates of economic return, they could be assisting the central government in financing something very different at the margin. For the state governments, the finding indicates that they may not be reaping the full benefits of externally procured assistance.
Who Gives Foreign Aid to Whom and Why?
Author: Alberto Alesina and David Dollar
Journal: Journal of Economic Growth 5 (1): 33-63, 2000
Replication Data: Download Here
Abstract: This paper studies the pattern of allocation of foreign aid from various donors to receiving countries. We find considerable evidence that the direction of foreign aid is dictated as much by political and strategic considerations, as by the economic needs and policy performance of the recipients. Colonial past and political alliances are major determinants of foreign aid. At the margin, however, countries that democratize receive more aid, ceteris paribus. While foreign aid flows respond to political variables, foreign direct investments are more sensitive to economic incentives, particularly "good policies" and protection of property rights in the receiving countries. We also uncover significant differences in the behavior of different donors.
What Does Aid to Africa Finance
Author: Shantayanan Devarajan, Andrew Sunil Rajkumar and Vinaya Swaroop
Journal: World Bank Policy Research Working Paper Number 2092, 1998
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Abstract: If a donor gives aid for a project that the recipient government would have undertaken anyway, then the aid is financing some expenditure other than the intended project. The notion that aid in this sense may be "fungible," while long recognized, has recently been receiving some empirical support. This paper focuses on Sub-Saharan Africa—the region with the largest GDP share of aid—and presents results that indicate that aid may be partially fungible, and suggests some reasons why.