Recipient Needs and Donor Interests in the Allocation of EEC Aid to Developing Countries

Abstract

This paper examines the distribution of aid from the European Economic Community (EEC) to developing countries. The first part presents an overview of the magnitude and composition of EEC aid. Then a model of aid allocation is proposed using data from the 1975–81 period. The empirical results indicate that donor interests are more important in the aid allocation process than recipient countries' need for aid. While this result is common in studies of bilateral aid, the opposite is usually held to be true for aid from multilateral sources. The results also suggest that the interests of all EEC members are not equally served by the aid allocation process. In particular, French political interests appear to be dominant—a situation which may arise because of French control over the EEC's administrative machinery for allocating aid.

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