Modelling inter-temporal aid allocation

Abstract

This paper models the inter-temporal allocation of bilateral foreign development aid to developing countries.A formal theoretical framework is developed, in which aid is treated as a private good of the donor country bureaucratic group responsible for bilateral aid allocation.This model is applied to data for 10 principal recipients of bilateral official development assistance over the period 1968 to 1999.A feature of this application is that it caters for the joint determination of aid allocations to individual recipient countries.Results indicate that both recipient need and donor interest variables determine the amount of foreign aid to developing countries.These results differ from many of those previously reported, which reject recipient need as a determinant of aid allocation. Outline 1 Introduction 2.Theoretical Model of Aid Allocation 3. Econometric Application 4.Results and Interpretations 5.Conclusion

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