Are 'New' Donors Different? Comparing the Allocation of Bilateral Aid Between Non-DAC and DAC Donor Countries

KOF Working Paper No. 255

30 Pages Posted: 24 Mar 2010

See all articles by Axel Dreher

Axel Dreher

Heidelberg University

Peter Nunnenkamp

University of Kiel

Rainer Thiele

Kiel Institute for the World Economy

Date Written: March 1, 2010

Abstract

Major DAC donors are widely criticized for weak targeting of aid, selfish aid motives and insufficient coordination. The emergence of an increasing number of new donors may further complicate the coordination of international aid efforts. On the other hand, new donors (many of which were aid recipients until recently) may have competitive advantages in allocating aid according to need and merit. Project-level data on aid by new donors, as collected by the PLAID initiative, allow for empirical analyses comparing the allocation behavior of new versus old donors. We employ Probit and Tobit models and test for significant differences in the distribution of aid by new and old donors across recipient countries. We find that new donors (i) focus on closer neighbors, (ii) care less for recipient need, (iii) exhibit a weaker bias towards badly governed countries, (iv) respond to disasters, but with fewer resources than old donors, and (v) do not pursue commercial self interest.

Keywords: aid allocation, new donors, donor motives, Probit, Tobit

JEL Classification: F35

Suggested Citation

Dreher, Axel and Nunnenkamp, Peter and Thiele, Rainer, Are 'New' Donors Different? Comparing the Allocation of Bilateral Aid Between Non-DAC and DAC Donor Countries (March 1, 2010). KOF Working Paper No. 255. Available at SSRN: https://ssrn.com/abstract=1573464 or http://dx.doi.org/10.2139/ssrn.1573464

Axel Dreher (Contact Author)

Heidelberg University ( email )

Grabengasse 1
Heidelberg, 69117
Germany

HOME PAGE: http://www.axel-dreher.de

Peter Nunnenkamp

University of Kiel ( email )

D-24100 Kiel
Germany

Rainer Thiele

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, D-24100
Germany
+49 431 8814 215 (Phone)
+49 431 8814 500 (Fax)

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