Competition for Export Markets and the Allocation of Foreign Aid: The Role of Spatial Dependence among Donor Countries

52 Pages Posted: 18 Jun 2014 Last revised: 30 Oct 2014

See all articles by Fabian Barthel

Fabian Barthel

London School of Economics & Political Science (LSE)

Eric Neumayer

London School of Economics and Political Science (LSE)

Peter Nunnenkamp

University of Kiel

Pablo Selaya

University of Copenhagen

Date Written: June 17, 2014

Abstract

We account for competition for export markets among donor countries of foreign aid by analyzing spatial dependence in aid allocation. Employing sector-specific aid data, we find that the five largest donors react to aid giving by other donors with whom they compete in terms of exporting goods and services to a specific recipient country at both stages of their allocation of aid for economic infrastructure and production sectors. By contrast, evidence for export competition driving aid allocation is lacking for more altruistic donors and for aid in social infrastructure.

Keywords: Aid allocation, sector-specific aid, export competition, spatial dependence

JEL Classification: F35

Suggested Citation

Barthel, Fabian and Neumayer, Eric and Nunnenkamp, Peter and Selaya, Pablo, Competition for Export Markets and the Allocation of Foreign Aid: The Role of Spatial Dependence among Donor Countries (June 17, 2014). World Development, 64 (12), 2014, pp. 350-365. Available at SSRN: https://ssrn.com/abstract=2455058

Fabian Barthel

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

HOME PAGE: http://personal.lse.ac.uk/barthel

Eric Neumayer (Contact Author)

London School of Economics and Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
+44 207 955 7598 (Phone)
+44 207 955 7412 (Fax)

HOME PAGE: http://personal.lse.ac.uk/neumayer

Peter Nunnenkamp

University of Kiel ( email )

D-24100 Kiel
Germany

Pablo Selaya

University of Copenhagen ( email )

Department of Economics
Ă˜ster Farimagsgade 5
Copenhagen, 1353
Denmark

HOME PAGE: http://www.econ.ku.dk/pabloselaya

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