Need, Merit and Politics in Multilateral Aid Allocation: A District‐Level Analysis of World Bank Projects in India

31 Pages Posted: 10 Jan 2017

See all articles by Peter Nunnenkamp

Peter Nunnenkamp

University of Kiel

Hannes Öhler

University of Goettingen (Gottingen)

Maximiliano Sosa Andres

Towers Watson

Date Written: February 2017

Abstract

We assess the targeting of foreign aid within recipient countries by employing Poisson estimations on the determinants of the World Bank's allocation of project aid at the district level in India. The evidence of needs‐based location choices is very weak as long as the poverty orientation of overall commitments is taken as the yardstick. It is only for some sectors that we find stronger indications of needs‐based allocation when combining sector‐specific commitments with corresponding measures of need. The evidence for a merit‐based allocation of World Bank aid is even weaker. We typically do not find evidence that aid allocation is affected by political patronage at the state or district level. However, the World Bank prefers districts where foreign direct investors may benefit from projects related to infrastructure.

Suggested Citation

Nunnenkamp, Peter and Öhler, Hannes and Sosa Andres, Maximiliano, Need, Merit and Politics in Multilateral Aid Allocation: A District‐Level Analysis of World Bank Projects in India (February 2017). Review of Development Economics, Vol. 21, Issue 1, pp. 126-156, 2017. Available at SSRN: https://ssrn.com/abstract=2896477 or http://dx.doi.org/10.1111/rode.12259

Peter Nunnenkamp (Contact Author)

University of Kiel ( email )

D-24100 Kiel
Germany

Hannes Öhler

University of Goettingen (Gottingen) ( email )

Platz der Gottinger Sieben 3
Gottingen, D-37073
Germany

Maximiliano Sosa Andres

Towers Watson ( email )

875 Third Avenue
New York, NY 10022
United States

HOME PAGE: http://www.towerswatson.com

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