The Politics of Foreign Aid: A Median Voter Perspective

14 Pages Posted: 10 Jun 2003

See all articles by Wolfgang Mayer

Wolfgang Mayer

University of Cincinnati - McMicken College of Arts and Sciences - Department of Economics

Pascalis Raimondos

Queensland University of Technology - School of Economics and Finance; Copenhagen Business School - Department of Economics; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

Abstract

The paper presents a model where the median voter in the donor country determines the support of foreign aid. It is first established that an individual in the donor country is affected by the direct benefits (due to altruism) and costs (due to taxes) of giving aid, and by the indirect benefits or costs of a change in the terms of trade. Then it is shown that the latter effect works through changing both the donor country's average income and its distribution of income. Given the stylized facts of a capital-abundant donor country and relatively capital-poor median voter, it is shown how redistribution-of-income effects soften the impact of terms-of-trade changes on the political support for foreign aid.

Suggested Citation

Mayer, Wolfgang and Raimondos, Pascalis, The Politics of Foreign Aid: A Median Voter Perspective. Review of Development Economics, Vol. 7, pp. 165-178, May 2003. Available at SSRN: https://ssrn.com/abstract=411189

Wolfgang Mayer (Contact Author)

University of Cincinnati - McMicken College of Arts and Sciences - Department of Economics ( email )

1202 Crosley
P.O. Box 210371
Cincinnati, OH 45221-0371
United States
513-556-2600 (Phone)
513-556-2669 (Fax)

Pascalis Raimondos

Queensland University of Technology - School of Economics and Finance ( email )

GPO Box 2434
2 George Street
Brisbane, Queensland 4001
Australia

Copenhagen Business School - Department of Economics ( email )

Solbjergs Plads 3
DK-2000 Frederiksberg C
Denmark
+45 38 152 594 (Phone)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
27
Abstract Views
889
PlumX Metrics