Sectoral Aid Priorities: Are Donors Really Doing Their Best to Achieve the Millennium Development Goals?

Swiss Institute for Business Cycle Research (KOF) Working Paper No. 124

38 Pages Posted: 15 Feb 2006

See all articles by Rainer Thiele

Rainer Thiele

Kiel Institute for the World Economy

Peter Nunnenkamp

University of Kiel

Axel Dreher

Heidelberg University

Date Written: January 2006


We analyze the aid portfolio of various bilateral and multilateral donors, testing whether they have prioritised aid in line with the Millennium Development Goals (MDGs). In doing so, we combine sectorally disaggregated aid data with indicators reflecting the situation of recipient countries regarding the MDGs. Our results show that donors differ not only in terms of their overall generosity and the general poverty orientation of aid, but also in the extent to which their sectoral aid allocation is conducive to achieving more specific MDGs such as all children completing a full course of primary schooling, reducing child and maternal mortality as well as reversing the spread of HIV/AIDS. Overall, while some MDGs, e.g., the fight against HIV/AIDS, have shaped the allocation of aid, the sector-specific results reveal that with respect to other MDGs, most notably primary education, there is a considerable gap between donor rhetoric and actual aid allocation. These results invite the conclusion that the current focus on substantially increasing aid in order to turn the tide in trying to achieve the MDGs misses one important point: Unless the targeting of aid is improved, higher aid will not have the desired effects. Our results suggest that at least part of the blame for missing the MDGs falls on insufficient targeting of aid.

Keywords: Aid Allocation, MDGs, Development Aid

JEL Classification: F35, O11, O19

Suggested Citation

Thiele, Rainer and Nunnenkamp, Peter and Dreher, Axel, Sectoral Aid Priorities: Are Donors Really Doing Their Best to Achieve the Millennium Development Goals? (January 2006). Available at SSRN: or

Rainer Thiele (Contact Author)

Kiel Institute for the World Economy ( email )

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

Peter Nunnenkamp

University of Kiel ( email )

D-24100 Kiel

Axel Dreher

Heidelberg University ( email )

Grabengasse 1
Heidelberg, 69117


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