Empirical Evidence on the New International Aid Architecture

WEF Working Paper No. 0026

61 Pages Posted: 3 Jul 2007 Last revised: 12 Nov 2007

See all articles by Stijn Claessens

Stijn Claessens

Bank for International Settlements (BIS)

Danny Cassimon

University of Antwerp - Institute for Development Policy and Management

Bjorn Van Campenhout

University of Antwerp - Institute for Development Policy and Management

Multiple version iconThere are 2 versions of this paper

Date Written: November 8, 2007

Abstract

We study how 22 donors allocate their bilateral aid among 147 recipient countries over the 1970-2004 period to investigate whether changes in the international aid architecture - at the international and country level - have led to changes in behavior. We find that after the fall of the Berlin Wall and especially in the late nineties, bilateral aid responds more to economic need and the quality of a recipient country's policy and institutional environment and less to debt, size and colonial linkages. Importantly, we find that when a country uses a PRSP and passes the HIPC decision point the perverse effect of large bilateral and multilateral debt shares on aid flows is reduced, suggesting less defensive lending. Overall, it appears international aid architecture changes have led to more selectivity in aid allocations. The specific factors causing these changes remain unclear, however. Furthermore, there remain large differences among donors in selectivity that appear to relate to donors' own institutional environments. Together this suggests that further reforms will have to be multifaceted.

Keywords: development aid, aid allocation, selectivity, debt relief, HIPC, PRSP, aid architecture

JEL Classification: O11, O16, O19

Suggested Citation

Claessens, Stijn and Cassimon, Danny and Van Campenhout, Bjorn, Empirical Evidence on the New International Aid Architecture (November 8, 2007). WEF Working Paper No. 0026. Available at SSRN: https://ssrn.com/abstract=997833 or http://dx.doi.org/10.2139/ssrn.997833

Stijn Claessens (Contact Author)

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

Danny Cassimon

University of Antwerp - Institute for Development Policy and Management ( email )

Prinsstraat 13
Antwerpen, Antwerp B-2000
Belgium

Bjorn Van Campenhout

University of Antwerp - Institute for Development Policy and Management ( email )

Prinsstraat 13
Antwerp, Antwerp 2000
Belgium

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