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The paper empirically explores the factors that could have accounted for the generally declining aid effort (defined as the generosity ratio, or the share of GDP given as aid) of bilateral donors over the last three decades. Annual panel data over 1970-2000 period for the 22 DAC members are used in a series of regressions. The findings suggest the existence of progressivity of aid in relation to donor income. There is also evidence of the economies of scale, in the sense that the share of aid in income decreases with growth in the size of donor country population. Domestic pro-poor tendency also appears to enhance donor generosity, and a positive 'peer pressure' effect is also observed. In addition, the extent of military adventurism of the donor is observed to have enhanced aid effort, just as also the size of government. But no discernible effect is detected for fiscal balance. On the political front, a greater number of checks and balances in the political system as well as the existence of polarization and fractionalization within the government are found to have enhanced aid effort while fractionalization within the opposition has the opposite effect. On the other hand, no discernible and consistent effect of ideological orientation of government is detected. Finally, the movement in the aid effort over time is found to differ between the G7 and non-G7 donors.

The paper empirically investigates, in the context of African countries, the determinants of income distribution and inequality, the effect of inequality on economic growth, and the channels through which inequality affects growth. Data for 35 countries over different periods in the last four decades are employed. Factors identified as having affected income distribution include the level of economic development attained, regional factors, size of government budget and the amount of it devoted to subsidies and transfers, phase of economic cycle, share of agricultural sector in total labour force, as well as human and land resources endowment. Some evidence that high inequality reduces growth is also found. The channels through which inequality affect growth are found to be through reduction in secondary and tertiary education investment, reduction in political stability, and increase in fertility rate. There is, however, no evidence that it affects private saving and investment or the size of government expenditure and taxation, contrary to what is contended in the theoretical literature.Re´sume´: L'article analyse de manie`re empirique, dans le cas de pays africains, les de´terminants de la re´partition et de l'ine´galite´des revenus, l'effet de cette ine´galite´sur la croissance e´conomique et les voies par lesquelles l'ine´galite´affecte la croissance. L'article se sert de donne´es relatives a`35 pays sur diffe´rentes pe´riodes de ces quatre dernie`res de´cen-nies. Les facteurs identifie´s comme ayant influe´sur la re´partition du revenu sont notamment le niveau de de´veloppement e´conomique atteint, des facteurs re´gionaux, la taille du budget du gouvernement et la part de ce budget consacre´e aux subventions et transferts, la phase du cycle 287 e´conomique, la part du secteur agricole dans la main-d'oeuvre totale, ainsi que le volume des ressources humaines et foncie`res dont dispose le pays. Quelques preuves indiquent e´galement qu'une forte ine´galite´re´duit la croissance. Les voies par lesquelles l'ine´galite´affecte la croissance sont, entre autres, la re´duction des investissements dans l'enseignement secondaire et tertiaire, la diminution de la stabilite´politique, et l'accroissement du taux de fe´condite´. Cependant, on n'a pas la preuve que l'ine´galiteá ffecte l'e´pargne et l'investissement prive´s ou le volume des de´penses et impoˆts publics, contrairement a`ce qui est dit dans les publications the´oriques.

This paper examines a wide range of issues relating to the mix between loans and grants as well as the degree of concessionality of loans. A number of empirical tests are carried out based on annual panel data over 1970 to 1999 for 22 donor countries and 72 recipient countries. Based on the tests, we observe that for bilateral donors, past grant‐loan mix (and, hence, reflows from past transfers) do not influence the volume of current resource transfers. Our tests also show that the rate of official borrowing by the recipients (and, by deduction, the extent of their past debt burden) is positively influenced by the extent of the concessionality of such loans – irrespective of whether it is in the form of subsidised interest rates or longer grace periods. The paper concludes with a review of the circumstances in which grants, soft loans and non‐concessional loans might have their respective comparative advantage, as well as a discussion of the need, so as to overcome the negative incentive problems of soft loans, for a typical concessional loan package to be separated into two constituent parts. This would enable the recipient to be given the grant component and the option to take from the non‐concessional loan component as much as desired.

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