The Determinants of Aid Allocation by Regional Multilateral Development Banks and United Nations Agencies

Abstract

This paper examines which factors can explain the allocation of aid by four regional development banks as well as three United Nations agencies. The results suggest the following: most donors examined also exhibit a bias apparent in bilateral aid allocation in favor of less populous countries. Some of them also share another bias of bilateral donors who give more aid to their former colonies. However, the three United Nations agencies contravene a third bias of bilateral aid allocation and provide more aid to countries geographically more distant from the centers of the Western world. While the regional development banks with the possible exception of the Inter‐American one focus exclusively on economic need as measured by per capita income, the three United Nations agencies also take into account human development need in their aid allocation as measured by the Physical Quality of Life Index. Some tentative evidence is found that respect for political freedom is rewarded with higher aid receipts at the aggregate multilateral level and by the Inter‐American Development Bank as well as perhaps, in a few estimations, two of the three United Nations agencies. Neither respect for personal integrity rights nor low levels of perceived corruption play any role in the allocation of aid by the donors looked at. In general, higher military expenditures and arms imports are not associated with higher aid receipts, with a few notable exceptions.

Citizen preferences and public goods: comparing preferences for foreign aid and government programs in Uganda

“…As Martens, et al (2002, p. 17) concludes, BMultilateral aid agencies may be somewhat shielded against direct political pressure from their member states.^Rodrik (1996) shows some aggregate evidence that supports the argument that Bmultilateral flows are less governed by political considerations than bilateral ones^ (Rodrik 1996, p. 176). Other macro-level empirical studies also produce results suggesting that multilateral agencies fund different countries and projects from bilateral ones, and that the former tend to target poorer countries and those with greater needs than those targeted by bilateral agencies (Maizels and Nissanke 1984;Frey and Schneider 1986;Tsoutsoplides 1991;Burnside and Dollar 2000;Neumayer 2003, Girod 2008.…”

Mobilising private adaptation finance: developed country perspectives

“…not climate funds such as the GCF or the Adaptation Fund). These organisations are more likely to argue from a developed country perspective given their donor-driven decision-making processes (see Gupta 1995;Kilby 2006;Neumayer 2003). The interviews were essential for two reasons.…”

Distributing development assistance for health: simulating the implications of 11 criteria

“…Many studies have examined what factors -including country characteristicsthat de facto correlate with the allocation of aid across countries and country categories (Alesina and Dollar, 2000;Neumayer, 2003;Berthelemy, 2006;Dieleman et al, 2014). However, surprisingly few studies have examined the potential distributional implications of a wide range of aid allocation criteria, including the consequences for countries and country categories of using various criteria to a greater extent than today (Llavador and Roemer, 2001;Collier and Dollar, 2002;McGillivray, 2004;Guillaumont, 2008;Guillaumont et al, 2015).…”

“…It has been suggested that per capita development assistance tend to decrease with population size or increase and then decrease (Alesina and Dollar, 2000;Neumayer, 2003;Salois, 2012). This may be explained by perceptions about the correlation between population size and other factors, such as economies of scale, resilience to shocks and effectiveness.…”