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Title:Multilateral intermediation of foreign aid: What is the trade-off for donor countries? PDF Logo
Authors:Powell, Andrew
Bobba, Matteo
Issue Date:2006
Series/Report no.:Working paper // Inter-American Development Bank, Research Department 594
Abstract:Why would bilateral donors intermediate aid through a multilateral and not extend aid directly? This paper suggests a trade-off: multiple bilateral donors for each recipient may imply coordination and strategic problems but intermediating through a multilateral may dilute individual donor objectives. The paper conducts traditional panel and truly bilateral regressions with bilateral-pair, fixed effects to model aid allocation decisions. The results confirm that politics is important for bilateral donors but also that aid fragmentation and strategic behavior affect aid allocation. Multilaterals solve strategic and coordination problems between donors and, while politics remains significant, there is some evidence for a dilution of this effect.
Subjects:Aid
Capital Flows
Multilaterals
Panel
JEL:F34
F35
O19
Document Type:Working Paper
Appears in Collections:Research Department Working Papers, Inter-American Development Bank

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