Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/269352 
Year of Publication: 
2013
Series/Report no.: 
FERDI Working Paper No. P71
Publisher: 
Fondation pour les études et recherches sur le développement international (FERDI), Clermont-Ferrand
Abstract: 
Developing country performance with respect to economic policies and institutional behaviour is a common criterion for the allocation of aid among recipient countries. This paper questions the manner in which performance is used in this regard, arguing that performance is too narrowly defined. A more appropriate definition is one that controls for the economic vulnerability and human capital of developing countries. Econometric analysis of cross-section and panel data is presented that supports this contention. The paper also contends that performance and exogenous economic shocks are likely to be pro-cyclical. This implied a double punishment when aid is allocated according to performance. Evidence of such punishment is also provided in this paper. The paper concludes by arguing that economic vulnerability and human capital variables should augment performance measures in aid allocation decision making.
JEL: 
F35
O19
Document Type: 
Working Paper

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