Barthel, Fabian Neumayer, Eric Nunnenkamp, Peter Selaya, Pablo
Year of Publication:
Kiel Working Paper 1875
We account for the competition for export markets among the donor countries of foreign aid by analyzing spatial dependence in aid allocation. We employ sector-specific aid data, distinguishing between first and second stage decisions on the selection of recipient countries and the amount of aid allocated to selected recipients. We find that the five largest donors react to aid giving by other donors with whom they compete in terms of exporting goods and services to a specific recipient country at both stages of their allocation of aid for economic infrastructure and productive sectors. By contrast, evidence for export competition driving aid allocation is lacking for more altruistic donors and for aid in social infrastructure.
aid allocation sector-specific aid export competition spatial dependence