NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Who Gives Foreign Aid to Whom and Why?

Alberto Alesina, David Dollar

NBER Working Paper No. 6612
Issued in June 1998
NBER Program(s):   IFM

This paper studies the pattern of allocation of foreign aid from various donors to receiving countries. We find considerable evidence that the direction of foreign aid is dictated by political and strategic considerations, much more than by the economic needs and policy performance of the recipients. Colonial past and political alliances are the major determinants of foreign aid. At the margin, however, countries that democratize receive more aid, ceteris paribus. While foreign aid flows respond more to political variables, foreign direct investments are more sensitive to economic incentives, particularly property rights in the receiving countries. We also uncover significant differences in the behavior of different donors.

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Document Object Identifier (DOI): 10.3386/w6612

Published: Alesina, Alberto and David Dollar. "Who Gives Foreign Aid To Whom And Why?," Journal of Economic Growth, 2000, v5(1,Mar), 33-63. citation courtesy of

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