Who Gives Foreign Aid To Whom And Why Pdf

who gives foreign aid to whom and why pdf

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We introduce an infinite-horizon endogenous growth framework for studying the effects of foreign aid on the economic growth in a recipient country. Aid is used to partially finance the recipient's public investment. We point out that the same rule of aid may have very different outcomes, depending on the recipient's circumstances in terms of development level, domestic investment, efficiency in the use of aid and in public investment, etc.

Effects of foreign aid on the recipient country's economic growth

Development aid is aid given by governments and other agencies to support the economic, environmental, social, and political development of developing countries. It is distinguished from humanitarian aid by aiming at a sustained improvement in the conditions in a developing country, rather than short-term relief. Development aid is thus widely seen as a major way to meet Sustainable Development Goal 1 end poverty in all its forms everywhere for the developing nations. Development aid is not usually understood as including remittances received from migrants working or living in diaspora --even though these form a significant amount of international transfer--as the recipients of remittances are usually individuals and families rather than formal projects and programmes. Some governments also include military assistance in the notion of "foreign aid", although the international community does not usually regard military aid as development aid. There are various terms that are interchangeable with "development aid" in some contexts but possess significantly different meanings in others.

David Dollar and Alberto Alesina Scholarly Articles from Harvard University Department of Economics Abstract: 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 as much by political and strategic considerations, as by the economic needs and policy performance of the recipients. Colonial past and political alliances are major determinants of foreign aid. At the margin, however, countries that democratize receive more aid, ceteris paribus. While foreign aid flows respond to political variables, foreign direct investments are more sensitive to economic incentives, particularly "good policies" and protection of property rights in the receiving countries.

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Foreign aid

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Who Gives Foreign Aid to Whom and Why?

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 as much by political and strategic considerations, as by the economic needs and policy performance of the recipients. Colonial past and political alliances are major determinants of foreign aid.

Development aid

Development aid

Foreign aid , the international transfer of capital , goods, or services from a country or international organization for the benefit of the recipient country or its population. Aid can be economic, military, or emergency humanitarian e. Foreign aid can involve a transfer of financial resources or commodities e. The resources can take the form of grants or concessional credits e. The most common type of foreign aid is official development assistance ODA , which is assistance given to promote development and to combat poverty. The primary source of ODA—which for some countries represents only a small portion of their assistance—is bilateral grants from one country to another, though some of the aid is in the form of loans, and sometimes the aid is channeled through international organizations and nongovernmental organizations NGOs. Countries often provide foreign aid to enhance their own security.

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While foreign aid flows respond to political variables, foreign direct investments are more sensitive to economic incentives, particularly “good policies” and.


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Alesina, Alberto, and David Dollar. Who gives foreign aid to whom and why​?. Journal of Economic Growth 5(1): Published Version doi/A.

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