Edited by B. Mak Arvin and Byron Lew
Chapter 4: Determining aid allocation decision-making: towards a comparative sectored approach
With the debate ongoing about its effectiveness, foreign aid can be described as one of the most expensive and long-lasting policy experiments ever conducted. One of the biggest challenges for researchers involved with assessing the effectiveness of foreign aid is how donor countries are driven by potentially many, if not competing, motivations behind aid allocations. It is problematic for claims to be made about how effective aid has been in realizing a donor country’s policy goals if, in fact, it is not clear what an aid donor is hoping to achieve by giving it. This paradox has influenced the rise of a parallel literature to that of aid effectiveness, which seeks to explain factors which determine variation in aid flows. Much of this large body of literature focuses on teasing out what motivates aid allocation decisions by systematically explaining why donors allocate foreign aid to certain countries and not to others. In doing so these studies have focused on addressing to what extent aid patterns are shaped by a recipient country’s need for aid, the political relationship between the donor and recipient governments, a donor’s commercial interests, and the likelihood of aid not being lost to corruption.
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