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Need, Merit and Politics in Multilateral Aid Allocation: A District†level Analysis of World Bank Projects in India

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  • Peter Nunnenkamp
  • Hannes Öhler
  • Maximiliano Sosa Andrés

Abstract

We assess the targeting of foreign aid within recipient countries by employing Poisson estimations on the determinants of the World Bank's allocation of project aid at the district level in India. The evidence of needs†based location choices is very weak as long as the poverty orientation of overall commitments is taken as the yardstick. It is only for some sectors that we find stronger indications of needs†based allocation when combining sector†specific commitments with corresponding measures of need. The evidence for a merit†based allocation of World Bank aid is even weaker. We typically do not find evidence that aid allocation is affected by political patronage at the state or district level. However, the World Bank prefers districts where foreign direct investors may benefit from projects related to infrastructure.

Suggested Citation

  • Peter Nunnenkamp & Hannes Öhler & Maximiliano Sosa Andrés, 2017. "Need, Merit and Politics in Multilateral Aid Allocation: A District†level Analysis of World Bank Projects in India," Review of Development Economics, Wiley Blackwell, vol. 21(1), pages 126-156, February.
    • Handle: RePEc:bla:rdevec:v:21:y:2017:i:1:p:126-156
    DOI: 10.1111/rode.12259
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    1. Dreher, Axel & Fuchs, Andreas & Hodler, Roland & Parks, Bradley C. & Raschky, Paul A. & Tierney, Michael J., 2019. "African leaders and the geography of China's foreign assistance," Journal of Development Economics, Elsevier, vol. 140(C), pages 44-71.
    2. Elisabeth Lio Rosvold, 2020. "Disaggregated determinants of aid: Development aid projects in the Philippines," Development Policy Review, Overseas Development Institute, vol. 38(6), pages 783-803, November.
    3. Dreher, Axel & Lang, Valentin & Reinsberg, Bernhard, 2024. "Aid effectiveness and donor motives," World Development, Elsevier, vol. 176(C).
    4. Jin Mun Jeong, 2020. "Economic sanctions and income inequality: impacts of trade restrictions and foreign aid suspension on target countries," Conflict Management and Peace Science, Peace Science Society (International), vol. 37(6), pages 674-693, November.
    5. Siri Aas Rustad & Kristian Hoelscher & Andreas Kotsadam & Gudrun Østby & Henrik Urdal, 2024. "Does development aid reach politically excluded groups? A Disaggregated Study of the Location of Aid in Sub‐Saharan Africa," Development Policy Review, Overseas Development Institute, vol. 42(3), May.
    6. Anaxagorou, Christiana & Efthyvoulou, Georgios & Sarantides, Vassilis, 2020. "Electoral motives and the subnational allocation of foreign aid in sub-Saharan Africa," European Economic Review, Elsevier, vol. 127(C).
    7. Bommer, Christian & Dreher, Axel & Perez-Alvarez, Marcello, 2022. "Home bias in humanitarian aid: The role of regional favoritism in the allocation of international disaster relief," Journal of Public Economics, Elsevier, vol. 208(C).
    8. Michael Chasukwa & Dan Banik, 2019. "Institutional bypass and aid effectiveness in Africa," WIDER Working Paper Series wp-2019-22, World Institute for Development Economic Research (UNU-WIDER).
    9. Dipendra, K.C., 2020. "Which aid targets poor at the sub-national level?," World Development Perspectives, Elsevier, vol. 17(C).
    10. Heinzel, Mirko & Reinsberg, Bernhard, 2024. "Trust funds and the sub-national effectiveness of development aid: Evidence from the World Bank," World Development, Elsevier, vol. 179(C).
    11. BenYishay, Ariel & DiLorenzo, Matthew & Dolan, Carrie, 2022. "The economic efficiency of aid targeting," World Development, Elsevier, vol. 160(C).
    12. Eichenauer, Vera Z. & Fuchs, Andreas & Kunze, Sven & Strobl, Eric, 2020. "Distortions in aid allocation of United Nations flash appeals: Evidence from the 2015 Nepal earthquake," World Development, Elsevier, vol. 136(C).
    13. Mogge, Lukas & McDonald, Morag & Knoth, Christian & Teickner, Henning & Purevtseren, Myagmartseren & Pebesma, Edzer & Kraehnert, Kati, 2023. "Allocation of humanitarian aid after a weather disaster," World Development, Elsevier, vol. 166(C).
    14. Jing Shao & Maojun Wang, 2020. "Analyzing the spatial allocation of Japan’s aid to China: A perspective from the relations between aid allocation stakeholders," Growth and Change, Wiley Blackwell, vol. 51(3), pages 1277-1303, September.
    15. Knutsen, Tora & Kotsadam, Andreas, 2020. "The political economy of aid allocation: Aid and incumbency at the local level in Sub Saharan Africa," World Development, Elsevier, vol. 127(C).
    16. Michael Chasukwa & Dan Banik, 2019. "Bypassing Government: Aid Effectiveness and Malawi’s Local Development Fund," Politics and Governance, Cogitatio Press, vol. 7(2), pages 103-116.
    17. Souha El Khanji, 2022. "Donors’ Interest in Water and Sanitation Subsectors," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(2), pages 611-654, April.
    18. Asiedu, Edward & Sadekla, Sylvester S. & Bokpin, Godfred A., 2020. "Aid to Africa’s agriculture towards building physical capital: Empirical evidence and implications for post-COVID-19 food insecurity," World Development Perspectives, Elsevier, vol. 20(C).
    19. Jung, Woojin, 2023. "Mapping community development aid: Spatial analysis in Myanmar," World Development, Elsevier, vol. 164(C).

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