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A Dynamic Model of Foreign Aid Allocation

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  • Fumitaka Furuoka

    (Universiti Malaysia Sabah)

Abstract

This paper uses the Generalized Method of Moments (GMM)-type of estimator of Arellano and Bond (1991) to analyze the dynamics of adjustment in foreign aid allocation over the period 2000-2005. The empirical findings reveal a complex nature of foreign aid allocations. On the one hand, the static panel data models indicated that aid donors tended to provide larger amounts of foreign aid to the poorer developing nations which were in a greater need for the development assistance. On the other hand, the dynamic panel data models indicated contradicted results, where relatively wealthy developing countries have received larger amounts of foreign aid.

Suggested Citation

  • Fumitaka Furuoka, 2008. "A Dynamic Model of Foreign Aid Allocation," Economics Bulletin, AccessEcon, vol. 15(8), pages 1-13.
    • Handle: RePEc:ebl:ecbull:eb-08o10012
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    References listed on IDEAS

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    7. Jakob Svensson, 2000. "Foreign aid and rent-seeking," Springer Books, in: Roger D. Congleton & Kai A. Konrad & Arye L. Hillman (ed.), 40 Years of Research on Rent Seeking 2, pages 165-189, Springer.
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    Cited by:

    1. Mohamed M. Sraieb, 2022. "The dynamics of US foreign aid decisions," Empirical Economics, Springer, vol. 63(4), pages 1859-1886, October.
    2. Mohamed Mounir Sraieb, 2015. "An Empirical Model for U.S. Foreign Aid Allocation," Working Papers ECARES ECARES 2015-48, ULB -- Universite Libre de Bruxelles.

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    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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