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Looking Ahead Optimally in Allocating Aid

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  • Wood, Adrian

Abstract

Summary The Collier-Dollar approach to aid allocation among countries has been less than fully embraced by donors--even those focused on poverty reduction--partly because it conflicts with the approach to aid allocation implied by the Millennium Development Goals. These two approaches are shown to be special cases of a more general model of aid allocation, in which donors care about future as well as current poverty. This model is illustratively applied to data for developing regions. Adding a poverty decline adjustment to the allocation formulae used by donors could resolve the conflict between the two approaches.

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  • Wood, Adrian, 2008. "Looking Ahead Optimally in Allocating Aid," World Development, Elsevier, vol. 36(7), pages 1135-1151, July.
    • Handle: RePEc:eee:wdevel:v:36:y:2008:i:7:p:1135-1151
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