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Bad Samaritans In Foreign Aid: Evidence From Major Mineral Discoveries

Author

Listed:
  • Rabah Arezki

    (CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)

  • Youssouf Camara

    (McGill University = Université McGill [Montréal, Canada])

  • Frederick van Der Ploeg

    (University of Oxford, UvA - University of Amsterdam [Amsterdam] = Universiteit van Amsterdam)

  • Grégoire Rota-Graziosi

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper explores whether foreign aid is self-interested, exploiting the timing and size of major mineral discoveries. We first analyze the effect a resource discovery in a two-by-two donorrecipient model with conflict about natural resources, using a contest success function. We then estimate the effects of major discoveries using a gravity model for a large panel of countries. Our empirical estimates are consistent with the predictions of the theoretical model. Results show that recipient countries that experience major discoveries receive more, not less, bilateral aid, all else equal. Our benchmark result is that following a mineral discovery, a recipient country receives 36% more aid compared to a country without such a discovery. That is a paradox considering that major discoveries are associated with an effective relaxation of international borrowing constraints.

Suggested Citation

  • Rabah Arezki & Youssouf Camara & Frederick van Der Ploeg & Grégoire Rota-Graziosi, 2024. "Bad Samaritans In Foreign Aid: Evidence From Major Mineral Discoveries," Working Papers hal-04789791, HAL.
    • Handle: RePEc:hal:wpaper:hal-04789791
    Note: View the original document on HAL open archive server: https://hal.science/hal-04789791v1
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