IDEAS home Printed from https://ideas.repec.org/p/unu/wpaper/dp2006-02.html
   My bibliography  Save this paper

Multilateral Aid Agencies and Strategic Donor Behaviour

Author

Listed:
  • George Mavrotas
  • Espen Villanger

Abstract

The paper builds on recent empirical evidence on the importance of strategic donor behaviour in aid allocation in order to develop a theoretical model where donor pressure on a recipient for influencing the aid disbursement of a multilateral institution is endogenously determined. Our game-theoretic, multi-agent model with one aid recipient, two bilateral donors and one multilateral institution illustrates the advantage of putting pressure on the recipient as an instrument for foreign policy, as seen from the mighty donor's point of view.

Suggested Citation

  • George Mavrotas & Espen Villanger, 2006. "Multilateral Aid Agencies and Strategic Donor Behaviour," WIDER Working Paper Series DP2006-02, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:dp2006-02
    as

    Download full text from publisher

    File URL: https://www.wider.unu.edu/sites/default/files/dp2006-02.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Tony Addison & George Mavrotas & Mark McGillivray, 2005. "Aid, Debt Relief and New Sources of Finance for Meeting the Millennium Development Goals," WIDER Working Paper Series RP2005-09, World Institute for Development Economic Research (UNU-WIDER).
    2. Eric Neumayer, 2003. "What Factors Determine the Allocation of Aid by Arab Countries and Multilateral Agencies?," Journal of Development Studies, Taylor & Francis Journals, vol. 39(4), pages 134-147.
    3. Alesina, Alberto & Dollar, David, 2000. "Who Gives Foreign Aid to Whom and Why?," Journal of Economic Growth, Springer, vol. 5(1), pages 33-63, March.
    4. Torsvik, Gaute, 2005. "Foreign economic aid; should donors cooperate?," Journal of Development Economics, Elsevier, vol. 77(2), pages 503-515, August.
    5. Finn Tarp, 2006. "Aid and Development," Discussion Papers 06-12, University of Copenhagen. Department of Economics.
    6. P. Guillaumont & L. Chauvet, 2001. "Aid and Performance: A Reassessment," Journal of Development Studies, Taylor & Francis Journals, vol. 37(6), pages 66-92.
    7. Deger, Saadet & Sen, Somnath, 1995. "Military expenditure and developing countries," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 11, pages 275-307, Elsevier.
    8. Villanger, Espen, 2006. "Company interests and foreign aid policy: Playing donors off against one another," European Economic Review, Elsevier, vol. 50(3), pages 533-545, April.
    9. Anke Hoeffler & Scott Gates, 2004. "Global Aid Allocation: Are Nordic Donors Different?," Economics Series Working Papers WPS/2004-34, University of Oxford, Department of Economics.
    10. David Dollar & Craig Burnside, 2000. "Aid, Policies, and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 847-868, September.
    11. Maizels, Alfred & Nissanke, Machiko K., 1984. "Motivations for aid to developing countries," World Development, Elsevier, vol. 12(9), pages 879-900, September.
    12. Scott Gates & Anke Hoeffler, 2004. "Global Aid Allocation: Are Nordic Donors Different?," CSAE Working Paper Series 2004-34, Centre for the Study of African Economies, University of Oxford.
    13. Henrik Hansen & Finn Tarp, 2000. "Aid effectiveness disputed," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(3), pages 375-398, April.
    14. P. Lundborg, 1998. "Foreign Aid and International Support as a Gift Exchange," Economics and Politics, Wiley Blackwell, vol. 10(2), pages 127-142, July.
    15. Kanbur, Ravi & Sandler, Todd & Morrison, Kevin, 1999. "The Future of Development Assistance: Common Pools and International Public Goods," Staff General Research Papers Archive 1629, Iowa State University, Department of Economics.
    16. Carl-Johan Dalgaard & Henrik Hansen & Finn Tarp, 2004. "On The Empirics of Foreign Aid and Growth," Economic Journal, Royal Economic Society, vol. 114(496), pages 191-216, June.
    17. Tony Addison & George Mavrotas & Mark McGillivray, 2005. "Development assistance and development finance: evidence and global policy agendas," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(6), pages 819-836.
    18. Basu, Kaushik, 2003. "Prelude to Political Economy: A Study of the Social and Political Foundations of Economics," OUP Catalogue, Oxford University Press, number 9780199261857.
    19. Hansen, Henrik & Tarp, Finn, 2001. "Aid and growth regressions," Journal of Development Economics, Elsevier, vol. 64(2), pages 547-570, April.
    20. Kanbur, Ravi, 2006. "The economics of international aid," Handbook on the Economics of Giving, Reciprocity and Altruism, in: S. Kolm & Jean Mercier Ythier (ed.), Handbook of the Economics of Giving, Altruism and Reciprocity, edition 1, volume 1, chapter 26, pages 1559-1588, Elsevier.
    21. Murshed, S Mansoob & Sen, Somnath, 1995. "Aid Conditionality and Military Expenditure Reduction in Developing Countries: Models of Asymmetric Information," Economic Journal, Royal Economic Society, vol. 105(429), pages 498-509, March.
    22. Espen Villanger, 2003. "Company influence on foreign aid disbursement: Is conditionality credible when donors have mixed motives?," CMI Working Papers WP 2003:4, CMI (Chr. Michelsen Institute), Bergen, Norway.
    23. Peter J. Burnell, 2004. "Foreign Aid Resurgent: New Spirit or Old Hangover?," WIDER Working Paper Series RP2004-44, World Institute for Development Economic Research (UNU-WIDER).
    24. Azam, Jean-Paul & Laffont, Jean-Jacques, 2003. "Contracting for aid," Journal of Development Economics, Elsevier, vol. 70(1), pages 25-58, February.
    25. Robert Lensink & Howard White, 2000. "Assessing Aid: A Manifesto for Aid in the 21st Century?," Oxford Development Studies, Taylor & Francis Journals, vol. 28(1), pages 5-18.
    26. Michael A. Clemens & Steven Radelet, 2003. "The Millennium Challenge Account: How Much is Too Much, How Long is Long Enough?," Working Papers 23, Center for Global Development.
    27. R.D. McKinlay & R. Little, 1978. "The French Aid Relationship: A Foreign Policy Model of the Distribution of French Bilateral Aid, 1964–70," Development and Change, International Institute of Social Studies, vol. 9(3), pages 459-478, July.
    28. Paul Collier & David Dollar, 2004. "Development effectiveness: what have we learnt?," Economic Journal, Royal Economic Society, vol. 114(496), pages 244-271, June.
    29. Tun Lin & George Mavrotas, 2004. "A Contract Perspective on the International Finance Facility," WIDER Working Paper Series RP2004-60, World Institute for Development Economic Research (UNU-WIDER).
    30. White, Howard, 2004. "Trends in the volume and allocation of official flows from donor countries," International Review of Economics & Finance, Elsevier, vol. 13(3), pages 233-244.
    31. Jan-Erik Antipin & George Mavrotas, 2006. "On the Empirics of Aid and Growth: A Fresh Look," WIDER Working Paper Series RP2006-05, World Institute for Development Economic Research (UNU-WIDER).
    32. Atkinson, A. B. (ed.), 2004. "New Sources of Development Finance," OUP Catalogue, Oxford University Press, number 9780199278565.
    33. Espen Villanger, 2004. "Powerful donors and foreign policy: The role of multilateral financial institutions," CMI Working Papers WP 2004: 12, CMI (Chr. Michelsen Institute), Bergen, Norway.
    34. Trumbull, William N & Wall, Howard J, 1994. "Estimating Aid-Allocation Criteria with Panel Data," Economic Journal, Royal Economic Society, vol. 104(425), pages 876-882, July.
    35. Espen Villanger, 2004. "Company Influence on Foreign Aid Disbursement: Is Conditionality Credible when Donors Have Mixed Motives?," Southern Economic Journal, John Wiley & Sons, vol. 71(2), pages 334-351, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gil S. Epstein & Ira N. Gang, 2009. "Poverty and Governance: The Contest for Aid," Review of Development Economics, Wiley Blackwell, vol. 13(3), pages 382-392, August.
    2. Kilby, Christopher, 2009. "The political economy of conditionality: An empirical analysis of World Bank loan disbursements," Journal of Development Economics, Elsevier, vol. 89(1), pages 51-61, May.
    3. Stijn Claessens & Danny Cassimon, 2007. "Empirical evidence on the new international aid architecture," WEF Working Papers 0026, ESRC World Economy and Finance Research Programme, Birkbeck, University of London.
    4. Amegashie, J. Atsu & Ouattara, Bazoumanna & Strobl, Eric, 2007. "Moral Hazard and the Composition of Transfers: Theory with an Application to Foreign Aid," MPRA Paper 3158, University Library of Munich, Germany, revised 06 May 2007.
    5. Gil S. Epstein & Ira N. Gang, 2006. "Decentralizing Aid with Interested Parties," WIDER Working Paper Series RP2006-06, World Institute for Development Economic Research (UNU-WIDER).
    6. George Mavrotas, 2011. "Security and Development: Delving Deeper into the Nexus," Chapters, in: George Mavrotas (ed.), Security and Development, chapter 1, Edward Elgar Publishing.
    7. Kurt Annen & Luc Moers, 2017. "Donor Competition for Aid Impact, and Aid Fragmentation," The World Bank Economic Review, World Bank, vol. 31(3), pages 708-729.
    8. Maria Perrotta Berlin & Raj M. Desai & Anders Olofsgård, 2023. "Trading favors? UN Security Council membership and subnational favoritism in aid recipients," The Review of International Organizations, Springer, vol. 18(2), pages 237-258, April.
    9. Paolo Pinotti & Riccardo Settimo, 2011. "Does aid buy votes?," Questioni di Economia e Finanza (Occasional Papers) 101, Bank of Italy, Economic Research and International Relations Area.
    10. Epstein, Gil S. & Gang, Ira N., 2009. "Good governance and good aid allocation," Journal of Development Economics, Elsevier, vol. 89(1), pages 12-18, May.
    11. Vera Z. Eichenauer & Simon Hug, 2018. "The politics of special purpose trust funds," Economics and Politics, Wiley Blackwell, vol. 30(2), pages 211-255, July.
    12. Alessia Isopi & George Mavrotas, 2006. "Aid Allocation and Aid Effectiveness: An Empirical Analysis," WIDER Working Paper Series RP2006-07, World Institute for Development Economic Research (UNU-WIDER).
    13. repec:bla:rdevec:v:13:y:2009:i:s1:p:382-392 is not listed on IDEAS
    14. Osman S Kiratli, 2019. "Aiding together? Europeans’ attitudes on common aid policy," European Union Politics, , vol. 20(2), pages 261-281, June.
    15. Raechelle Mascarenhas & Todd Sandler, 2006. "Do donors cooperatively fund foreign aid?," The Review of International Organizations, Springer, vol. 1(4), pages 337-357, December.
    16. Aidy Halimanjaya, 2016. "Allocating climate mitigation finance: a comparative analysis of five major green donors," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 6(3), pages 161-185, July.
    17. Kilby, Christopher, "undated". "The Political Economy of Conditionality: An Empirical Analysis of World Bank Enforcement," Vassar College Department of Economics Working Paper Series 92, Vassar College Department of Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mark McGillivray, 2003. "Efficacité de l'aide et sélectivité : vers un concept élargi," Revue d’économie du développement, De Boeck Université, vol. 11(4), pages 43-62.
    2. Mark McGillivray, 2006. "Aid Allocation and Fragile States," WIDER Working Paper Series DP2006-01, World Institute for Development Economic Research (UNU-WIDER).
    3. Tony Addison & George Mavrotas & Mark McGillivray, 2005. "Aid, Debt Relief and New Sources of Finance for Meeting the Millennium Development Goals," WIDER Working Paper Series RP2005-09, World Institute for Development Economic Research (UNU-WIDER).
    4. Tony Addison & George Mavrotas & Mark McGillivray, 2005. "Development assistance and development finance: evidence and global policy agendas," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(6), pages 819-836.
    5. Mark McGillivray, 2005. "Réformer la formule : commentaires.Efficacité de l'aide et régimes de politiques économiques dans les pays receveurs," Revue d’économie du développement, De Boeck Université, vol. 13(2), pages 119-127.
    6. Mark McGillivray, 2003. "Aid Effectiveness and Selectivity: Integrating Multiple Objectives into Aid Allocations," WIDER Working Paper Series DP2003-71, World Institute for Development Economic Research (UNU-WIDER).
    7. Alessia Isopi & George Mavrotas, 2006. "Aid Allocation and Aid Effectiveness: An Empirical Analysis," WIDER Working Paper Series RP2006-07, World Institute for Development Economic Research (UNU-WIDER).
    8. Almuth Scholl, 2009. "Aid Effectiveness and Limited Enforceable Conditionality," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(2), pages 377-391, April.
    9. repec:hum:wpaper:sfb649dp2005-054 is not listed on IDEAS
    10. Tun Lin & George Mavrotas, 2004. "A Contract Perspective on the International Finance Facility," WIDER Working Paper Series RP2004-60, World Institute for Development Economic Research (UNU-WIDER).
    11. Tierney, Michael J. & Nielson, Daniel L. & Hawkins, Darren G. & Roberts, J. Timmons & Findley, Michael G. & Powers, Ryan M. & Parks, Bradley & Wilson, Sven E. & Hicks, Robert L., 2011. "More Dollars than Sense: Refining Our Knowledge of Development Finance Using AidData," World Development, Elsevier, vol. 39(11), pages 1891-1906.
    12. Mark McGillivray, 2005. "What determines African bilateral aid receipts?," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(8), pages 1003-1018.
    13. Elisabeth Paul, 2006. "A Survey of the Theoretical Economic Literature on Foreign Aid," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 20(1), pages 1-17, May.
    14. Tony Addison & George Mavrotas & Mark McGillivray, 2005. "Aid to Africa: an unfinished agenda," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(8), pages 989-1001.
    15. Temple, Jonathan R.W., 2010. "Aid and Conditionality," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4415-4523, Elsevier.
    16. Mina Baliamoune‐Lutz & George Mavrotas, 2009. "Aid Effectiveness: Looking at the Aid–Social Capital–Growth Nexus," Review of Development Economics, Wiley Blackwell, vol. 13(3), pages 510-525, August.
    17. Mark McGillivray, 2003. "Modelling Aid Allocation: Issues, Approaches And Results," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 28(1), pages 171-188, June.
    18. Jan-Erik Antipin & George Mavrotas, 2006. "On the Empirics of Aid and Growth: A Fresh Look," WIDER Working Paper Series RP2006-05, World Institute for Development Economic Research (UNU-WIDER).
    19. Pincin, Jared, 2013. "Political power and aid tying practices in the development assistance committee countries," MPRA Paper 49806, University Library of Munich, Germany.
    20. Kilby, Christopher, 2005. "World Bank lending and regulation," Economic Systems, Elsevier, vol. 29(4), pages 384-407, December.
    21. Stéphane Pallage & Michel A. Robe & Catherine Bérubé, 2006. "The Potential of Foreign Aid as Insurance," IMF Staff Papers, Palgrave Macmillan, vol. 53(3), pages 1-5.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:unu:wpaper:dp2006-02. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Siméon Rapin (email available below). General contact details of provider: https://edirc.repec.org/data/widerfi.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.