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Competition for export markets and the allocation of foreign aid: The role of spatial dependence among donor countries

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  • Barthel, Fabian
  • Neumayer, Eric
  • Nunnenkamp, Peter
  • Selaya, Pablo

Abstract

We account for the competition for export markets among the donor countries of foreign aid by analyzing spatial dependence in aid allocation. We employ sector-specific aid data, distinguishing between first and second stage decisions on the selection of recipient countries and the amount of aid allocated to selected recipients. We find that the five largest donors react to aid giving by other donors with whom they compete in terms of exporting goods and services to a specific recipient country at both stages of their allocation of aid for economic infrastructure and productive sectors. By contrast, evidence for export competition driving aid allocation is lacking for more altruistic donors and for aid in social infrastructure.

Suggested Citation

  • Barthel, Fabian & Neumayer, Eric & Nunnenkamp, Peter & Selaya, Pablo, 2013. "Competition for export markets and the allocation of foreign aid: The role of spatial dependence among donor countries," Kiel Working Papers 1875, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1875
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    More about this item

    Keywords

    aid allocation; sector-specific aid; export competition; spatial dependence;
    All these keywords.

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid

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