A CGD note. Donors vary considerably in how much they focus their spending on poorer countries. There are good reasons to believe that the utility-maximizing allocation is focused heavily on the world’s poorest countries, where an extra dollar is likely to make the greatest difference to welfare. However, donors may also allocate resources towards humanitarian causes: particularly seeing disadvantaged subgroups within countries including refugees fleeing violence or natural disasters as deserving particular attention. In addition, donors might believe their aid will achieve more in democratic or ‘well governed’ countries. Perhaps less legitimately, donors might prefer to allocate more aid to countries with closer political or economic ties: ex-colonies, allies, supporters in the UN, or trade partners. Similarly, they might choose to focus their aid on the ‘near abroad,’ as a tool of diplomacy or reflecting higher immediate self-interest. This paper uses some of the indicators highlighted as significant by that literature to examine if they can help explain the variation in poverty focus of donor aid.
Charles Kenny
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Charles Kenny writes about global development — what’s working, what isn’t, and how the world can do better. An economist who spent fifteen years at the World Bank, he is now a senior fellow at the Center for Global Development in Washington, DC.
Charles Kenny 