Abstract
This study provides a comparative analysis of the main determinants of large shifts in aid allocation by major donors, namely China, France, the United Kingdom, and the United States. In contrast to continuing assistance, significant year-over-year variation of allocated aid to a given recipient is considered a new and deliberate decision by the donors. Using a version of quantile regression to account for heterogeneity in the characteristics of aid recipients, we show that significant differences exist in the aid allocation strategies of the major donors. There is no conditionality attached to Chinese aid, while self-economic interests and corruption levels at home and in the recipient countries determine aid allocated by France and the U.K. to their former colonies. In addition, recipient needs affect aid from France, the U.K., and the U.S. Over the 2000-2014 period, there is no significant change in the determinants of aid allocation by China in response to various criticisms of its approach. Confronted with the growing influence of emerging donors such as China, the three major traditional donors seem to adjust their aid allocation policy towards their own economic interests.
Highlights
The Development Assistance Committee (DAC)’s stated goal is to contribute to sustainable development, help developing countries emerge from poverty, and ensure a future in which no country will depend on external aid
This study provides a comparative analysis of the main determinants of large shifts in aid allocation by major donors, namely China, France, the United Kingdom, and the United States
Using a version of quantile regression to account for heterogeneity in the characteristics of aid recipients, we show that significant differences exist in the aid allocation strategies of the major donors
Summary
The Development Assistance Committee (DAC)’s stated goal is to contribute to sustainable development, help developing countries emerge from poverty, and ensure a future in which no country will depend on external aid. Aid from DAC member countries has increased between 2000 and 2016, from 35.72 billion to 137.05 billion in constant 2010 U.S dollars. Despite this increase in ODA from DAC member countries, the growth remains very low compared to the growth of aid from emerging, non-DAC member countries. Aid from non-DAC member countries shot up from 15.38 million in 2001 to 14.65 billion in 2016 in constant 2010 U.S dollars. Especially Brazil, Russia, India, China, and South Africa (BRICS) countries, China has overtaken India and become the largest donor (Asmus et al, 2017)
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