Generosity or economic reasons? - Motivations of Kuwait and the United Arab Emirates for aid allocations

Abstract

Recently, international development cooperation seems to realign: new actors and new forms of aid have appeared. Financial aid from emerging donors is growing, and the aid for trade (AfT) initiative launched ten years ago has growing importance with its aim to improve the supply-side capacity in developing countries so that they can effectively join and benefit from international trade. All these raise the question of what kind of role the emerging donors have in implementing the AfT initiative. Because of the heterogeneity of emerging donors, the current study is focusing on the Arab donors only, and aims to analyse what factors motivate the Arab aid and AfT allocation. The literature review and the results of our empirical analysis applying the Heckit model and covering 124 developing countries and the years 2010 through 2016 indicate that cultural and geographic proximity and human development are the driving factors when allocating Arab aid.