Who Gets the Goodies? Overlapping Interests and the Geography of Aid for Trade Allocation in Bangladesh

Abstract

The Sustainable Development Goal principle of “leaving no one behind” has led to increased attention being paid to patterns of intra-country allocation of foreign aid. We contribute to these efforts by considering a particular type of foreign aid, Aid for Trade (AfT), to discern allocation objectives of aid. We match a novel, geo-coded, dataset on over 11,000 Bangladeshi exporting firms to over one thousand AfT project locations in Bangladesh similarly geo-coded by AidData and expanded by ourselves. We use this matched data to employ spatial techniques that evaluate political economy logics of aid allocation, wherein AfT is functionally targeted towards exporting firms, is allocated based on prebendalism, and/or is directed to high poverty areas. Our analysis finds support that AfT is allocated based on functional or prebendalist logics. The results for poverty are more nuanced. When considered in a stand-alone fashion, poverty is associated with a smaller likelihood of allocation. However, some evidence suggests that when the other logics are present, the impact of poverty on allocation becomes positive. These findings suggest that the politics of aid allocation is a nuanced and intricate dance with multiple overlapping or competing logics.