Bilateral Official Development Assistance Research Articles

Strategic donor behaviour and country vulnerability in health aid transitions

BackgroundWhen countries reach the middle-income threshold, many multilateral donors, including Gavi, the Vaccine Alliance (Gavi), begin to withdraw their official development assistance (ODA), known as graduation. We hypothesised that bilateral...

Development Goals, commercial interest and EU Aid-for-Trade

The extent to which official development assistance (ODA) conforms to internationally agreed goals and principles of aid effectiveness may be influenced by donors’ national interests. Disentangling the extent to which national ODA is motivated by development goals vs. commercial self-interest is difficult. European Union (EU) member states provide external aid through EU-level institutions and independently through national aid programs. Theory suggests pooled EU-level aid facilitates satisfying development effectiveness principles while bilateral ODA is more likely to reflect national interests. We investigate this hypothesis for a subset of ODA, aid for trade (AfT), provided by donors to recipient countries between 2002 and 2018. We find a strong, statistically significant positive relationship between AfT provided by EU donors and their exports to recipient countries. In contrast, AfT provided by EU institutions and non-European states enhances merchandise imports from recipient countries.

Determinants of Climate-Related Development Finance: Policy Implications for South Korea's CRDF in Comparison with CRDF Trends of Japan, Germany, and France

As climate change is a global agenda that requires combined and collective global efforts, each country, developed or developing, needs to mainstream climate change policies, both domestic and external, to achieve its' Nationally Determined Contribution (NDC) targets and ultimately the goals of the Paris Agreement (PA). For this end, climate finance, domestic or international, public or private, plays crucial role in the much-needed transitioning of carbon-intensive industries as well as adapting to the effects of climate change. This study, within the context of Climate-Related Development Finance (CRDF) for developing countries as part of bilateral Official Development Assistance (ODA), aims to derive policy implications for South Korea's CRDF by means of empirical analyses of CRDF determinants for Japan, Germany, and France, which are one of the largest donor countries of CRDF among member countries of the Development Assistance Committee for the Organization for Economic Co-operation and Development (OECD DAC). South Korea should scale up CRDF to recipient countries to which export volume is comparatively higher, reflecting its economic interest, as largest donor countries do consider export volume in their CRDF allocations.

Does official development assistance benefit the donor economy? New evidence from Japanese overseas infrastructure projects

Given the growing pressure on donors to curtail foreign aid budgets, analyzing the effectiveness of bilateral official development assistance (ODA) in realizing national interests has become more significant than ever. From the viewpoint of economic interests, prior research has revealed that ODA can help expand donor exports and outward foreign direct investments. This study is the first to provide evidence that ODA can also help firms from donor countries to win infrastructure projects in recipient countries. Employing unique contract data on Japanese overseas infrastructure projects, I estimate a fixed effects Poisson model with a panel dataset for 158 recipients for the period between 1970 and 2020. The results suggest that 17% of the total number of overseas infrastructure projects contracted to Japanese firms during 1970–2020 were attributable to Japanese ODA disbursement. I also explore the potential mechanism, finding that the Japanese ODA-infrastructure link is strengthened when Japanese loans and grants are simultaneously provided to a recipient country. This finding is consistent with the view that pre-investment studies conducted as part of technical cooperation could generate goodwill effects on Japanese firms during their bidding for Japanese yen loan projects.

Empirical analysis of the impact of Turkish bilateral official development assistance on export

Purpose ― The main objective of this study is to explore the relationship between bilateral official development assistance and the export of Turkey to 18 Turkish aid recipient countries between 1998 and 2019. Methods ― The study employs the gravity model of international trade to capture the effect of official development assistance on Turkish export to its aid recipient countries and utilizes Panel data econometric analysis. Findings ― The official development assistance (ODA) remains statistically significant across the models, indicating that ODA is one of the significant drivers of Turkish bilateral trade with the aid recipient countries. Implications ― The study argues that Turkey applied ODA as a foreign policy tool to access new markets in the Middle East, Balkans, Africa, and Asia. Turkish exports to developing countries increased due to the upsurged country's foreign aid donation to its recipients. Originality ― This study deviates from other studies in the literature by empirically examining the relationship between bilateral Official development assistance and the export of Turkey.

Determinants of bilateral official development assistance

ABSTRACT According to the World Bank 2017 statistics, the inequalities between rich and poor countries have increased despite an 80% increase in the official development assistance volume. This persisted, even under the Millennium Development Goals (MDGs) regime (2000–2015), a period during which developing countries’ needs were assumed to be at the centre of the international community’s actions. Thus, one may question the effectiveness of aid and the real motivations of donor countries. This article aims to examine the factors that determine the bilateral official development assistance (BODA) allocation by using more recent data, and with an emphasis on whether donor countries have put into place a wish from the MDGs to largely take into account the needs of recipient countries in their ODA allocation decisions. Among other results, we show that the needs of recipient countries are taken into account by only small donors (in terms of volume) in their aid decisions. The major ODA providers do not follow the trend. Thus, rowing in line with the MDGs, putting the needs of recipient countries at the centre of BODA allocation was mainly limited to small ODA donors. Donor interest was is put forward by most of the donor countries.

Структура и перспективы трансформации официальной помощи развитию Армении

This article examines the ratio of the official development assistance (ODA) structure of Armenia to its domestic goals. For this, the author examines the structure of development assistance to Armenia and the motives of its main donors. Considering the countryʼs rather close economic cooperation with Russia and the countries of the European Union (EU), the expected political motivation of the countryʼs donors in providing and distributing ODA is revealed. However, for the most part, ODA-supported projects correspond to the real distribution of the countryʼs domestic needs: poverty reduction and support for socially vulnerable groups of the population, development of agriculture and the service sector, and support for climate initiatives. The main contribution to this is made by international organizations and the United States, which are historically the most reliable and long-standing donors of ODA to the country. The Russian Federation is also a major donor of ODA to Armenia; however, due to the peculiarities of defining development assistance at the legislative level, Russian bilateral ODA is disordered and incorrectly reflected in official statistics. In the medium term, the current structure of ODA by sector and donor can be expected to stay stable: it is based on long-term agreements on cross-country economic cooperation and the activity of a stable political structure in the United States. In the long term, the structure of Armeniaʼs ODA is likely to be most determined by the development of economic relations between the Republic of Armenia and the European Union.

Aiding Human Rights? The Effect of U.S., European, and Chinese Development Assistance on Rights Practices in Recipient Countries, 2001 to 2017

Official development assistance (ODA) refers to aid intended to promote economic development and wellbeing in developing countries. The effect of ODA from Western donors continues to be debated, but the impact of aid from non-Western countries such as China is a relatively new field of inquiry and analysis. Using data on Western ODA and a new dataset of “ODA-like” disbursements from China, this article analyzes the relationship between bilateral aid receipts from three sources—the United States, major European donors, and China—and two sets of human rights practices: physical integrity and “empowerment” (i.e., civil and political) rights. Analyses are conducted using panel fixed-effects regression models with and without instrumental variables. U.S. ODA, in particular, improves human rights in recipient countries. Estimated effects of bilateral ODA from European donors and China are far less robust. These results suggest that U.S. aid is not as ineffective nor Chinese aid as pernicious as is commonly assumed.

Lessons from the Past and Sectoral Priorities in Bilateral Official Development Assistance

As a donor, the Republic of Korea emphasizes five sectors as primary targets for official development assistance—education, health, governance, agriculture, and industry and energy—which contributed to its own rapid economic growth; that is, the country uses its own development experience as a development assistance model. This study examines the determinants of Korean ODA allocation for each of these sectors. We hypothesize that Korea is likely to allocate more targeted ODA to countries with less achievement in these sectors, and that this tendency is stronger for low-income countries. Using disaggregated Korean ODA allocation data for 2006 to 2015, we find that while the income of recipient countries generally has a significant effect on the allocation of ODA to each sector, the level of development of that particular sector does not appear to have systematic effects on allocations. This null finding may be due to the lack of coordination among the country’s many ODA institutions and the alignment of ODA with the demands and preferences of the recipient countries.

Do Greener Trade Agreements Call for Side-Payments?

Preferential trade agreements (PTAs) increasingly include environmental provisions. While the existing literature documents these provisions’ environmental impacts, this paper sheds light on their relation with aid flows. Using an event-specification and data on bilateral Official Development Assistance (ODA) commitments for a sample of 147 developing country recipients in the period from 2002 to 2017, we find evidence that the number of environmental provisions in PTAs is positively associated with aid during negotiation phases. With high-income countries typically pre-determining the extent of environmental provisions in their upcoming PTAs, this suggests that aid serves as a side-payment for recipients to sweeten the pot and agree upon already formulated PTA content. While both aggregate ODA and its subcomponent environmental aid a priori qualify as candidates for pre-signature side-payments, we find that only the former fulfills this expectation, presumably reflecting more leeway to exploit aid fungibility.

Tracking sectoral allocation of official development assistance: a comparative study of the 29 Development Assistance Committee countries, 2011–2018

ABSTRACT Background: Official development assistance (ODA) is one of the most important means for donor countries to foster diplomatic relations with low- and middle-income countries and contribute to the welfare of the international community. Objective: This study estimated the sectoral allocation of gross disbursements of ODA of the 29 Development Assistance Committee (DAC) member countries of the Organisation for Economic Co-operation and Development (OECD) for the duration of 2011 to 2018, by aid type (bilateral, multilateral, and both aids). Methods: Data from the OECD iLibrary were used. The sector definition was based on the OECD sector classification. For core funding to multilateral agencies that do not specialize in each aid sector, we estimated ODA and its flows based on the OECD methodology for calculating imputed multilateral ODA. Results: For all 29 countries, during the period of 2014–2018 where data were available for all the countries, the sector with the highest average annual ODA contribution was health at 20.34 billion USD (13.21%), followed by humanitarian aid at 18.04 billion (11.72%). Humanitarian aid has increased in the sectoral share rankings in both bilateral and multilateral aid, and the sectoral share for refugees in donor countries has increased in bilateral aid. While the 29 countries show relatively similar trends for sectoral shares, some countries and sectors display unique trends. For instance, infrastructure and energy sectors in bilateral aid of Japan are particularly high accounts for 48.48% of the total bilateral ODA of the country in 2018. Conclusions: This paper evaluated ODA trends by major donors of DAC countries in the pre-COVID-19 pandemic periods. We hope that our estimates will contribute to the review of the strategic decision-making and the effective implementation of future ODA policy discussions in the DAC countries while ensuring transparency.

Do diplomatic visits promote official development aid? Evidence from Japan

Do diplomatic visits by political leaders of recipient countries to donors influence the amount of bilateral Official Development Assistance (ODA) granted by donors? Some might argue that as aid al...

Двусторонняя официальная помощь развитию: факторы для стран-доноров

Determination and analysis of factors that influence the parameters of international development assistance from donor countries is one of the prominent areas of international development research. This study examines the relationship between economic and institutional parameters of donor countries and the share of bilateral official development assistance in the total amount of official development assistance provided by donor countries. A cross-country analysis of the of the relationship between the share of bilateral aid and the ratio of total official development assistance to gross national income and gross national income per capita of the donor countries was carried out. The relationship between the share of bilateral aid and some of the institutional characteristics of donor countries was also investigated. The results indicate a possible positive relationship between macroeconomic parameters and the share of bilateral official development assistance. For individual institutional characteristics, a possible positive relationship with the share of bilateral assistance was also revealed. Thus, the improvement of counteraction to corruption in donor countries correlates with the increase in the share of their bilateral official development assistance. A general conclusion is drawn on the existence of a positive relationship between the increase of the share of bilateral official development assistance and the growth of the economic potential of donor countries and strengthening of their institutions.

The effects of foreign aid on refugee flows

We investigate whether foreign aid affects refugee flows from recipient countries. Combining refugee data on 141 origin countries over the 1976–2013 period with bilateral Official Development Assistance data, we estimate the causal effects of a country’s aid receipts on both total refugee flows to the world and flows to donor countries. The interaction of donor-government fractionalization and a recipient country’s probability of receiving aid provides a powerful and excludable instrumental variable (IV) when we control for country- and time-fixed effects that capture the levels of the interacted variables. Though our IV results suggest that aid induces recipient governments to encourage the return of their citizens, we find no evidence that aid reduces worldwide refugee outflows or flows to donor countries in the short term. However, we observe long-run effects after four three-year periods, which appear to be driven by lagged positive effects of aid on growth.

Gender equality in politics at home and promotion of gender equality in politics abroad: The role of bilateral official development assistance

Does gender equality in politics in donor countries affect the allocation to recipient countries of official development assistance in support of gender equality in politics? Since the 1995 Beijing Declaration and Platform for Action and the launch of the United Nations Millennium Development Goals in 2000, gender equality has been underscored as an important development goal for donors. We hypothesize that donors with higher levels of gender equality in politics are likely to allocate more aid to recipients with lower levels of gender equality in politics to promote the equality in politics in those countries. We expect this positive relationship to be even more significant after the launch of the Millennium Development Goals. Using a time-series cross-sectional design covering country dyads for the period, 1990–2012, we find evidence supporting our hypotheses.

The Effects of Foreign Aid on Refugee Flows

This article is the first to systematically study whether foreign aid affects the net flows of refugees from recipient countries. Combining refugee data on 141 origin countries over the 1976-2013 period with bilateral Official Development Assistance data, we estimate the causal effects of a country's aid receipts on both total refugee flows to the world and flows to donor countries. The interaction of donor-government fractionalization and a recipient country's probability of receiving aid provides a powerful and excludable instrumental variable, when we control for country- and time-fixed effects that capture the levels of the interacted variables. Although our results suggest that exogenous aid induces recipient governments to encourage the return of their citizens, we find no evidence that aid reduces worldwide refugee outflows or flows to donor countries in the short term. However, we observe long-run effects after four three-year periods, which appear to be driven by lagged positive effects of aid on growth.

Does Official Development Assistance Affect Donor's Export? Case of Korea

This paper aims to estimate the impact of bilateral Official Development Assistance (ODA) provided by Korea on its bilateral export to recipient countries. The empirical analysis is based on data from 1996 to 2014 with 121 recipient countries. Although the two models of determinants of ODA and its export effectiveness are highly interrelated, this kind of simultaneous model specification with two-ways causal relationship has not been conducted in the past. Employing a three-stage least squares estimation method leads to accounting for two-ways causal relationships between ODA and export while the endogeneity and sample selection bias are accounted for. Through using the gravity model in analysis of Korea's aggregated export data, the positive effect of bilateral ODA is confirmed when fixed unobserved effects are controlled. The model is further generalized by disaggregation of ODA into its underlying types. The results show that, humanitarian aid and loan-type aid turn out to be effective types of ODA to influence export positively. In terms of Korea's ODA allocation, the finding suggests that there is a two-stage decision making process in aid provision. In the first stage, a humanitarian purpose of aid dominates responding to lower income and disaster experienced countries' needs, even when lower bilateral trade prevails. The second stage is to make a decision regarding the size of ODA to selected recipient countries, and this presents a mixed purposes of giving ODA aiming at higher importer countries.

The funding landscape for HIV in Asia and the Pacific.

IntroductionDespite recent and robust economic growth across the Asia-Pacific region, the majority of low- and middle-income countries in the region remain dependent on some donor support for HIV programmes. We describe the availability of bilateral and multilateral official development assistance (ODA) for HIV programmes in the region.MethodsThe donor countries considered in this analysis are Australia, Canada, Denmark, France, Germany, Netherlands, Norway, Sweden, the United Kingdom and the United States. To estimate bilateral and multilateral ODA financing for HIV programmes in the Asia-Pacific region between 2004 and 2013, we obtained funding data from the Organisation for Economic Co-operation and Development Creditor Reporting System database. Where possible, we checked these amounts against the funding data available from government aid agencies. Estimates of multilateral ODA financing for HIV/AIDS were based on the country allocations announcement by the Global Fund to Fight AIDS, Tuberculosis and Malaria (the Global Fund) for the period 2014 to 2016.ResultsCountries in the Asia-Pacific region receive the largest share of aid for HIV from the Global Fund. Bilateral funding for HIV in the region has been relatively stable over the last decade and is projected to remain below 10% of the worldwide response to the epidemic. Bilateral donors continue to prioritize ODA for HIV to other regions, particularly sub-Saharan Africa; Australia is an exception in prioritizing the Asia-Pacific region, but the United States is the bilateral donor providing the greatest amount of assistance in the region. Funding from the Global Fund has increased consistently since 2005, reaching a total of US$1.2 billion for the Asia-Pacific region from 2014 to 2016.ConclusionsEven with Global Fund allocations, countries in the Asia-Pacific region will not have enough resources to meet their epidemiological targets. Prevention funding is particularly vulnerable and requires greater domestic leadership and coordination. Bilateral donors are still crucially important in the response to HIV throughout the Asia-Pacific region.

Korean Bilateral Official Development Assistance to Africa Under Korea's Initiative for Africa's Development

In the past several years, the Republic of Korea—a former least developed country (LDC) and aid recipient that became a donor—joined the “club of emerging donors” to Africa. In March 2006, President Roh Moohyun declared Korea's Initiative for Africa's Development. The initiative puts poverty reduction and socioeconomic development of African countries in the forefront. Using pooled cross-sectional time series data, in this study we examine the determinants of Korean bilateral official development assistance (ODA) to Africa for the period 1991–2011. The findings of the study suggest that the approach of Korean ODA does not differ significantly from that of many conventional donors whose ODA disbursement has had a dual purpose: to improve the welfare of developing countries and to serve self-interests.

China's Foreign Aid at a Transitional Stage

By estimating China's foreign aid as a proxy for China's bilateral Official Development Assistance and by analyzing its implementation structure and policy, this paper sheds some light on China's foreign aid activities, which have been at a transitional stage. Based on our estimates, the level of foreign aid in terms of net disbursement has increased sharply since 2004, reaching around US$7.1 billion in 2013. Some measures to strengthen the implementation structure to deal with this expansion have been introduced by the central government; however, this transition process needs more time. To facilitate this process, China is attempting to absorb knowhow on development assistance from multilateral institutions and Organisation for Economic Cooperation and Development's Development Assistance Committee countries that are eager to share their knowledge, with the expectation that China will eventually play a major role in international development.