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Aid Motivation and Donor Behavior

Publication Type : Journal Article

Publisher : American Review of Political Economy

Source : American Review of Political Economy, Volume 5, Issue 1, p.1–13 (2007)

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Keywords : aid determinants, Developing countries, donor trade interest, Foreign Aid, fungibility

Campus : Amritapuri

School : Department of Management, School of Business

Center : Amrita Center for Economics & Governance (ACEG)

Department : Department of Management

Year : 2007

Abstract : This paper develops an analytical framework to explain foreign aid motivation and donor behavior, using an interdependent utility maximization framework, in which donor faces two constraints; its own budget constraint and the recipient's utility function. This paper specifically contributes to the literature on foreign aid by integrating the various objectives underlying aid allocation, namely recipient income and trade performance,international income distribution and donor reaction to fungibility. Between trade interest and international income distribution, the former is found to be a more common consideration in aid allocation. One of the important results is that the fungibility of foreign aid is established as a major problem so as to invite donor’s retaliation. However, the retaliatory response appears to co-exist with other motivations.

Cite this Research Publication : Shyam Nath and Sobhee, S. K., “Aid Motivation and Donor Behavior”, American Review of Political Economy, vol. 5, no. 1, pp. 1–13, 2007.

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