Competition for Export Markets and the Allocation of Foreign Aid: The Role of Spatial Dependence among Donor Countries

TY - UNPB

T1 - Competition for Export Markets and the Allocation of Foreign Aid

T2 - The Role of Spatial Dependence among Donor Countries

AU - Barthel, Fabian

AU - Neumeyer, Erich

AU - Nunnenkamp, Peter

AU - Selaya, Pablo

N1 - JEL classification: F35

PY - 2014/12

Y1 - 2014/12

N2 - We account for competition for export markets among donor countries of foreign aid by analyzing spatial dependence in aid allocation. Employing sector-specific aid data, we find that the five largest donors react to aid giving by other donors with whom they compete in terms of exporting goods and services to a specific recipient country at both stages of their allocation of aid for economic infrastructure and production sectors. By contrast, evidence for export competition driving aid allocation is lacking for more altruistic donors and for aid in social infrastructure.

AB - We account for competition for export markets among donor countries of foreign aid by analyzing spatial dependence in aid allocation. Employing sector-specific aid data, we find that the five largest donors react to aid giving by other donors with whom they compete in terms of exporting goods and services to a specific recipient country at both stages of their allocation of aid for economic infrastructure and production sectors. By contrast, evidence for export competition driving aid allocation is lacking for more altruistic donors and for aid in social infrastructure.

KW - Faculty of Social Sciences

KW - Aid allocation

KW - sector-specific aid

KW - export competition

KW - spatial dependence

M3 - Working paper

BT - Competition for Export Markets and the Allocation of Foreign Aid

PB - Kiel Institute for the World Economy

CY - Kiel

ER -