This paper proposes a model of aid allocation which aims to equalize the opportunity between recipient countries to reduce the poverty. The model takes into account the natural growth deviation which is defined by the gap between the growth rate required to reach a development goal and the...

In previous papers we have argued that aid is likely to mitigate the negative effects of external shocks on economic growth (i.e., aid is more effective in countries that are more vulnerable to external shocks). Recently an important debate has emerged about the possible negative effects of aid...