We account for the competition for export markets among the donor countries of foreign aid by analyzing spatial dependence in aid allocation. We employ sector-specific aid data, distinguishing between first and second stage decisions on the selection of recipient countries and the amount of aid...

International donors usually have particular goals they want to achieve with their foreign aid, for example, poverty alleviation. In the international aid story lobbying by potential recipient groups attempting to capture the donor's support play a potentially important role for nongovernmental...

Theoretical models predict that countries with unchanged long-run savings preferences will respond to debt relief by running up new debts or by running down assets. And there are some signs that incremental debt relief over the past two decades has fulfilled those predictions. Debt relief is...

We examine how foreign aid can be used to induce a recipient country to engage in trade-policy reforms. First, we develop a two-country and two-period theoretical model where the donor's promise of aid in period 2 depends on the recipient's chosen tariff in period 1. Without aid, optimal tariff...

“Reduced emissions from deforestation and forest degradation” (REDD) is emerging as a major new climate change mechanism that could deeply impact the financial, social and institutional dynamics of deforestation, conservation, and development in many developing countries. It has the...

We demonstrate that subsidy uncertainty in microfinance can lead to mission drift and defeat poverty alleviation efforts. Our model shows that microfinance institutions, fearing that subsidies may dry up, have no alternative but to build precautionary savings by serving wealthier clients,...

This paper reviews the various measures which have been used in the recent literature to assess how well donors allocate their aid across countries. We begin by proposing three desirable criteria for a measure of allocative performance, which make limited assumptions. We then show that all...

At present, the enhanced HIPC initiative and the Gleneagles Proposal for debt write-downs by the G8 are the main mechanisms used to reduce indebtedness of low-income countries. In these countries where poor governance is a key issue, it is naïve to believe that the Millennium Development Goals...

The international effort to meet the Millennium Development Goals by 2015 has given fresh prominence to the idea of poverty traps, a notion that was widely current in the 1950s. This idea, most actively promoted by economist Jeffrey Sachs, director of Columbia University's Earth Institute and...

At a time when the international dialogue surrounding development is focused on increasing the quantity of aid, this paper focuses on how the donor community can improve the quality of foreign assistance. The author discusses the problem of project proliferation, and the tendency of developing...