This paper contributes to the literature on foreign aid by exclusively explaining a donor’s motivation for foreign external assistance. The underlying framework focuses on recipients’ needs for foreign aid to address income inequality as and when growth occurs. A tax-subsidy policy is...

This paper addresses donors’ policy of providing external assistance to developing countries using an inter-temporal framework, over a finite horizon. While the framework adopted tracks the motivation of providing fore ign aid, it is altogether consistent with the paradigm of forward-looking...