Pablo Selaya publishes article in World Development
“Competition for Export Markets and the Allocation of Foreign Aid: The Role of Spatial Dependence among Donor Countries”
Fabian Barthel (LSE), Eric Neumayer (LSE), Peter Nunnenkamp (IfW), and Pablo Selaya (UCPH & Harvard)
World Development 64 (12): 350-365
The paper studies competition for export markets among donor countries of foreign aid, by analyzing spatial dependence in aid allocation. The paper employs sector-specific aid data and distinguishes between decisions about (1) the selection of recipient countries and (2) the amount of aid allocated to selected recipients. The study finds that the 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, and in particular for economic infrastructure and production sectors. By contrast, the results show no evidence for export competition driving aid allocation for more altruistic donors, and for aid in social infrastructure projects.