Empirical Analyses of Emerging Donors in Development Cooperation

• Applicants: Professor Dr. Axel Dreher; Professor Dr. Andreas Fuchs
• Subject Area: Economic Policy, Applied Economics
• Term: from 2015 to 2023
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 271131907

Our project intends to contribute to the empirical aid literature by investigating the allocation and effectiveness of development finance provided by emerging actors in the field of development cooperation. The proposed research agenda aims to analyze the differences in the allocation and effectiveness of aid given by emerging donors compared to the established group of Western donors. In the first funding period (2015-2018), we have taken up the challenge posed by the scarcity of data on non-OECD bilateral aid as well as non-state aid and made significant progress in the analysis of emerging donors. Our focus was on data set construction and the analysis of aid allocation and growth effects of aid.The new project proposal builds on and enhances the geocoded data sets created during the first project period. It focuses on the increasing bilateral activities of donor governments operating outside the OECD as well as the involvement of private capital and corporations in particular. Despite increasing academic interest in non-OECD donors and implementers, there is still much uncertainty on how they will affect the global effort to eliminate poverty. Notwithstanding a growing importance of these actors in development finance, this type of aid has not received much attention in the previous literature. More precisely, our analyses will focus on China, India and companies that lend from the World Bank’s International Finance Corporation (IFC). The project follows a comparative approach evaluating whether and how this type of foreign aid complements or contrasts traditional development finance. In addition, we seek to broaden the scope of analysis on the effects of aid receipts by going beyond average income effects. Our research project aims to extend the literature in three important dimensions. First, building on our previous research, we plan to continue to construct new and better data to address data scarcity on emerging aid flows at a detailed level. Second, we intend to focus on the subnational analysis of emerging aid using geocoded data, remote-sensing data, and spatial econometrics methods. This will substantially increase statistical power compared to conventional analyses at the national level. Third, we want to contribute to the growing literature that moves beyond the analysis of GDP to measure economic development, by using more nuanced determinants of human well-being and behavior. In particular, we seek to address the multidimensional nature of a nation’s prosperity, by analyzing the effects of aid on health, migration, and public satisfaction.

• DFG Programme: Research Grants
• International Connection: Spain, USA
• Cooperation Partners: Dr. André Gröger; Bradley C. Parks, Ph.D.