Latitude and Lending: Mapping and Evaluating Official Development Assistance

• Applicants: Dr. Pietro Bomprezzi; Professor Dr. Axel Dreher
• Subject Area: Economic Policy, Applied Economics
• Term: since 2025
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 573271517

This project investigates the allocation patterns and development effects of foreign aid in a multi-donor world. While traditional donors reporting to the OECD Development Assistance Committee (DAC) continue to play a dominant role, emerging powers such as China and India, as well as private philanthropic actors like the Gates Foundation, are reshaping the landscape of development finance. At the same time, the availability of fine-grained, subnational data on aid flows and development outcomes opens up new avenues for empirical research. However, existing datasets are limited in their coverage of non-Western donors and lack sufficient spatial precision to identify the local mechanisms through which aid affects development. To address these challenges, the project is organized in two parts. The first builds a comprehensive new project-level aid dataset, based on the Geocoded Official Development Assistance Dataset (GODAD), expanding its coverage to include non-DAC donors and private foundations while substantially improving the spatial precision of aid locations. We plan to update the natural language pipeline with state of the art named entity recognition and semantic similarity model to extract and infer location data from project descriptions. These methods are supplemented with APIs (e.g., Google Maps, OpenStreetMap) and auxiliary geospatial sources to increase accuracy and coverage. We aim to create a public good in the form of a replicable, open-access dataset for use by policymakers and researchers interested in the determinants and consequences of aid in a complex, multi-donor environment. The second part of the project uses this data to address key questions of aid effectiveness at the subnational level. Specifically, it investigates whether and how multiple donors operating in the same regions influence local development outcomes, such as economic activity, household wealth, and the incidence of violent conflict. A central premise is that aid effectiveness is not only determined by the amount or sectoral focus of aid, but also by who gives it and how it is implemented. The project thus explores the role of donor heterogeneity—such as differing objectives, conditionalities, and operational strategies—in shaping development outcomes. To make credible causal claims, the project combines rich subnational data with a series of empirical strategies. These include fixed effects regressions, two-stage least squares using donor-country political fractionalization as an instrument, and spatial identification approaches such as difference-in-differences, leveraging exogenous, abrupt aid cuts. The high spatial resolution also enables matching strategies that compare similar treated and untreated regions, as well as the study of spillover and saturation effects due to overlapping donor activities.

• DFG Programme: Research Grants
• International Connection: Italy, USA
• Cooperation Partners: Professorin Silvia Marchesi, Ph.D.; Professorin Dr. Christina Schneider