Aid Effort and its Determinants
The article empirically explores the factors that could have accounted for the generally declining aid effort (defined as the generosity ratio, or the share of GDP given as aid) of bilateral donors over the last three decades. Annual panel data for 1970–2000 from the 22 Development Assistance Committee (DAC) members are used in a series of regressions, and the findings suggest the existence of progressivity of aid in relation to donor income. There is also evidence of economies of scale, in the sense that the share of aid decreases relative to the size of donor country population. A domestic pro-poor tendency also appears to enhance donor generosity, and a positive “peer pressure” effect is also observed. In addition, the extent of donors' military adventurism is observed to enhance aid efforts. However, no discernible effect is detected for fiscal balance. Political polarization and fractionalization are found to enhance aid efforts, although no discernible consistent effects of ideological orientation of government are detected. Finally, aid effort over time is found to differ between G7 and non-G7 donors.