Aid and the Financial Crisis: Shall We Expect Development Aid to Fall?

Bilateral Aid Allocation for International Development: Impact of the Financial Crisis

Moscow University Economics Bulletin ◽

10.38050/01300105201846 ◽

2018 ◽

Vol 2018 (4) ◽

pp. 100-121

Author(s):

Elena Balter ◽

Aleksandra Morozkina

Keyword(s):

Financial Crisis ◽

International Development ◽

Low Income ◽

Development Assistance ◽

Development Aid ◽

Low Income Countries ◽

External Financing ◽

Bilateral Aid ◽

The Impact ◽

Allocation Decisions

This article examines the impact of financial crisis of 2008-2009 on allocation of development aid. Using OECD data on Official Development Assistance (ODA) allocation for international development by key donor countries, authors test three hypotheses: first, general impact of crisis on ODA allocation; second, impact of crisis on three recipient income groups; third, impact of crisis on relative importance of analyzed factors for ODA allocation decisions. The results show that general impact of crisis on ODA volumes was negative, although donors preferred to increase aid to low-income countries. Impact of factors describing economic situation in donor countries (public debt level, government expenditures and donor growth) increased after crisis. Donor countries might make use of these results to increase efficiency of their development assistance strategies, whereas recipient countries may exploit these results in order to attract more external financing for development.

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