Determinants of Donor Generosity: A Survey of the Aid Budget Literature

Fuchs, A. Dreher, A. Nunnenkamp, P. World Development

This article provides a survey of the aid budget literature and examines the determinants of the development aid efforts of 22 Development Assistance Committee (DAC) members over the 1976–2011 period. In fixed effects regressions, we identify aid inertia, per-capita GDP, the creation of an independent aid agency, colonial history, Russian military capacity, peer effects, terror incidents, aid to CEEC/NIS countries, and imports from developing countries as determinants of the Official Development Assistance (ODA)-to-GNI ratio. Excluding donor fixed effects, several variables, including colonial history and the aid agency dummy, are no longer significant; the impact of per-capita GDP gets weaker, while donors’ budget deficits decrease aid effort.