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Aid and income distribution (English)

An empirical analysis of the factors affecting the allocation of aid to LDCs in the recent past provides a basis for judging the possibilities for improving aid allocation in the future. Since even the most optimistic estimates of aid supplies fall substantially short of the requirements of the poorer countries, analysis must focus on the possibilities for making more effective use of the amounts that may be available. Results of the analysis suggest that: (1) there is a strong negative relationship between per capita aid commitments and population size; (2) a substantial reduction in the small country bias could free a significant amount of resources for reallocation to larger poor countries; (3) an awareness of the needs of middle- and lower-income countries has led both multilateral and bilateral donors to vastly increase lending to a number of countries in the $200-$300 per capita group; (4) absorptive capacity and political ties with donors have been the essential factors in determining which countries obtain aid; and (5) the role of concessional aid may be particularly importent in reallocation schemes for countries with per capita incomes under $200. 18 references.

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Citation

EDELMAN, J. CHENERY, H.

Aid and income distribution (English). World Bank reprint series ; no. REP 72 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/429471467980482266/Aid-and-income-distribution