Policy Sciences

, Volume 40, Issue 2, pp 157–179 | Cite as

Trade versus aid: donor generosity in an era of globalization

  • Erik LundsgaardeEmail author
  • Christian Breunig
  • Aseem Prakash


Why do foreign aid budgets vary across countries and over time? Existing research indicates that the same set of factors shapes commitments toward both domestic and international redistribution. While scholars have acknowledged international normative influences on aid allocations, research on levels of donor generosity has not examined how international trade influences aid budgets. This paper examines whether imports from developing countries have a ‘displacement effect’ on aid commitments. Employing a panel of nineteen OECD donor countries, we analyze aid budgets from 1980 to 2000. We find that increased imports from developing countries to donor countries are associated with aid reductions. These results persist after controlling for international and domestic variables identified in previous research, and under other estimation techniques and model specifications.


Foreign aid Donor generosity Trade 



Previous versions of this work were presented at Aston University in July, 2005 and at the 2005 Annual Meetings of the American Political Science Association and the Association for Public Policy Analysis and Management. The authors wish to thank Matt Potoski, John Ahlquist, Erica Johnson, Melissa A. Thomas, and Mike Ward as well as the anonymous reviewers for their useful advice.


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Copyright information

© Springer Science+Business Media LLC 2007

Authors and Affiliations

  • Erik Lundsgaarde
    • 1
    Email author
  • Christian Breunig
    • 2
  • Aseem Prakash
    • 1
  1. 1.Department of Political ScienceUniversity of WashingtonSeattleUSA
  2. 2.Department of Political ScienceUniversity of TorontoOntarioCanada

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