An Empirical Analysis of the Determinants of Foreign Aid: A Panel Approach

  • Abdiweli M. Ali
  • Hodan Said Isse
Article
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Abstract

This paper uses a panel approach to examine the determinants of foreign aid. It examines the extent to which taxes on international trade and the scope of government activities, ethnicity, private credit, and education determine foreign aid. The paper specifies and estimates a model that explains the allocation of foreign aid among 151 countries over the period 1975 to 1998. The key empirical finding suggests that Taxes on Trade increases foreign aid dependency. Moreover, trade, private credit, foreign direct investment, GDP per worker, and government consumption are important determinants of foreign aid. The factors that appear to decrease foreign aid include: Years of schooling, private credit, trade, and GDP per worker. The factors that appear to increase foreign aid include: Taxes on international trade, ethnicity, and government consumption.

JEL

O11 O47 P51 
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Copyright information

© Springer Science+Business Media, Inc. 2006

Authors and Affiliations

  • Abdiweli M. Ali
    • 1
  • Hodan Said Isse
    • 2
  1. 1.Niagara UniversityNew YorkU.S.A.
  2. 2.SUNY at BuffaloBuffaloU.S.A.

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