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Development Aid

“Izandla ziyagezana” - “Hands Wash Each Other”

Certain donors (notably the Nordic countries) seem to respond more to the 'correct'
incentives, namely income levels, good institutions of the receiving countries, and

openness.
Other countries (notably France) give to former colonies tied by political alliances, without
much regard to other factors, including poverty levels or choice of politico-economic

regimes. The United States pattern of aid giving is vastly influenced by that country's
interest in the Middle East.

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Cross country differences are largely explained by 'political' factors such as colonial links,

alliances, strategic interests, etc. However, at the margin, changes in aid flows over time
in a country tend to reward 'good policies', notably democratisation and openness.”
"Who Gives Foreign Aid to Whom and Why?" 441
Alesina, Alberto, and David Dollar.
National Bureau of Economic Research, (June 1998)
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“ Imputing U.S. expected benefits from SC resolutions through the probit estimation, we
find empirical evidence supporting the hypothesis that the U.S. traded foreign aid for

rotating members' votes on vital issues during the period 1960-2001. Our finding
suggests that SC seat rotation is a useful predictor of U.S. foreign aid distribution.”

“Vote-Buying Behavior in the Security Council: 442
Theory and Evidence from U.S. Foreign Aid “(July 2014)
Fumiko Tamura, Finance Department, News Corp
Takuma Kunieda†, Department of Economics and Finance,
City University of Hong Kong

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“ Ten of the 15 seats on the U.N. Security Council are held by rotating members serving
two year terms. We find that a country's U.S. aid increases by 59 percent and its U.N. aid

by 8 percent when it rotates onto the council. This effect increases during years in which
key diplomatic events take place (when members' votes should be especially valuable),

and the timing of the effect closely tracks a country's election to, and exit from, the
council.

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Our results suggest that council membership itself, and not simply some omitted variable,

drives the aid increases. On average, the typical developing country serving on the council
can anticipate an additional $16 million from the United States and $1 million from the

United Nations During important years, these numbers rise to $45 million from the United
States and $8 million from the United Nations.