Essays on the Allocation, Effectiveness and Coordination of Development Aid

202 Pages·2013·4.69 MB·English

by  Hannes Öhler

Essays on the Allocation,
Effectiveness and Coordination of
Development Aid

Dissertation
zur Erlangung des Doktorgrades der Staats- und
Wirtschaftswissenschaften der Fakultät für Wirtschafts- und
Sozialwissenschaften der Universität Heidelberg

vorgelegt von
Hannes Öhler

Heidelberg, 2012
Erstgutachter: Prof. Dr. Axel Dreher
Zweitgutachter: Prof. Dr. Stefan Klonner
Drittprüfer: Prof. Dr. Daniel Finke

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Acknowledgements

I am very grateful to my supervisor Axel Dreher. He supported me with his advice, his
experience and many fruitful discussions. Moreover, I would also like to thank Stefan
Klonner and Daniel Finke for being members of my PhD thesis committee.

Special thanks also go to my co-author Peter Nunnenkamp who I am grateful to for sharing
his experience and knowledge with me. I would also like to thank Maximiliano Sosa Andrés
and Johannes Weisser, two other co-authors, and Janina Weingarth who contributed to an
earlier version of Chapter I. In addition, I am grateful to Michaela Rank and the student
assistants in Göttingen and Heidelberg who provided excellent research assistance.

Last but not least, I would like to thank my office mates during my PhD studies, Andreas and
Jan, and my other friends and colleagues at the Chair of International and Development
Politics in Heidelberg and in the Development Economics Research Group in Göttingen for
the great time I had with them.

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Table of Contents

List of Tables vii
List of Figures ix
List of Appendices x
Overview: An Empirical Analysis in Five Chapters 1
Chapter I: Financial Dependence and Aid Allocation by Swiss NGOs:
A Panel Tobit Analysis 8
I.1 Introduction 9
I.2 Analytical Background and Hypotheses 10
I.3 Data and Method 12
I.4 Results 19
I.5 Summary and Conclusion 28
I.6 References 30
Chapter II: Need, Merit, and Politics in Multilateral Aid Allocation:
A District-Level Analysis of World Bank Projects in India 49
I.1 Introduction 50
I.2 Data and Method 53
I.3 Results 57
I4 Summary and Conclusion 63
I.5 References 65
Chapter III: Throwing Foreign Aid at HIV/AIDS in Developing Countries:
Missing the Target? 77
I.1 Introduction 78
III.2 Assessing Aid Effectiveness: An Alternative Approach 79
III.3 Data and Stylized Facts 82
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III.4 Method 85
III.5 Results 88
III.6 Summary and conclusion 97
III.7 References 100
Chapter IV: Does Conditionality Work? A Test for an Innovative US Aid Scheme 115
IV.1 Introduction 116
IV.2 The Debate on Conditionality 117
IV.3 The MCC’s Approach and Conditions 122
IV.4 Data and Method 125
IV.5 Results 129
IV.6 Summary and Conclusion 138
IV.7 References 141
Chapter V: Do Aid Donors Coordinate Within Recipient Countries? 158
V.1 Introduction 159
V.2 Hypotheses and Related Literature 161
V.3 Data and Method 165
V.5 Results 169
V.6 Conclusion 173
V.7 References 175

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List of Tables

Table I.1 Swiss NGO aid, sample characteristics 35

Table I.2 Total sample of Swiss NGOs: panel Tobit results, coefficients, 36
total NGO aid

Table I.3 Total sample of Swiss NGOs: panel Tobit results, overall 38
marginal effects, total NGO aid

Table I.4 Total sample of Swiss NGOs: test for robustness, coefficients, 40
total NGO aid

Table I.5 Sub-sample of officially co-financed NGOs: panel Tobit 41
results, overall marginal effects

Table II.1 PPML estimations, number of locations at the district level for 67
all projects approved in 2006-2011, district- and state-level
determinants

Table II.2 PPML estimations, number of locations at the district level for 68
all projects approved in 2006-2011, district-level determinants
and state fixed effects

Table II.3 PPML estimations, number of locations at the district level for 69
all projects approved in 2001-2011

Table II.4 PPML and SARAR by GS2SLS estimations with spatial lags 70
(based on inverse distances), number of locations at the district
level for all projects approved in 2006-2011

Table II.5 PPML estimations, number of locations at the district level for 71
all projects by year from 2006 to 2011

Table II.6 PPML estimations, number of project-specific locations at the 72
district level (for each project approved in 2006-2011)

Table III.1 Aid against HIV/AIDS: Top-20 Recipients, 1998-2002 and 105
2003-2007

Table III.2 ODA effects on the number of people living with HIV and 106
AIDS-related deaths: Baseline results

Table III.3 ODA effects on the number of people living with HIV and 107
AIDS-related deaths: Robustness tests

Table III.4 ODA effects on AIDS-related deaths: DAC countries versus 108
multilateral organizations as major donors
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Table III.5 ODA effects on AIDS-related deaths: United States and Global 109
Fund as major donor

Table III.6 ODA effects on AIDS-related deaths: Robustness tests for 110
major donors

Table IV.1 Summary Statistics 148

Table IV.2 MCC Eligibility and Control of Corruption (2nd quartile) 149

Table IV.3 MCC Eligibility and Control of Corruption (1st quartile) 150

Table IV.4 MCC Eligibility and Control of Corruption (2nd quartile) 151

Table IV.5 MCC Eligibility and Control of Corruption (2nd or 3rd quartile) 152

Table IV.6 MCC Eligibility and Control of Corruption (complex incentive 153
structure)

Table IV.7 Tests for Robustness 154

Table V.1 Average project size by donor (2000-2007) 180

Table V.2 Logit estimations, whole period, before vs. after Paris 181
Declaration, bilateral vs. multilateral donors

Table V.3 Marginal effects based on Table V.2, columns (4) and (5) 181

Table V.4 Logit estimations, Log aid funds as (additional) explanatory 182
variable

Table V.5 Marginal effects based on Table V.4, columns (4), (5), (9) and 183
(10)

Table V.6 Logit estimations, international and national NGOs, 183
coordination with official donors, coefficients

Table V.7 Logit estimations, international and national NGOs, 184
coordination with official donors, marginal effects

Table V.8 Logit estimations, coordination among international and 185
national NGOs, coefficients

Table V.9 Logit estimations, coordination among international and 186
national NGOs, marginal effects

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List of Figures

Figure I.1 Marginal effects of the interaction ODAresid*Share 34

Figure I.2 Marginal effects of the interaction ODAresid*Share, 34
Contributions

Figure III.1 Aid commitments by bilateral and multilateral donors to fight 103
HIV/AIDS, 1995-2008 (US$ billion in constant prices of 2008)

Figure III.2 Median of per-capita aid against HIV/AIDS (in 2003-2007) for 103
sub-samples of countries with high, medium and low HIV
prevalence (in 2003)

Figure III.3 Treatment versus control group: Increase in aid per capita, 104
2003-2007 compared to 1998-2002

Figure IV.1 MCC compact obligations in percent of total aid commitments 146
of all donors in previous five years

Figure IV.2 MCC compact obligations in percent of recipient countries’ 146
GDP

Figure IV.3 Change in Control of corruption before and after the 147
announcement of MCC

Figure V.1 Number of projects by official donors and NGOs 179

Figure V.2 Number of official donors and NGOs 179

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List of Appendices

Appendix I.1 Variable description and sources 43

Appendix I.2 Descriptive statistics, total sample of Swiss NGOs 44

Appendix I.3 Correlations between dependent and independent variables, 45
total sample of Swiss NGOs

Appendix I.4 First-stage regression, Tobit estimations with public aid (ODA) 46
as the dependent variable

Appendix I.5 Test for endogeneity of ODA, UN voting as the instrumental 47
variable

Appendix I.6 First-stage regression, OLS with # NGOs as the dependent 48
variable, coefficients

Appendix II.1 Sector-specific World Bank commitments in India, 2006-2011 73
(US$ billion)

Appendix II.2 Distribution of World Bank projects across Indian states, 2006- 74
2011

Appendix II.3 Definition of variables and data sources 75

Appendix II.4 Descriptive Statistics 76

Appendix III.1 Definition of variables and sources 111

Appendix III.2 Descriptive statistics (year 2003) 112

Appendix III.3 HIV prevalence and ODA in sample countries (treatment and 113
control group)

Appendix III.4 Countries in the respective treatment and control groups 114

Appendix IV.1 MCC candidate countries in 2004 155

Appendix IV.2 MCC compacts, 2005-2010 156

Appendix IV.3 Countries in the respective treatment group 157

Appendix V.1 Infant mortality and per capita official aid and NGO aid per 187
province

Appendix V.2 Number of projects and aid funds by official donors and NGOs 188

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