International Policy

Little Rhyme Or Reason In Economic Aid

Why do some countries get more economic aid than others -- and why are they often the least deserving? Those and related questions are examined in a study by Alberto Alesina of Harvard University and David Dollar of the World Bank.

They arrive at some surprising conclusions:

  • Countries that are very poor often get less aid than countries that are better off -- and countries that follow destructive economic policies often get more aid.

  • Rich countries often direct more aid to countries that were their former colonies -- with an ex-colony pursuing a closed economy getting 50 percent more aid than a non- colony whose economy is open.

  • Doubling the length of time as a colony of France would result in a 100 percent increase in aid -- 165 percent more if it were a former colony of Japan.

  • Countries with smaller populations receive more aid per capita than more populous ones.

Certain factors can usually predict how much aid a country will receive -- but not in the case of Egypt and Israel. Egypt receives 481 percent more aid than the factors would suggest. As for Israel, Alesina and Dollar say the amount of aid is "basically off the scale" -- 450 times as much as one would expect.

A recent study by Bryan Johnson of the Heritage Foundation concluded that of the top 10 U.S. aid recipients in 1997, seven voted against the U.S. in the United Nations more than half the time.

Source: Perspective, "Who Gets Aid?" Investor's Business Daily, August 12, 1998.

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