Please join us on Friday, April 26th, at 3 p.m. in the Hatfield Room for our final Faculty Colloquium of this semester.
Presenter: Raechelle Mascarenhas, Associate Professor of Economics
Title: Do Foreign Aid Contributions Foster Cooperation and Generosity Amongst Donors?
This talk provides an overview of my research into two aspects of the motivations underlying foreign aid donations: cooperation and generosity.
The first part of the presentation explores whether donors cooperate when giving foreign aid to developing countries. The data on foreign aid flows is disaggregated by sector (such as education, health and governance) to examine if the sector receiving aid induces donors to coordinate or free-ride. Two allocation processes are tested: non-cooperative (Nash-Cournot) and cooperative (Lindahl). The empirical analysis strongly rejects the cooperative Lindahl model with evidence of most donors adhering to the non-cooperative Nash-Cournot model.
The second part of the presentation provides an analysis of the impact of systemic financial crises on foreign aid flows through direct bilateral transfers to developing countries and channeled through multilateral institutions. The study reveals that both bilateral and multilateral aid experience statistically significant declines after donor financial crises. However, multilateral aid experiences more severe and prolonged declines than bilateral aid. This is perhaps because donors, in the aftermath of the crises, tend to prioritize their strategic interests by not cutting back bilateral aid as much as multilateral aid. Donors also tie bilateral aid to purchases of goods and services to businesses in the donor country and this tends to reduce the concessionality and effectiveness of foreign aid.
Students are welcome and coffee and treats will be provided. We look forward to seeing you there.
Bill Kelm and Daniel Rouslin
Faculty Colloquium Coordinators