Rabah Arezki (CERDI, CNRS)

Rabah Arezki
CERDI, CNRS

Bad Samaritans in Development Aid: Evidence from Natural Resource Discoveries

Co-authors: Youssouf Camara, Rachel Yuting Fa, Grégoire Rota-Graziosi.

Abstract

This paper explores whether bilateral development aid is “tied”, exploiting the timing and size of natural resource discoveries. Results show that recipient countries that discover natural resources receive statistically and economically more aid. Mineral discoveries and grants are more subject to that phenomenon relative to oil and loans. We verify that bilateral aid is more sensitive to discoveries than multilateral aid suggesting that pooling aid into multi-stakeholder governance structure helps limit tied aid. Results are robust to a variety of checks including different estimators, the exclusion of China as donor, and exploiting information about the origin of discoverer and donor.