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This article investigates empirically whether, and in what ways, donors in the Development Assistance Committee respond to transnational terrorist incidents and the onset of the War on Terror by changing aid effort and aid allocation. First, an analysis of 22 donor countries shows that aid effort increased during the War on Terror period, but did not respond to the actual number of terror events. Second, using aid allocation equations, we find that countries where terror originates are not more likely to receive aid as a consequence, but if they are selected, they receive larger amounts of aid. Our results imply that politicians may still have to learn from economic research. To the extent that development aid can effectively combat terror across the world, as recent research suggests it does, politicians would be well-advised to target aid to those countries where terrorist groups exist in abundance. ; peerReviewed

Foreign aid from China is often characterized as "rogue aid" that is not guided by recipient need but by China"s national interests alone. However, no econometric study so far confronts this claim with data. We make use of various datasets, covering the 1956-2006 period, to empirically test to which extent political and commercial interests shape China"s aid allocation decisions. We estimate the determinants of China"s allocation of project aid, food aid, medical teams and total aid money to developing countries, comparing its allocation decisions with traditional and other so-called emerging donors. We find that political considerations are an important determinant of China"s allocation of aid. However, in comparison to other donors, China does not pay substantially more attention to politics. In contrast to widespread perceptions, we find no evidence that China"s aid allocation is dominated by natural resource endowments. Moreover, China"s allocation of aid seems to be widely independent of democracy and governance in recipient countries. Overall, denominating aid from China as "rogue aid" seems unjustified. ; info:eu-repo/semantics/published

Does the proliferation of aid donors lead to visible changes in the world of foreign assistance? Aid provided by low- and middle-income countries, autocratic regimes and donors operating outside the Development Assistance Committee (DAC) of the OECD is gaining in importance. This article uses data on emergency aid supplied by 105 donor countries to explore the determinants of aid and the differences in allocation patterns between donor groups. Our results show that both the so-called new and traditional donors provide emergency aid based on humanitarian need and their self-interests, but we find evidence that non-DAC donors attach relatively more importance to political motives. Additionally, autocratic donors seem to favor countries rich in natural resources and to disfavor democracies. Since the timeliness of the aid delivery is crucial for aid effectiveness, we furthermore analyze which factors influence the number of days that pass after a natural disaster before a donor commits herself to provide emergency relief. With regard to aid promptness, we find DAC, developed and democratic countries to be significantly faster than non-DAC, developing and autocratic countries.

It is puzzling that India, which has a large domestic constituency of people suffering from underdevelopment, chronic poverty and mal-governance, is emerging as an important aid donor. With the intension of understanding why poor countries provide foreign aid, this article is the first to econometrically analyze India's aid allocation decisions. First, we utilize cross-sectional data on aid commitments by the Ministry of External Affairs to 125 developing countries, obtained in US dollars from AidData for the 2008-2010 period. Second, we compare India's aid allocation with that of other donors. Our findings show that India's aid allocation is partially in line with our expectations of the behavior of a "needy" donor. Commercial and political self-interests dominate India's aid allocation. We find the importance of political interests to be significantly larger for India than for all donors of the Development Assistance Committee. Moreover, we find that countries which are closer geographically are favored, and that countries at a similar developmental stage are more likely to enter India's aid program.

It is puzzling that India, which has a large domestic constituency of people suffering from underdevelopment, chronic poverty and mal-governance, is emerging as an important aid donor. With the intension of understanding why poor countries provide foreign aid, this article is the first to econometrically analyze India's aid allocation decisions. First, we utilize cross-sectional data on aid commitments by the Ministry of External Affairs to 125 developing countries, obtained in US dollars from AidData for the 2008-2010 period. Second, we compare India's aid allocation with that of other donors. Our findings show that India's aid allocation is partially in line with our expectations of the behavior of a "needy" donor. Commercial and political self-interests dominate India's aid allocation. We find the importance of political interests to be significantly larger for India than for all donors of the Development Assistance Committee. Moreover, we find that countries which are closer geographically are favored, and that countries at a similar developmental stage are more likely to enter India's aid program.

Is political compliance a precondition for healthy trade relations with China? The Chinese government frequently threatens that meetings between its trading partners' officials and the Dalai Lama will be met with animosity and ultimately harm trade ties with China. We run a gravity model of exports to China from 159 partner countries between 1991 and 2008 to test the extent to which bilateral tensions affect trade with autocratic China. In particular, we investigate empirically whether countries that receive the Dalai Lama despite China's opposition experience a significant reduction of their exports to China. In order to account for the potential endogeneity of meetings with the Dalai Lama, the number of Tibet Support Groups and the travel pattern of the Tibetan leader are used as instruments. Our empirical results support the idea that countries officially receiving the Dalai Lama at the highest political level are punished through a reduction of their exports to China. However, this 'Dalai Lama Effect' is only observed for the Hu Jintao era and not for earlier periods. Furthermore, we find that this effect is mainly driven by reduced exports of machinery and transport equipment and that it disappears two years after a meeting took place.

Do states use trade to reward and punish partners? WTO rules and the pressures of globalization restrict states' capacity to manipulate trade policies, but we argue that governments can link political goals with economic outcomes using less direct avenues of influence over firm behavior. Where governments intervene in markets, politicization of trade is likely to occur. In this paper, we examine one important form of government control: state ownership of firms. Taking China and India as examples, we use bilateral trade data by firm ownership type, as well as measures of bilateral political relations based on diplomatic events and UN voting to estimate the effect of political relations on import and export flows. Our results support the hypothesis that imports controlled by state-owned enterprises (SOEs) exhibit stronger responsiveness to political relations than imports controlled by private enterprises. A more nuanced picture emerges for exports; while India's exports through SOEs are more responsive to political tensions than its flows through private entities, the opposite is true for China. This research holds broader implications for how we should think about the relationship between political and economic relations going forward, especially as a number of countries with partially state-controlled economies gain strength in the global economy.