In a recent article published in World Development, SPP Associate Professors Thilo Bodenstein and Achim Kemmerling take a look at the paradox of redistribution in international aid. Bodenstein and Kemmerling revisit the well-known, and somewhat controversial, paradox of redistribution in rich welfare states: the more you target social policies for the poor, the less you spend on them.
Applying this logic to official bilateral development assistance, they explored whether the recent focus on poverty in development aid has led to an overall drop in the amount of aid, a finding that would be consistent with the paradox of redistribution on the international level. In building their data set, Bodenstein and Kemmerling computed the amount of aid an OECD country gives to the poorest developing countries and used the incidence of child mortality as an indicator of poverty.
Based on this data, Bodenstein and Kemmerling confirmed that a focus on poverty is influencing major donors’ decisions on where to send aid. “Countries like India get ‘de-listed,’ and ‘bottom billion countries’ become the new targets for development aid,” remarked Kemmerling.
They also concluded that a greater focus on poverty results in considerable drops in the total amount of aid given by donor countries. “We think that the more focused aid becomes, the more that certain types of actors lose interest in giving aid,” noted Kemmerling. “On the other hand, more universal and larger donations come from countries where there is a broad coalition with diverse interests that decides on aid spending.”