Comparative advantage and bilateral foreign aid policy

Weder, Rolf and Dewald, Michael. (1996) Comparative advantage and bilateral foreign aid policy. World Development, 24 (3). pp. 549-556.

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This paper formulates the problem of bilateral aid allocation in terms of the comparative advantage framework. It is argued that the adaptability of this framework to foreign aid critically depends on the assumption that each donor's aid budget is spent to a large extent on its home market. This assumption is not contradicted by empirical evidence. An analysis of Swiss foreign aid data then suggests that there is scope for considerable gains from specialization. We conclude that donors should coordinate their behavior according to their comparative advantage to achieve an optimal allocation of global aid resources.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Aussenwirtschaft und Europ. Integration (Weder)
08 Cross-disciplinary Subjects > Europainstitut > Europainstitut > Europäische Wirtschaft (Weder)
UniBasel Contributors:Weder, Rolf
Item Type:Article, refereed
Article Subtype:Research Article
Publisher:Pergamon, Elsevier
Note:Publication type according to Uni Basel Research Database: Journal article
Identification Number:
Last Modified:26 Oct 2016 11:09
Deposited On:26 Oct 2016 11:09

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