Targeting Aid to the Needy and Deserving: Nothing But Promises?

By reallocating aid to where it is needed most and where a productive use is most likely, donors could help alleviate poverty in developing countries. The rhetoric of donors suggests that this insight has increasingly shaped the allocation of aid. We assess the poverty and policy orientation of bilateral and multilateral aid in different ways. In addition to presenting stylised facts based on bivariate correlations, we apply a Tobit model that captures both altruistic and selfish donor motives. We find little evidence supporting the view that the targeting of aid has improved significantly. Most donors provide higher aid to relatively poor countries, but so far the fight against poverty has not resulted in a stronger focus on needy recipients with favourable local conditions. The estimation results reveal that the policy orientation of aid critically depends on how local conditions are measured. In general, however, donors appear to be less policy‐oriented than poverty‐oriented. The response of donors to changing institutional and policy conditions in recipient countries turns out to be fairly weak. We reject the proposition that multilateral aid is clearly superior to bilateral aid in terms of rewarding poor countries with better policies and institutions.     

Saying Nothing With Words

Good legislation depends on clearly articulated policy objectives. This paper argues that a significant threat to effective consumer protection is posed by fuzzy thinking at the policy-making stage. Three major Australian law reform initiatives are examined: the Contracts Review Act 1980 (New South Wales); new uniform truth in lending laws; and product liability legislation. In each case, effective policy choices were left unresolved, either because the choice was politically too difficult or simply because of a failure by the policy makers to perceive that there was a choice needing to be made. In each case, the problem has been disguised by resort to drafting at a high level of abstraction, and this serves to make rhetorical claims in support of the legislation seem plausible. The truth, however, is that legislation drafted this way is bound to be indeterminate and it is left to the courts to invent policy as part of the interpretation process. This is not a legitimate judicial function.     

Arab‐related Bilateral and Multilateral Sources of Development Finance: Issues,Trends, and the Way Forward

This paper analyses the organisational structure as well as the characteristics of development finance provided by Arab donor countries. This is done with a comparative view in relation to western donors and with the aim to develop recommendations as to how Arab development finance can be strengthened and rendered more effective for the new millennium. In the 1960s and 1970s Arab donors established a variety of national and multilateral agencies. These agencies share many characteristics of their western counterparts, but some also exhibit distinctive features. Both in terms of absolute volume as well as generosity measured by aid as a percentage of GDP, Arab countries have been important donors in the past, even though recent years have seen a significant fall in Arab aid. Reversing this downfall in aid, targeting its aid better towards the poor and very poor recipient countries and raising the grant share and the concessionality of loans for these countries together with a reallocation of aid towards the social sectors of human development would render Arab aid‐giving more effective in terms of poverty alleviation and more in line with western aid. A greater willingness to participate in the ongoing discussions amongst western donors about the proper objectives and design of development finance would help Arab donorsto achieve the recognition they truly deserve. Closer cooperation with western donors would be a logical consequence of taking such a step. However, this would also need to be matched by a greater willingness on the part of western donors to take their Arab counterparts seriously as partners of development finance.     

Foreign aid and trade reform: Evidence from ACP-EU data

Beside traditional motives of giving – namely, altruism and donors’ self-interest, foreign aid also serves to encourage poor countries to liberalize trade. In this paper, I use recent foreign aid data from 15 European donors to 45 African, Caribbean and Pacific countries (ACP) to assess the importance of each motive. Although all the motives are important, their relative importance varies from one sub-group of donors to another. In particular, big donors such as France, Germany and the United Kingdom seem to weight more their commercial interests than other European donors; besides, recipient needs appear to be less important. Contrary to other European donors, international cooperation, measured by the correlation in the votes at the United Nations General Assemblies influences their decision to allocate aid to ACP recipients. This last finding probably reflects their relatively high political power in international fora. Finally, I introduce a dummy variable for economic partnership agreement (EPA) and find that donors do not give to support trade liberalization per se. However, large donors give more aid to ACP exporters of raw materials that engage in the EPA. This result implies that foreign aid is a device to secure access to raw materials.     

Dangerous Interactions: Problems in Interpreting Tests of Conditional Aid Effectiveness

There is now a substantial empirical literature examining the determinants of aid effectiveness. A large part of this makes inferences based on a regression incorporating aid (as a share of recipient GDP) interacted with some institutional or policy variable. Recently, some authors have questioned the statistical robustness of such regressions, pointing out that results vary according to the way aid is measured and the estimator applied to the data. Moreover, the regression equations used to test hypotheses about the determinants of aid effectiveness are often introduced without any corresponding formal theory. We explore aid‐policy interaction terms in the context of a simple theoretical model, showing how different nonlinearities may be conflated. The resulting difficulties in the interpretation of aid‐growth regressions are illustrated in the context of a seminal paper in the conditional aid effectiveness literature. One simple change in the way that aid is measured – in per capita terms rather than as a fraction of GDP – completely changes the regression results. This indicates that adding interaction terms to otherwise linear regression equations is an inadequate way of capturing the nonlinearities in the growth process. Our aim is to re‐emphasise the importance of grounding.     

Foreign assistance and emigration: Accounting for the role of non-transferred aid

Since policymakers increasingly regard foreign aid as a means to manage international flows of migrants, it is important to obtain accurate empirical evidence on the complex link between aid and migration. Recent research has shown that the impact of foreign assistance on migrant flows is highly heterogeneous across aid categories. In this paper, we focus on a dimension of heterogeneity that has so far not been considered in the literature, namely whether or not the delivery of foreign aid is associated with a transfer of resources to the recipient country. We show in a first step that non-transferred aid is quantitatively important, accounting for more than 25% of overall aid given by OECD DAC donors in 2016. Running separate gravity-type regressions for transferred and non-transferred aid, we then find that transferred aid has a much stronger (negative) impact on migration than the previously used total aid variable that includes the non-transferred component. As may be expected, non-transferred aid itself does not appear to affect migrant flows. A high share of non-transferred aid would therefore be at odds with the donors’ stated goal of tackling the root causes of migration.     

Reforming the International Financial System for Effective Aid Delivery

The role of the multilateral aid agencies in the delivery of aid is as old as the debate on the role of aid in economic development. Aid is effective in a good policy environment. However, effective aid delivery is equally important. This is why the need to reform the institutions involved in the process of delivering aid is crucial. Among others, the paper concluded that there is a need for redefining the roles and the establishment of a well articulated network among the various institutions involved in the aid process. More importantly, given the different actors and motives at play in the transfer of resources to recipient countries, the role of a supranational institution to coordinate and give direction is indispensable.     

Can monetary policy survive policy model mis‐specification? Model uncertainty and the perils of “policy model complacency”

The question addressed in this paper is: can monetary policy succeed in stabilizing the economy even when the policy model on which it is predicated is mis‐specified? Using variants of the 3‐equation macroeconomic model, it is shown that this question can be answered in the affirmative. The purpose of the paper is not to encourage indifference toward model uncertainty, however, but rather to warn against the perils of “policy model complacency.” This arises if the success of policy is misinterpreted as successful understanding of the workings of the economy, which makes the policy maker vulnerable to surprises: events with systematic origins in the “true” model of the economy that are not anticipated by the (mis‐specified) policy model. To safeguard against this problem, policy makers should always entertain eclectic views of the workings of the economy. This task is easily accomplished by paying attention to heterodox macroeconomics, which frequently makes predictions that are very much at variance with those of the dominant policy model.     

资产减值准备政策选择的经济学分析

资产减值准备政策为提高会计信息质量起到推动作用,但也为企业在一定范围内操纵利润留下空间。从经济学角度,对资产减值准备政策选择的原因和动机进行分析,以达到提高会计信息质量的目的,实现对企业资产减值政策的有效监督。     

Examining the Use of Nutrition Information on Restaurant Menus

Over the past decade, the world has been facing an obesity epidemic. In the popular press and certain governmental and public policy circles, this seems to be attributed to the marketing efforts of fast-food and chain restaurants. As a solution to this problem, many have proposed increasing the amount of nutrition information available to the public by adding nutrition information to restaurant menus and menu boards. However, some debate has ensued about the use and function of this nutrition information. Specifically, this research attempts to uncover whether consumer actually use the nutrition information to aid their decision-making process. In two experimental studies, results are presented to enlighten the discussion of consumers’ reactions to nutrition information when it is present on restaurant menus. Contrary to what public policy makers have stated, this research shows that only small groups of consumers use nutrition information on a restaurant menu. The results in both studies indicate that when consumers eat out at restaurants, their decisions are based on taste and preference rather than nutrition information if it is presented on a menu. These results may have implications for the provision of nutrition information on restaurant menus and consumer decision-making.     

Better to shop than to vote?

This paper begins by reflecting on the current generalised political apathy signalled by low voter turnout and falling party membership. It would appear that people are exercising political choices not at the ballot box but by means of consumer activism. Corporations respond to consumer pressure in a way that governments do not, and are gradually assuming the role of global political actors. But this is a dangerous state of affairs for several reasons. In the first place, social welfare can never be the core activity of corporations. Corporate social motives are commercial, and there is a danger that their social policy decisions will be driven by the logic of the market place rather than social need. Recession, for instance, will curtail their social responsiveness, as will decisions to relocate. It is also the case that partnerships between governments and corporates run the risk of removing checks on the growth and abuse of corporate power. And finally, what price does society have to pay for the growth of corporate benevolence?     

A Critical Assessment of Libertarian Paternalism

This paper tries to assess to what extent libertarian paternalism lives up to its libertarian credentials, and whether this “softer” version of paternalism is more or less desirable than the traditional, more coercive (but also more transparent) form. Since much is made in the libertarian paternalistic programme of the ease of reversibility of “nudges,” it is argued that the distinction between effective and nominal ability to reverse a nudge is more important than its theoretical ease of reversibility—the more so, if anchoring, framing and status quo bias are as powerful as the libertarian paternalists maintain. If the libertarian paternalistic nudges are effective, but not always transparent, it is argued that this raises some questions (which do not seem to have been adequately addressed in the current literature) about the legitimacy of the interventions; about how the true preferences of the “consumer” can be guessed by the choice architect (and the role played by rationality in this process) and about the effective respect of her autonomy. Finally, this paper highlights some alternatives to “nudging” which place a greater emphasis on the full process of choice—rather than just on its outcomes—and can therefore better preserve true autonomy of choice.     

Advances in Research on Mental Accounting and Reason-Based Choice

Research extending over twenty years in behavioral decision theory has led to the development of two important research streams—mental accounting and reason-based choice. This paper explores recent research on the role of mental accounting and reason-based choice in the construction of consumer preferences. Evidence suggests that the principles of mental accounting often regulate the purchase and consumption of luxuries and that reasons may play an important part in this process. In particular, buying and consuming luxury goods tends to call for reasons and justification and can evoke intra-personal conflict that might be resolved with the aid of mental accounting. Moreover, reasons can serve as important building blocks in the formation and grouping of mental accounts. The current paper also discusses the construction of preferences as a process where, in certain cases, consumers choose reasons rather than options. Among other things, focusing on reasons can lead to discrepancies between decisions and consumption experiences, preference intransitivity, and unconventional choices. Directions for future research are discussed.     

Should Variable Cost Aid to Attract Foreign Direct Investment be Banned? A European Perspective

The purpose of this paper is to analyze the European Commission’s approach to state aid to attract foreign direct investment (FDI) in a competition policy framework. The Commission considers variable cost aid (VCA) to be more distortive than start-up or fixed cost aid (FCA). This paper addresses that issue and checks whether allowing FCA while banning VCA is an optimal strategy for a supranational Competition Authority maximizing welfare. The model shows that a domestic government maximizing welfare always prefers VCA to FCA if both the incumbent and the entrant are foreign firms and if granting VCA does not cause the incumbent firm to exit the market. The model shows that banning VCA may lead to sub-optimal equilibria where welfare is not maximized.     

The internationalization of entrepreneurial firms from emerging economies: The roles of institutional transitions and market opportunities

This paper examines the influence of institutional transitions and market opportunities in emerging economies on the internationalization of entrepreneurial firms from these economies. We conceptualize and examine a three-stage model of institutional transition in emerging economies, and their effects on the internationalization strategies of new venture firms. Propositions are developed in examining how the different stages of the institutional transition can influence the strategic choices for the internationalization of new venture firms. In responding to the calls for more research on institutions and international entrepreneurship, this paper is an attempt extending the linkages between the two to the context of emerging economies. The paper also has managerial implications for entrepreneurs and the associated policy implications in international entrepreneurship.     

Scaling‐up Foreign Aid: Will the ‘Big Push’ Work?

International donors are substantially scaling‐up aid programmes. At the same time, there are widespread reservations over how much aid recipient countries can use effectively. Such concerns are supported by the aid effectiveness literature which finds that there are limits to the amounts of aid recipients can efficiently absorb. This article demonstrates that a ‘big push’ in foreign aid will not lead to diminishing returns as long as donors get the inter‐country allocation of aid right. This is true even if donors provide aid at levels equal to the well‐known target of 0.7 per cent of their gross national income.     

The ethics of creative accounting some Spanish evidence

Creative accounting involves accountants in making accounting policy choices or manipulating transactions in such a way as to convey a preferred and deliberately chosen impression in the accounts. Although it is regarded as unethical by most observers, a defense of creative accounting can be based on the assumption that users of accounts can identify bias in accounting policy choices and make appropriate adjustments. In this paper we take the example of the Barcelona Football Club where the club management made three key accounting policy choices that resulted in the presentation of a favourable position, and a supporters club presented an alternative report choosing three alternative accounting policies that presented an unfavourable position. We presented each of these financial reports to one of two groups of Spanish bank loan officers: we found that the more favourable set of accounts was significantly more likely to attract a positive response to a loan request. This result undermines the validity of defending creative accounting based on the argument that accounts users can identify manipulation.     

Aid Delivery through Non‐governmental Organisations: Does the Aid Channel Matter for the Targeting of Swedish Aid?

This paper analyses whether aid channelled through non‐governmental organisations (NGOs) is less affected by selfish donor motivations and better targeted to needy recipient countries than aid distributed by state agencies. We employ Tobit (and Probit) models and make use of an exceptionally detailed database that allows an assessment of the allocation of Swedish aid channelled through NGOs in comparison to the allocation of Swedish official aid. Our analysis provides mixed results. On the one hand, NGOs appear to be altruistic as far as available indicators on political and commercial motivations of aid can tell. On the other hand, needs‐based targeting of aid by NGOs turns out to be surprisingly weak. GDP per capita of recipient countries shapes the allocation of official aid, but not that of aid channelled through NGOs. The headcount of absolute poverty has a significantly positive effect on aid allocation, but its impact is not particularly strong when NGOs are involved. Overall, the Swedish case supports the sceptical view that NGOs are not necessarily superior donors compared to state aid agencies.     

The impact of corporate behavior on perceived product value

This research examines how ethical and unethical corporate behavior influence the perceived value of a firm's products, operationalized as the price consumers are willing to pay for that product relative to the competition. We propose that if consumers expect companies to conduct business ethically, then ethical behavior will not be rewarded but unethical behavior will be punished. The results of the first study confirm this expectation. The second study explored ways a firm can improve the perceived value of its products after an unethical act has been committed. Our results indicate that after a firm has committed an unethical act, consumer's perceptions of that company and its products were positively influenced by ethical behavior, corporate philanthropy, and cause-related marketing. However, our analyses revealed that these different strategies varied in their effectiveness. The third study used a choice task, rather than a judgment task, to confirm the finding that corporate behavior does influence perceived product value and is therefore likely to influence market choices. The implications of these findings are discussed.