Evidence of ‘foreign aid Keynesianism’

Recent literature on the determinants of the US foreign aid budget has raised the hypothesis of a relationship between the latter and the extent of domestic poverty. This is particularly relevant at times of economic crisis and has led to talk of ‘foreign aid Keynesianism’. The present study is based on the experience of members of the Development Assistance Committee of the Organisation for Economic Co-operation and Development (OECD-DAC). It supports previous findings related to the United States and shows that the influence of domestic poverty on donor decision-making regarding the foreign aid budget is shared by other countries, strengthening support for the poverty–aid relationship. However, this positive result refers to only half of the sample considered and an opposite relationship can be detected in a few other cases.