Whose poverty really matters when deciding aid volumes?

This study assesses the relevance of poverty in the determination of aid volumes. In particular, it investigates whether donors' decisions about aid volumes are more reactive to changes in domestic poverty than to those in the poverty of prospective aid recipients. This is particularly relevant at times of economic crisis, which may seriously affect the proportion of donors' budgets that is devoted to foreign assistance. The present study is based on the experience of a sample of members of the Development Assistance Committee of the Organisation for Economic Cooperation and Development (OECDDAC). It finds that faster and greater changes in the volume of foreign aid occurred in response to changes in poverty in the donor countries rather than in potential recipient countries. Furthermore, donors' attitude towards poverty in low-income countries differs from the one towards poverty in middle-income countries.