Empirical results of aid motivations: Australia's bilateral aid program

This paper briefly surveys the existing literature on the motivations of overseas aid. The emphasis is on the two competing models of recipient need and donor interest, and the paper estimates these two models using data for Australian bilateral aid. Both the recipient need model and the donor interest model are supported by the econometric analysis. This is in stark contrast to the results of other studies for “large” states, such as the United States and the United Kingdom. These prior studies show no support for the recipient need model whereas the donor interest model is supported. The atypical result for the Australian bilateral aid program requires further analysis in terms of non-nested hypotheses.