What role does equity play in the international
distribution of development aid?
Jere R. Behrman and Raaj Kumar Sah
In: Economic structure and performance, edited by Moshe Syrquin, Lance Taylor and Larry E. Westphal. Chapter 15, pages 295-315. Academic Press, New York, 1984.
(Post-publication note. This chapter does not include an abstract. The excerpts below are from the chapter.)
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The international aid distributed to developing countries since the Second War has been substantial: for example, over $30 billion of concessional aid was distributed in 1980. In this essay we consider the role of equity in the division of foreign aid among various developing countries. This topic is examined through a model in which the aid donors trade off an increase in the equality of incomes of recipient countries for an increase in the total income of these countries. This model is then estimated to obtain indices of absolute-inequality aversion and of relative-inequality aversion, indices that are implicit in the distribution of aid.