Морозкина_резюме_ENG (Двусторонняя официальная помощь развитию влияние мирового финансового кризиса 2008-2009 годов)

National Research University Higher School of EconomicsAleksandra MorozkinaBILATERAL OFFICIAL DEVELOPMENT ASSISTANCE: IMPACT OFTHE GLOBAL FINANCIAL CRISIS OF 2008-2009PhD Dissertation Summaryfor the purpose of obtaining academic degreeDoctor of Philosophy in Economics HSEAcademic Supervisor:Professor, Candidate of SciencesGrigoryev LeonidJEL: F35, O19Moscow – 2018Motivation.The recession of 2008-09 had a major impact on developing countries and aparticularly strong effect on the poorest nations.

The consequences of exportsreduction combined with volatile prices on raw materials and the decrease inmoney transfers continue to exert a negative influence on their growth anddevelopment prospects.Promotion of international development as a mechanism targeting theresolution of developing countries’ problems can help overcome the fallout of theglobal financial crisis. Assistance provided by developed countries constitutes animportant source for financing recipients’ development projects, particularly forthe countries that have no access to international capital markets.

Sometimesdonors may contribute more than a third of a small country’s GDP and over $500per capita annually. That is why the survival of some countries hinges uponinternational assistance.Since the 1950s, applied analytics was dominated by the theory of donorselfishness, i.e. the provision of assistance in donors’ own interests as opposed tothe needs of developing countries. While in the 21st century (before the recession)the idea of providing assistance as a means to promote selfish interests was stillpopular, another construct started to gain ground with its concept of increasingaltruism of donor countries.

Active growth in the promotion of developmentobserved in the years following the recession, especially the increase in the shareof aid disbursed to the least developed countries, presumably supports this stance.In modeling the effect of financial crisis on the allocation of developmentassistance, this study introduces new points which support the idea of donorselfishness and the need to create additional incentives that would allow for thedistribution of development assistance in favor of the countries that need it most.Brief literature review.Allocation of aid is well-thought-out in foreign and Russian academicliterature. Place and role of official development aid is discussed in research ofsuch authors as J.

Sachs, W. Easterly, J.Stigtitz, A.Sen, D.Moyo. Many2publications pay attention to the problem of motives of aid allocation and factorsaffecting it. Starting from R.McKinlay and R.Little is it widely accepted toseparate these factors into two groups: donor interests and recipient needs. Theabove article analyzed ODA from USA, Germany, France and UK, and it wasconcluded that politic and economic dominate. V.I.Bartenev and E.N.Glazunovastate that later researches using new factors and analyzing more countries supportthis hypothesis of prevailing donor interests. As a rule, authors highlight economicand political interests of donor countries. According to S.Gates and A.Hoeffler,Scandinavian countries are an exception – Denmark, Finland, Norway andSweden.

They allocate aid to more needy and poor recipients.In 2006 G.Canavire, P.Nunnenkamp, R.Thiele, L.Triveño conducted one ofthe first researches demonstrating that some donors at the beginning of XXIbecame more attentive to recipient needs, although Australia, France, Italy, Japanand USA follow their own interests in the first place. Analysis of aid fromindividual countries, conducted by R.McDonald, J.Hoddinott, S.Chand, J.Faust andS.Ziaja, demonstrated more emphasis of Canada, Australia and Germany on poorcountries, which is reflected by higher significance of recipient GDP per capitaamong factors influencing aid allocation. V.I.Bartenev and E.N.Glazunovahighlighted, that donor countries in the middle of 2000-s “introduced approachesaimed at satisfaction of recipient needs [Bartenev, Glazunova, 2012 p.

132],decreasing importance of their commercial and political interests. S.Claessens,D.Cassimon and B.Van Campenhout on the base of analysis of bilateral aid in1970-2004 concluded that donors changed their behavior at the beginning of XXIcentury, and showed that significance of recipient GDP per capita increased.Analysis of number of poor in recipient countries and its impact on aid allocationin 2010-2015, conducted by M.McGillivray and M.Clarke allowed to conclude that“total aid flows are relatively fair” [McGillivray M., Clarke M., 2018, p.

1073].F.Bickenbach, A.Mbelu, P.Nunnenkamp on the base of analysis of bilateral ODAin 1995-2015 showed that “overall aid has become slightly more concentrated on3relatively poor recipient countries since 2005” [Bickenbach, F., Mbelu, A.,Nunnenkamp, P., 2017, стр. 24].However financial crisis of 2008-2009 given budget constraints of donorcountries may reverse this trend. For example, E.Frot on the base of ODA datafrom 1986-1996 showed that its volumes decrease on average by 13% afterbanking crisis in donor countries (in total), or by 5% annually from the beginningof the crisis. E.Dabla-Norris, C.Minoiu, L.-F.

Zanna on the base of ODA data in1970-2004 showed that in recession donor countries decrease ODA volumes by11.3%. D.Roodman in 2008 graphically demonstrated that Finland, Japan, Norwayand Sweden decreased their ODA budgets after domestic banking crises in 1990-s.Thus previous crises influencedODA allocation decisions by donorcountries, and led to redirection of resources, allocated for ODA, to solving ofdomestic problems. Further analysis is required in order to examine sustainabilityof a trend of paying more attention to recipient needs which was highlighted inprevious researches.Objectives of the research.

The objective of this study is to clarify andcomplement the model of ODA allocation taking into account changes in directionand volumes of official development assistance (ODA) after financial crisis of2008-2009.The aforementioned objective of the dissertation determines the need forconsecutive resolution of the following issues:1.Describe modern ODA system;2.Update the classification of ODA participants based on the emergenceof new donors and post-recession ODA data;3.Identify key changes in post-recession ODA system;4.Suggest a system of indices that can reflect the specifics of donors’selection of ODA directions and volume following the recession of 2008-09;5.Perform regression analysis of the changes in the influence of theseindices on donors’ selection of ODA directions and volume following the recessionof 2008-09;46.Use the constructed model to make recommendations on thereformation of the ODA system.Contribution.

The study explores global issues in national developmentand the need for developed countries to provide assistance to developing nations.The author’s contribution pursues the following objectives:1.Elaborate the classification of donors depending on the purpose ofODA provision, specifically: suggested three subgroups of donors, followingpolitical interests (donors that allocate aid to neighbors, donors that allocate aid toformer colonies, donor that allocate aid to military allies);2.Identify changes in the ODA system following the recession of 2008-09 taking into account changes in donors’ financial situation.

First, in the ODAallocation system there are present some elements of altruism and priority forrecipient need, which appears in increase of ODA volumes after crisis and increaseof share of aid, directed to the least developed countries. Second, increasedattention to the recipient needs before the crisis was not universal andinsufficiently sustainable, which appears in decrease of share of grants and share ofaid directed to actually development projects;3.Suggest an adjusted model for the distribution of developmentassistance which accounts for changes in the relations between donors andrecipients in the aftermath of the 2008-09 recession.

It is showed that post-crisismodel differs from the model before crisis in stronger-pronounced differencesbetween donor groups and closer attention of donors to their own interests.Methodology.At the first stage of the study, the author splits donors into three groups, i.e.altruists, business persons and politicians. Grouping is based on results of 53previous researches, published in 1977-2018 (including McKinlay, Little, 1977,Alesina, Dollar, 2000, Hoeffler, Outram, 2011, Bickenbach, Mbelu, Nunnenkamp2017), which analyze factors behind aid allocation.In order to qualify and amend the classification author conducted correlationand regression analysis based on annual assistance provided by 33 donors to 1425recipients in 2000-16 and five factors, affecting allocation of aid.

On this stagethree subgroups of politicians were introduced: donors that allocate aid toneighbors, donors that allocate aid to former colonies, donor that allocate aid tomilitary allies.(A) Altruist donors are identified based on the GDP per capita because,according to the majority of studies, that is the only indicator which reflectsrecipients’ socioeconomic conditions.(B) Donors driven by commercial interest are identified based on tradevolume between donors and recipients.

The author uses the trade turnoverindicator, i.e. the aggregate of exports and imports as they pertain to a specificdonor-recipient pairing. This indicator accounts for donors’ two potentialeconomic interests because a recipient may simultaneously serve as the source ofresources for the donor (donor imports) and potential sales market (donor exports).(C) Donors’ political interests are determined based on the following threeindicators which allow for splitting donors into three subgroups:distance between capital cities of the donor and the recipient is used toidentify donors interested in securing their borders and providing assistanceto neighboring countries;number of years showing how long a recipient was a donor’s colony isused to identify donors that prefer to provide assistance to countries withwhich they have established economic and geopolitical relations resultingfrom the colonial past;arms transfer is used to identify donors that provide economic andsocial aid to countries which are their strategic allies.Since donors may take into account recipients’ progress when distributingODA, the author analyzes indices which reflect the development of democraticinstitutions and the observance of human rights.