Kiel Working Papers, Kiel Institute for World Economics
No 1486:
Acting Autonomously or Mimicking the State and Peers? A Panel Tobit Analysis of Financial Dependence and Aid Allocation by Swiss NGOs
Axel Dreher, Peter Nunnenkamp, Hannes Öhler and Johannes Weisser
Abstract: NGO aid is still widely believed to be superior to
official aid (ODA). However, the incentives of NGOs to excel and target aid
to the poor and deserving are increasingly disputed. We contribute to the
emerging literature on the allocation of NGO aid by performing panel Tobit
estimations for Swiss NGOs. The analysis offers new insights in two major
regards: First, we cover the allocation of both self-financed and
officially co-financed aid for a large panel of NGOs and recipient
countries. Second, by classifying each NGO according to its financing
structure, we address the unresolved question of whether financial
dependence on the government impairs the targeting of NGO aid. It turns out
that NGOs mimic the state as well as NGO peers. Officially refinanced NGOs
are more inclined to imitate the allocation of ODA. However, the degree of
financial dependence does not affect the poverty orientation of NGO aid and
the incentives of NGOs to engage in easier environments. The allocation of
self-financed aid differs in several respects from the allocation of
officially co-financed aid, including the role of financial dependence for
imitating the state and herding among NGOs
Keywords: NGO aid; aid allocation; official co-financing; financial dependence; (follow links to similar papers)
JEL-Codes: F35; (follow links to similar papers)
33 pages, February 2009
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