The stated objectives for countries in providing foreign aid have been strategic, economic and humanitarian. The end of the Cold War and the recent disintegration of territorial states has increased the prominence of the humanitarian objective. Therefore, the paper concentrates on the transfer of resources from wealthier and politically stable countries to poorer and politically unstable ones. The amount of foreign aid provided by governments and international relief agencies is determined by the altruistic desires of individuals. Within a median voter framework, it is found that foreign aid is increasing in the degree of altruism of the median voter, their income, the similarity the median voter has with the ethnicity or religion of the recipient group, and the number of civilian casualties resulting from armed conflicts in the recipient nation. Foreign aid is inversely related to the size of the recipient country and the extent that international relief is being pilfered. This latter result explains "foreign aid fatigue." An implication of this analysis is that donor nations may have an incentive to intervene militarily in civil conflicts which reduce the welfare of their altruistic citizens in order to establish order in the relief effort or to stabilize or establish a government capable of controlling the domestic unrest. This option will be chosen if the welfare of the median voter is greater under military intervention than under the status quo of continuing to send only aid. Intervention will occur, the more effective the military option is in reducing the unrest, the greater the degree of altruism of the median voter, the larger the size of the donor country, the lower the cost of intervention, the larger the extent and size of the group being victimized, the lower the relative valuation placed on alternative domestic uses of foreign aid, and the greater the size of the transfer being provided.
All Science Journal Classification (ASJC) codes
- Economics and Econometrics
- Political Science and International Relations