KASUGA Hidefumi (Kansai University)
This paper investigates whether aid flows to developing countries fit well with their development priorities. In particular, we examine aid allocation across sectors in a given recipient country by using sectoral data on aid and indicators that measure the recipient's need for aid in each sector. The data show that inter-recipient aid allocation reflects the recipient's need. However, we found no evidence that inter-sectoral allocation fits with national priorities except in high- and middle-income East Asian countries. Our evidence shows that the quality of bureaucracy and corruption in recipient countries impede efficient inter-sectoral allocation.