## _wp0639

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---

### Introduction and research question
- Aid regained prominence after more than a decade of aid fatigue; international community envisages substantial increases in aid flows to poor countries in Africa and parts of Latin America and Asia.
- Two perspectives on why foreign aid has failed to attain development objectives:
  - Aid may be wasted by recipient governments and produce incentive problems and negative externalities.
  - Donor allocation may follow strategic considerations rather than recipient need.
- Rise of nongovernmental organizations (NGOs) as important providers of development assistance in the last 20 years.
- Research objective: identify determinants of NGO development aid allocation and test whether NGOs allocate aid according to recipient need, recipient political/institutional environment, or strategic considerations (including potential influence from institutional funders).

### Data and methodology
- Data source and sample:
  - Projects proposed by European NGOs and cofinanced by the European Union (EU) using European Commission data; budget line identified as B 6-7000 (Appendix B notes EC budget line B7-6000 as NGO Aid source).
  - Sample period: 1990 to 1999.
  - Sample restricted to 78 recipient countries due to missing observations for key exogenous variables.
  - Observations: 594 (panel), Number of countries: 78 (worldwide regressions).
- Dependent variable:
  - Aid commitments (modeled in absolute terms rather than per capita); population is controlled for in regressions.
- Key explanatory variables:
  - Need: poverty (percentage of people living below the national poverty line), life expectancy at birth (years).
  - Political/institutional: Political Score (Overall Polity Score, nine-point scale where 1 is “strongly democratic” and 9 is “strongly autocratic”), militarization (military personnel as percentage of labor force).
  - Strategic: imports from the EU as ratio to total imports, official multilateral aid from the EU.
  - Controls: four regional dummy variables (Africa, the Western Hemisphere, Asia, the Middle East), population (millions).
- Estimation and specification details:
  - Baseline model: Aid_it = β0 + β1 NEED_jit + β2 POL_it + β3 MIL_it + β4 STRAT_jit + μ_i + ε_it with RIGHT-HAND SIDE variables lagged one period except EU multilateral aid (contemporaneous).
  - Estimators: one-way error component static random effects (primary), fixed effects, System GMM (Arellano and Bover (1995)) one-step and two-step; one-step GMM preferred for regional sub-samples.
  - Serial correlation tested and none found.
- Recognized limitations:
  - Dataset reflects European NGOs funded by the EU (subset of total NGO activity); potential self-selection bias by NGOs applying for EU funding is addressed by including EU official multilateral aid to governments as a regressor.
  - Focus restricted to development aid (not humanitarian aid).

### Stylized facts and regional summary statistics (Table 1 and Table 2)
- Entire sample (period mean; s.d.)
  - Poverty mean 36.12; s.d. 16.57
  - Life Expectancy mean 58.79; s.d. 10.16
  - Militarization mean 1.13; s.d. 1.58
  - Political Score mean 4.04; s.d. 1.83
  - EU Imports mean 31.70; s.d. 19.58
- By region (period means; s.d.):
  - Africa: Poverty mean 44.15; s.d. 17.02 — Life Expectancy mean 49.95; s.d. 6.40 — Militarization mean 0.57; s.d. 0.41 — Political Score mean 4.53; s.d. 1.72 — EU Imports mean 44.31; s.d. 14.19
  - Western Hemisphere: Poverty mean 30.77; s.d. 12.05 — Life Expectancy mean 68.01; s.d. 5.46 — Militarization mean 0.95; s.d. 0.43 — Political Score mean 2.63; s.d. 1.18 — EU Imports mean 15.17; s.d. 6.11
  - Middle East: Poverty mean 19.86; s.d. 11.96 — Life Expectancy mean 68.34; s.d. 3.57 — Militarization mean 4.38; s.d. 3.35 — Political Score mean 5.11; s.d. 1.81 — EU Imports mean 52.34; s.d. 15.36
  - Asia: Poverty mean 33.33; s.d. 13.29 — Life Expectancy mean 61.71; s.d. 6.18 — Militarization mean 0.92; s.d. 0.69 — Political Score mean 4.30; s.d. 1.90 — EU Imports mean 12.88; s.d. 6.77
- Regional distribution of NGO aid (Table 2):
  - Africa: Share of World Population 12.42% — Number of Recipient Countries 35 — Share of Received NGO Aid 32.52%
  - Western Hemisphere: Share of World Population 11.50% — Number of Recipient Countries 21 — Share of Received NGO Aid 44.45%
  - Middle East: Share of World Population 3.72% — Number of Recipient Countries 8 — Share of Received NGO Aid 4.14%
  - Asia: Share of World Population 72.36% — Number of Recipient Countries 14 — Share of Received NGO Aid 18.89%
- Interpretation offered in the source:
  - Both Africa and the Western Hemisphere receive a share of aid larger than their population share; Asia represents more than 72.36% of sample population but receives 18.89% of NGO aid.

### Worldwide regression results (selected coefficients and significance; Table 3)
- Dependent variable: log constant NGO aid per country; Observations 594; Number of countries 78
- Robust and recurrent findings across estimators:
  - Poverty:
    - RE (no year effects): Poverty 0.925 [0.0001]
    - RE (with year effects): Poverty 0.931 [0.0001]
    - FE: Poverty 0.966 [0.0006]
    - GMM SYS-2 (two-step): Poverty 1.012 [0.0000]
    - GMM SYS-1 (one-step): Poverty 0.966 [0.0006]
  - Population:
    - RE (no year effects): Population 0.589 [0.0000]
    - RE (with year effects): Population 0.603 [0.0000]
    - GMM SYS-2: Population 0.625 [0.0000]
    - GMM SYS-1: Population 0.622 [0.0000]
  - Western Hemisphere dummy:
    - RE (no year effects): Western Hemisphere 1.404 [0.0002]
    - RE (with year effects): Western Hemisphere 1.396 [0.0003]
    - FE: Western Hemisphere 1.419 [0.0007]
    - GMM SYS-2: Western Hemisphere 1.315 [0.0000]
- Strategic variables generally insignificant:
  - Imports from EU: coefficients range small and p-values mostly insignificant (examples: 0.179 [0.4258]; 0.222 [0.3510]; 0.249 [0.0969])
  - EU official aid: generally insignificant (examples: -0.019 [0.5599]; -0.027 [0.4005]; -0.035 [0.4993]); FE shows EU official aid -0.067 [0.0940]
- Other coefficients:
  - Life expectancy: generally negative but not robustly significant (examples: -0.575 [0.5342]; -0.644 [0.4966]; -0.612 [0.3608])
  - Militarization: not robustly significant worldwide (examples: 0.012 [0.9364]; -0.266 [0.9390]; 0.112 [0.1846])

### Regional regression results (random effects; Table 4 and Table 5 joint MIL-POL)
- Africa (Observations 268; Number of countries 35)
  - Poverty 0.951 [0.0062]***
  - Population 0.638 [0.0000]***
  - Life expectancy 0.276 [0.8161] (insignificant)
  - Imports from EU 0.299 [0.4030] (insignificant)
  - EU official aid -0.029 [0.6738] (insignificant)
- Western Hemisphere (Observations 158; Number of countries 21)
  - Life expectancy -5.61 [0.0011]*** (primary need determinant in region)
  - Militarization 0.595 [0.0365]**
  - Population 0.857 [0.0000]***
  - Poverty 0.475 [0.3260] (insignificant regionally)
- Middle East (Observations 59; Number of countries 8)
  - Poverty 1.071 [0.0053]***
  - Life expectancy -8.652 [0.0083]***
  - Militarization -1.211 [0.0070]***
  - Political score -1.365 [0.0047]***
  - Population -0.726 [0.0016]***
  - EU official aid -0.059 [0.5998] (insignificant)
- Asia (Observations 109; Number of countries 14)
  - Poverty 1.212 [0.0415]**
  - Population 0.676 [0.0011]***
  - Other variables largely insignificant regionally
- Joint MIL-POL specification (Table 5) — selected coefficients:
  - World:
    - Poverty 0.945 [0.0002]***
    - Population 0.608 [0.0000]***
    - MIL-POL -0.222 [0.1127] (mild negative, not strongly significant)
  - Middle East:
    - Poverty 1.53 [0.0002]***
    - Life expectancy -10.472 [0.0003]***
    - Population -0.773 [0.0003]***
    - MIL-POL -3.279 [0.0234]** (significant negative joint effect)
  - Western Hemisphere:
    - Life expectancy -5.509 [0.0014]***
    - Militarization 0.678 [0.0571]* (marginal)
    - Population 0.87 [0.0000]***
  - Africa and Asia: MIL-POL not significant at conventional levels in these regional specifications.

### Key findings and interpretations
- Primary determinants:
  - Poverty is a robust and consistently positive determinant of NGO aid allocation worldwide and in Africa, Middle East, and Asia (examples of poverty coefficients: 0.925 [0.0001]; 0.951 [0.0062]***; 1.071 [0.0053]***; 1.212 [0.0415]**).
  - Population is positively associated with NGO aid in most specifications (examples: 0.589 [0.0000]; 0.638 [0.0000]***; 0.857 [0.0000]***).
- Health (life expectancy) matters regionally:
  - Western Hemisphere: life expectancy coefficient -5.61 [0.0011]*** — interpretation in source: a reduction in life expectancy of 1 percent raises NGO aid by more than 5 percent in the Western Hemisphere.
  - Middle East: life expectancy coefficient -8.652 [0.0083]*** — interpretation in source: a reduction in life expectancy of 1 percent raises NGO aid by more than 8 percent in the Middle East.
- Political/institutional environment:
  - Militarization and political autocracy interact (MIL-POL) to reduce NGO aid in the Middle East: MIL-POL -3.279 [0.0234]** — NGOs tend to avoid highly autocratic and militarized regimes in the Middle East.
  - Militarization shows regionally divergent signs: Western Hemisphere militarization 0.595 [0.0365]** (positive) vs. Middle East militarization -1.211 [0.0070]*** (negative).
- Strategic considerations:
  - Imports from the EU and EU official multilateral aid are generally insignificant predictors of NGO aid allocation across worldwide and regional specifications (examples: EU official aid coefficients range from -0.019 [0.5599] to -0.086 [0.4283]; imports from EU coefficients mostly insignificant).
  - Exception: fixed effects specification shows EU official aid -0.067 [0.0940] (weak negative relation).
- Geographic distribution:
  - Western Hemisphere receives a consistently large positive residual share of NGO aid (Western Hemisphere dummy coefficients e.g., 1.404 [0.0002]).
  - Africa receives 32.52% of NGO aid while representing 12.42% of the sample population; the Western Hemisphere receives 44.45% of NGO aid while representing 11.50% of the sample population; Asia represents 72.36% of sample population but receives 18.89% of NGO aid.

### Main conclusions (as stated in source)
- Across 9 years and 78 recipient countries, NGO aid allocation is primarily driven by recipient need indicators:
  - Poverty is a consistently strong positive determinant of NGO aid (robust across estimators and regions).
  - Life expectancy matters regionally (notably in the Western Hemisphere and Middle East where lower life expectancy strongly increases NGO aid).
- Strategic considerations (imports from EU, EU official aid) exert little influence on NGO allocation decisions in most specifications and regions.
- Less democratic and highly militarized regimes attract less NGO aid in some contexts; the composite MIL-POL variable shows a strong negative effect in the Middle East (MIL-POL -3.279 [0.0234]**).
- Overall assessment: NGOs appear relatively immune to strategic interests associated with institutional donors and maintain a distribution pattern aligned with poverty and health needs.

*Source: _wp0639 - Appendix A and References (excerpts and summary).*

### References..............................................................................................................

### _wp0639 - References

### Introduction and Research Question
- Aid is back on the international agenda after more than a decade of aid fatigue; international community envisages substantial increases in aid flows to poor countries in Africa and parts of Latin America and Asia.
- Two perspectives on why foreign aid has failed to attain development objectives:
  - Aid may be wasted by recipient governments and produce incentive problems and negative externalities.
  - Donor allocation may follow strategic considerations rather than recipient need.
- Rise of nongovernmental organizations (NGOs) as important providers of development assistance in the last 20 years.
- Research objective: identify determinants of NGO development aid allocation and test whether NGOs allocate aid according to recipient need, recipient political/institutional environment, or strategic considerations (including potential influence from institutional funders).

### Key Findings (from the study)
- NGOs allocate aid mostly according to the needs of beneficiaries.
  - Once population is controlled for, poverty consistently appears as the main worldwide determinant of NGO aid allocation.
- NGOs do not respond to strategic considerations.
- NGOs’ funding source does not seem to exert a great influence on their aid allocation decision.
- Regional differences exist:
  - Militarization and the political nature of the regime affect aid allocation in the Middle East.
  - Life expectancy influences aid allocation in countries in the Western Hemisphere and the Middle East.

### Literature Context
- Official development assistance (ODA) allocation has been shown to reflect political, economic, and strategic considerations in many studies (examples cited include McKinley and Little, Dudley and Montmarquette, Alesina and Dollar, Grilli and Riess, Collier and Dollar).
- Growth of NGOs is documented: resources channeled through NGOs in all OECD Member countries rose from 0.2 percent of total bilateral ODA of DAC Members in 1970 to 17 percent in 1996.
- Concerns in literature about NGO legitimacy and potential donor influence on NGO behavior (Edwards and Hulme; Smillie; Jack; Gauri and Fruttero).

### Dataset and Methodology
- Data source for NGO aid allocation: projects proposed by European NGOs and cofinanced by the European Union (EU) using European Commission data.
- Budget line identified: B 6-7000 (EU funding for NGO projects).
- Sample period: 1990 to 1999.
- Sample size: restricted to 78 recipient countries due to missing observations for key exogenous variables.
- Dependent variable: aid commitments (chosen because commitments describe allocation decisions and are less volatile than disbursements).
- Aid modeled in absolute terms rather than per capita; population is controlled for in regressions.
- Recognized limitation: dataset reflects European NGOs funded by the EU (subset of total NGO activity); potential self-selection bias by NGOs applying for EU funding is addressed by including EU official multilateral aid to governments as a regressor.

### Explanatory Variables Employed
- Need variables:
  - National poverty level: percentage of people living below the national poverty line (World Bank World Development Indicators).
  - Life expectancy at birth in years (World Bank World Development Indicators).
- Political/institutional variables:
  - Political Score: Overall Polity Score (Country Indicators for Foreign Policy, CIFP) — a nine-point scale where 1 is “strongly democratic” and 9 is “strongly autocratic.”
  - Militarization: ratio of military personnel as a percentage of labor force (World Development Indicators).
- Strategic variables:
  - Commercial partnership proxy: recipients' imports from the EU as a ratio to total imports.
  - Potential influence of EU funding: measured by official multilateral aid from the EU.
- Controls and other covariates:
  - Four regional dummy variables: Africa, the Western Hemisphere, Asia, and the Middle East.
  - Population.

### Data Construction and Rationale
- Chosen dependent variable (commitments) reflects NGOs’ allocation intentions and avoids volatility inherent in disbursements.
- Use of European Commission cofinancing data as a practical proxy for NGO allocation decisions given lack of comprehensive global NGO destination data.
- Inclusion of EU multilateral aid to governments as a regressor to control for possible EU influence on NGO project locations.
- Focus restricted to development aid (not humanitarian aid) because humanitarian allocation is driven by emergency events and disasters.

### Stylized Facts and Variables Overview
- Table 1 in the source reports, by region, means and standard deviations of exogenous variables (period mean and standard deviation summarized per region; detailed country lists and variable definitions in Appendix A and Appendix B).
- Acknowledged trade-offs and potential biases:
  - NGOs may self-select projects appealing to institutional donors.
  - Data reflect NGO projects proposed for and cofinanced by the EU; not all NGO activity worldwide.

*Source: _wp0639 - References (excerpts and summary of the paper's Introduction, literature review, data, and methodology).*

### Appendix A.

### Appendix A.

### Regional summary statistics (Table 1)
- Entire sample
  - Poverty mean 36.12; s.d. 16.57
  - Life Expectancy mean 58.79; s.d. 10.16
  - Militarization mean 1.13; s.d. 1.58
  - Political Score mean 4.04; s.d. 1.83
  - EU Imports mean 31.70; s.d. 19.58
- Africa
  - Poverty mean 44.15; s.d. 17.02
  - Life Expectancy mean 49.95; s.d. 6.40
  - Militarization mean 0.57; s.d. 0.41
  - Political Score mean 4.53; s.d. 1.72
  - EU Imports mean 44.31; s.d. 14.19
- Western Hemisphere
  - Poverty mean 30.77; s.d. 12.05
  - Life Expectancy mean 68.01; s.d. 5.46
  - Militarization mean 0.95; s.d. 0.43
  - Political Score mean 2.63; s.d. 1.18
  - EU Imports mean 15.17; s.d. 6.11
- Middle East
  - Poverty mean 19.86; s.d. 11.96
  - Life Expectancy mean 68.34; s.d. 3.57
  - Militarization mean 4.38; s.d. 3.35
  - Political Score mean 5.11; s.d. 1.81
  - EU Imports mean 52.34; s.d. 15.36
- Asia
  - Poverty mean 33.33; s.d. 13.29
  - Life Expectancy mean 61.71; s.d. 6.18
  - Militarization mean 0.92; s.d. 0.69
  - Political Score mean 4.30; s.d. 1.90
  - EU Imports mean 12.88; s.d. 6.77

- Summary observation: regions differ substantially in poverty, life expectancy, militarization, political score, and EU trade exposure; analysis considers entire sample and regional sub-samples.

### Regional distribution of NGO aid (Table 2)
- Africa
  - Share of World Population 12.42%
  - Number of Recipient Countries 35
  - Share of Received NGO Aid 32.52%
- Western Hemisphere
  - Share of World Population 11.50%
  - Number of Recipient Countries 21
  - Share of Received NGO Aid 44.45%
- Middle East
  - Share of World Population 3.72%
  - Number of Recipient Countries 8
  - Share of Received NGO Aid 4.14%
- Asia
  - Share of World Population 72.36%
  - Number of Recipient Countries 14
  - Share of Received NGO Aid 18.89%

- Interpretation: both Africa and the Western Hemisphere receive a share of aid larger than their population share; Asia represents more than 72.36% of sample population but receives 18.89% of NGO aid.

### Methodology
- Baseline empirical model (equation (1)):
  - Aid_it = β0 + β1 NEED_jit + β2 POL_it + β3 MIL_it + β4 STRAT_jit + μ_i + ε_it
  - NEED_j ∈ [poverty, life expectancy]; STRAT_j ∈ [imports from EU, official multilateral EU aid]
  - μ_i is country-specific unobserved effect; ε_it is time-varying error
- Lag structure:
  - Right-hand side variables are lagged (one period), except EU multilateral aid (assumed contemporaneously available)
- Estimators used:
  - One-way error component static random effects model (primary reported specification)
  - Fixed effects estimator (reported but noted as poor choice due to limited time variation)
  - System GMM (Arrellano and Bover (1995)): one-step and two-step; for regional sub-samples report one-step GMM
- Estimator selection rationale:
  - Random effects chosen following Nerlove and Balestra interpretation of decisions as draws; concern about RE consistency addressed by using GMM and FE alternatives
  - Serial correlation tested and none found
  - Two-step GMM standard errors noted to be unreliable in some sample sizes; hence one-step preferred for regional subsamples

### Worldwide results (Table 3; dependent variable: log constant NGO aid per country)
- RE (no year effects)
  - Life expectancy -0.575 [0.5342]
  - Imports from EU 0.179 [0.4258]
  - Militarization 0.012 [0.9364]
  - Poverty 0.925 [0.0001]
  - Policy score -0.055 [0.6643]
  - Population 0.589 [0.0000]
  - EU official aid -0.019 [0.5599]
  - Western Hemisphere 1.404 [0.0002]
  - Africa 0.254 [0.6393]
  - Middle East 0.322 [0.6018]
  - Constant -3.458 [0.4127]
  - Observations 594; Number of countries 78
- RE (with year effects)
  - Life expectancy -0.644 [0.4966]
  - Imports from EU 0.222 [0.3510]
  - Militarization -0.266 [0.9390] (table layout indicates militarization value listed but p-value unchanged)
  - Poverty 0.931 [0.0001]
  - Policy score -0.094 [0.4388]
  - Population 0.603 [0.0000]
  - EU official aid -0.027 [0.4005]
  - Western Hemisphere 1.396 [0.0003]
  - Africa 0.212 [0.7078]
  - Middle East 0.299 [0.6504]
  - Constant -3.371 [0.4330]
  - Observations 594; Number of countries 78
- FE
  - Life expectancy -0.348 [0.7905]
  - Imports from EU 0.061 [0.8291]
  - Militarization 0.138 [0.3415]
  - Poverty 0.966 [0.0006]
  - Policy score 0.088 [0.6101]
  - Population -0.688 [0.8078]
  - EU official aid -0.067 [0.0940]
  - Western Hemisphere 1.419 [0.0007]
  - Africa (not significant)
  - Middle East -0.319 [0.6803]
  - Constant 2.628 [0.7480]
  - Observations 594; Number of countries 78
- GMM SYS-2 (two-step)
  - Life expectancy -0.437 [0.6940]
  - Imports from EU 0.325 [0.2249]
  - Militarization -0.266 [0.3910]
  - Poverty 1.012 [0.0000]
  - Policy score -0.301 [0.0622]
  - Population 0.625 [0.0000]
  - EU official aid -0.036 [0.3798]
  - Western Hemisphere 1.315 [0.0000]
  - Africa 0.209 [0.7212]
  - Middle East 0.256 [0.4784]
  - Constant -4.271 [0.4164]
  - Observations 594; Number of countries 78
- GMM SYS-1 (one-step)
  - Life expectancy -0.612 [0.3608]
  - Imports from EU 0.249 [0.0969]
  - Militarization 0.112 [0.1846]
  - Poverty 0.966 [0.0006] (presentation in table shows consistency of poverty significance)
  - Policy score -0.228 [0.0730]
  - Population 0.622 [0.0000]
  - EU official aid -0.035 [0.4993]
  - Western Hemisphere 0.225? / 1.315? (table shows Western Hemisphere 1.315 in SYS-2 and 1.315 reported earlier; GMM SYS-1 column lists 0.209/0.225 labeling ambiguity—core finding: Western Hemisphere dummy significant)
  - Observations 594; Number of countries 78

- Key worldwide findings:
  - Poverty is a robust determinant: poverty coefficient positive and statistically significant across estimators (e.g., 0.925 [0.0001]; 0.931 [0.0001]; 0.966 [0.0006]; 1.012 [0.0000])
  - Population positively associated with NGO aid (e.g., 0.589 [0.0000]; 0.603 [0.0000]; 0.625 [0.0000])
  - Strategic variables (imports from EU, EU official aid) mostly insignificant; fixed effects shows a small negative relation between official EU aid and NGO aid (EU official aid -0.067 [0.0940])
  - Western Hemisphere dummy strongly positive and significant (e.g., 1.404 [0.0002]; 1.396 [0.0003]; 1.419 [0.0007]; 1.315 [0.0000])

### Regional results (Table 4; random effect estimator reported)
- Africa (Observations 268; Number of countries 35)
  - Life expectancy 0.276 [0.8161]
  - Imports from EU 0.299 [0.4030]
  - Militarization -0.08 [0.6591]
  - Poverty 0.951 [0.0062]***
  - Political score -0.265 [0.2079]
  - Population 0.638 [0.0000]***
  - EU official aid -0.029 [0.6738]
  - Year effects Yes; Constant -7.17 [0.1399]
- Western Hemisphere (Observations 158; Number of countries 21)
  - Life expectancy -5.61 [0.0011]***
  - Imports from EU -0.02 [0.9562]
  - Militarization 0.595 [0.0365]**
  - Poverty 0.475 [0.3260]
  - Political score -0.148 [0.5556]
  - Population 0.857 [0.0000]***
  - EU official aid 0.043 [0.4637]
  - Year effects yes; Constant 20.696 [0.0063]***
- Middle East (Observations 59; Number of countries 8)
  - Life expectancy -8.652 [0.0083]***
  - Imports from EU 0.232 [0.8270]
  - Militarization -1.211 [0.0070]***
  - Poverty 1.071 [0.0053]***
  - Political score -1.365 [0.0047]***
  - Population -0.726 [0.0016]***
  - EU official aid -0.059 [0.5998]
  - Year effects yes; Constant 37.793 [0.0102]**
- Asia (Observations 109; Number of countries 14)
  - Life expectancy -1.362 [0.6437]
  - Imports from EU 0.002 [0.9972]
  - Militarization 0.256 [0.4725]
  - Poverty 1.212 [0.0415]**
  - Political score 0.042 [0.9202]
  - Population 0.676 [0.0011]***
  - EU official aid -0.086 [0.4283]
  - Year effects yes; Constant -1.202 [0.9236]

- Regional key findings:
  - Poverty explains NGO aid allocation in Africa, Middle East, and Asia (coefficients: 0.951 [0.0062]***; 1.071 [0.0053]***; 1.212 [0.0415]**)
  - In the Western Hemisphere life expectancy is the primary need determinant (life expectancy -5.61 [0.0011]***), with a large elasticity: a reduction in life expectancy of 1 percent increases NGO aid by more than 5 percent (Western Hemisphere) and more than 8 percent (Middle East) per the text interpretation of coefficients
  - Militarization significant in the Western Hemisphere (0.595 [0.0365]**) and Middle East (-1.211 [0.0070]***), but signs differ across regions
  - Strategic variables (imports from EU, EU official aid) remain insignificant across regional sub-samples
  - Population positive and significant in all regions except Middle East (negative there driven by Lebanon outlier)

### Joint effect of Militarization and Political Institutions (MIL-POL) (Table 5)
- World (Observations 594; Number of countries 78)
  - Life expectancy -0.717 [0.4465]
  - Imports from EU 0.231 [0.2974]
  - Militarization 0.212 [0.2407]
  - Poverty 0.945 [0.0002]***
  - Political score 0.06 [0.7278]
  - Population 0.608 [0.0000]***
  - EU official aid -0.029 [0.4042]
  - MIL-POL -0.222 [0.1127]
  - Western Hemisphere 1.386 [0.0001]***
  - Year effects yes; Constant -3.092 [0.4434]
- Africa (Observations 268; Number of countries 35)
  - Life expectancy 0.203 [0.8668]
  - Imports from EU 0.317 [0.3822]
  - Militarization 0.118 [0.5956]
  - Poverty 0.959 [0.0063]***
  - Political score -0.092 [0.7216]
  - Population 0.638 [0.0000]***
  - EU official aid -0.032 [0.6423]
  - MIL-POL -0.224 [0.2093]
  - Year effects Yes; Constant -6.506 [0.1905]
- Western Hemisphere (Observations 158; Number of countries 21)
  - Life expectancy -5.509 [0.0014]***
  - Imports from EU -0.067 [0.8584]
  - Militarization 0.678 [0.0571]*
  - Poverty 0.492 [0.3228]
  - Political score -0.066 [0.8200]
  - Population 0.87 [0.0000]***
  - EU official aid 0.04 [0.4980]
  - MIL-POL -0.122 [0.6375]
  - Year effects yes; Constant 20.433 [0.0071]***
- Middle East (Observations 59; Number of countries 8)
  - Life expectancy -10.472 [0.0003]***
  - Imports from EU 0.31 [0.7381]
  - Militarization 1.908 [0.1816]
  - Poverty 1.53 [0.0002]***
  - Political score 1.403 [0.3122]
  - Population -0.773 [0.0003]***
  - EU official aid -0.008 [0.9398]
  - MIL-POL -3.279 [0.0234]**
  - Year effects yes; Constant 44.739 [0.0007]***
- Asia (Observations 109; Number of countries 14)
  - Life expectancy -1.192 [0.6635]
  - Imports from EU -0.016 [0.9724]
  - Militarization 0.645 [0.2805]
  - Poverty 1.212 [0.0177]**
  - Political score 0.298 [0.6128]
  - Population 0.687 [0.0002]***
  - EU official aid -0.092 [0.3786]
  - MIL-POL -0.375 [0.5040]
  - Year effects Yes; Constant -1.327 [0.9087]

- Key findings on MIL-POL:
  - MIL-POL is significant and negative for the Middle East: MIL-POL -3.279 [0.0234]** — interpretation: NGOs tend to avoid highly autocratic and militarized regimes in the Middle East; a 1 percent increase in MIL-POL reduces NGO aid allocation to the Middle East by more than 3 percent
  - MIL-POL is mildly negative for the entire sample (MIL-POL -0.222 [0.1127]) but not strongly significant
  - Other base specification results remain: poverty consistently positive and significant; population positive and significant; strategic variables largely insignificant

### Main conclusions (from Appendix A content)
- Across 9 years and 78 recipient countries, NGO aid allocation is primarily driven by recipient need indicators:
  - Poverty is a consistently strong positive determinant of NGO aid (robust across estimators and regions)
  - Life expectancy matters regionally (notably in the Western Hemisphere and Middle East where lower life expectancy strongly increases NGO aid)
- Strategic considerations (imports from EU, EU official aid) exert little influence on NGO allocation decisions in most specifications and regions
- Less democratic and highly militarized regimes attract less NGO aid in some contexts; the composite MIL-POL variable shows a strong negative effect in the Middle East (MIL-POL -3.279 [0.0234]**)
- NGOs overall appear relatively immune to strategic interests associated with institutional donors and maintain a distribution pattern aligned with poverty and health needs

*Source: _wp0639 - Appendix A.*

### REFERENCES

### _wp0639 - REFERENCES

### References
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- Arellano, M. and O. Bover, 1995, “Another Look at the Instrumental Variable Estimation of Error-Components Models,” Journal of Econometrics, Vol. 68, No. 1, pp. 29–52.
- Blundell, Richard, and Stephen Bond, 1999, “GMM Estimation with Persistent Panel Data: An Application to Production Functions,” IFS Working Paper W99/04 (London: Institute for Fiscal Studies).
- Bond, Stephen, 2002, “Dynamic Panel Data Models: A Guide to Micro Data Methods and Practice,” CeMAPP Working Paper CWP09/02 (London: Institute for Fiscal Studies).
- Collier, P., and D. Dollar, 2002, “Aid Allocation and Poverty Reduction,” European Economic Review, Vol. 46, No. 8, pp. 1475–1500.
- Cox A., and A. Koning, 1997, “EC Cooperation With NGO: An Evaluation” (Brussels: European Commission).
- Davies, R., 1997 “Donor Information Demands and NGO Institutional Development,” Journal of International Development, Vol. 9, No. 4, pp. 612–20.
- Dudley, L., and C. Montmarquette, 1976, “A Model of the Supply of Bilateral Foreign Aid,” American Economic Review, Vol. 66, No. 1, pp. 132–42.
- Edwards, M., and D. Hulme, 1994, “NGOs Performance and Accountability in the New World Order” (unpublished; Manchester: Institute for Development Policy and Management).
- ———, 1997, “Too Close for Comfort? The Impact of Official Aid on NGOs,” in NGOs, State and Donors, Too Close for Comfort?, ed. by M. Edwards and D. Hume (London: Macmillan Press).
- Feeny, S., and M. McGillivray, 2001 “Aid and Public Sector Borrowing in Developing Countries,” Journal of International Development, Vol. 15, pp. 989–98.
- Frey, B.S., and F. Schneider, 1986, “Competing Models of International Lending Activity,” Journal of Development Economics, Vol. 20, pp. 225–45.
- Gauri, Varun, and Anna Fruttero, 2003, “Location Decisions and Nongovernmental Organization Motivation: Evidence from Rural Bangladesh,” Policy Research Working Paper 3176 (Washington: World Bank).
- Gounder, R., 1994, “Empirical Results of Aid Motivations: Australia’s Bilateral Aid Program,” World Development, Vol. 22, No. 1, pp. 99–113.
- Grilli, E., and M. Riess, 1992, “EC Aid to Associated Countries: Distribution and Determinants,” Review of World Economics, Weltwirtschaftliches Archiv, Vol. 128, No. 2, pp. 202–20.
- Haavelmo, T., 1994, “The Probability Approach in Econometrics” in The history of econometrics, Volume 2., ed. by Darnell, Adrian C. (United Kingdom: Elgar Reference Collection Aldershot).
- Howes, M., 1997, “NGOs and the Institutional Development of Membership Organizations: the Evidence from Six Cases,” Journal of International Development, Vol. 9, No. 4, pp. 597–604.
- Jack, W., 2001, “Public Policy toward Nongovernmental Organizations in Developing Countries,” The World Bank, Policy Research Working Paper Series 2639.
- James, R., 1997, “Organizational Strengthening of European NGOs,” Journal of International Development, Vol. 9, No. 4, pp. 605–11.
- Lister, S., 2001, “The Consultation Practice of Northern NGOs: A Study of British Organizations in Guatemala,” Journal of International Development, Vol. 13, pp. 1071–82.
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- McKinley, R.D., and R. Little, 1978a, “A Foreign Policy Model of the Distribution of British Bilateral Aid,” British Journal of Political Science, Vol. 8, No. 3, pp. 313–32.
- McKinley, R.D., and R. Little, 1978b, “The French Aid Relationship: A Foreign Policy Model of the Distribution of French Bilateral Aid,” Development and Change, Vol. 9, pp. 459–78.
- Meyer, Carrie A., 1995, “Opportunism and NGOs: Entrepreneurship and Green North-South Transfers,” World Development, 23 (August), pp. 1277–89.
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- Townsend, J.G., G. Porter, and E. Mawdsley, 2002, “The Role of Transnational Community of Non-Government Organizations: Governance or Poverty-Reduction?” Journal of International Development, No.14, pp. 829–39.
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### Appendix A. Countries in Sample by Region
- Africa
  - Benin
  - Botswana
  - Burkina Faso
  - Burundi
  - Cameroon
  - Cape Verde
  - Central African Rep.
  - Congo, Rep. of
  - Côte d'Ivoire
  - Equatorial Guinea
  - Ethiopia
  - Gambia
  - Ghana
  - Guinea-Bissau
  - Gounder, R. (entry appears in references above) [Note: list continues below in source]
  - Kenya
  - Madagascar
  - Malawi
  - Mali
  - Mauritius
  - Mozambique
  - Namibia
  - Niger
  - Nigeria
  - Rwanda
  - Senegal
  - South Africa
  - Sudan
  - Swaziland
  - Tanzania
  - Togo
  - Tunisia
  - Uganda
  - Zambia
  - Zimbabwe
- Asia
  - Bangladesh
  - Cambodia
  - Fiji
  - India
  - Indonesia
  - Lao PDR
  - Nepal
  - Pakistan
  - Papua New Guinea
  - Philippines
  - Sri Lanka
  - Thailand
  - Vietnam
- Western Hemisphere
  - Argentina
  - Belize
  - Bolivia
  - Brazil
  - Chile
  - Colombia
  - Costa Rica
  - Dominican Republic
  - Ecuador
  - El Salvador
  - Guatemala
  - Haiti
  - Honduras
  - Mexico
  - Nicaragua
  - Panama
  - Paraguay
  - Peru
  - Trinidad and Tobago
  - Uruguay
  - Venezuela
- Middle East
  - Algeria
  - Egypt
  - Israel
  - Jordan
  - Lebanon
  - Morocco
  - Sudan
  - Syrian Arab Republic
  - Tunisia
  - Yemen

### Appendix B. Data Description and Sources
- 1) NGO Aid
  - Source: European Commission, budget line B7-6000.
  - The data represent commitments of European Commission to cofinancing NGO projects in a given country in a given year.
- 2) European Union Multilateral Aid
  - Source: OECD
  - Total official development assistance committed to a country in a given year by the countries that are part of the European Union.
- 3) National Poverty
  - Source: World Development Indicators
  - Percentage of the population living below the national poverty line. National estimates are based on population-weighted subgroup estimates from household surveys.
- 4) Militarization
  - Source: World Development Indicators
  - Military personnel as percentage of labor force.
- 5) Political Score: Level of Democracy (Overall Polity Score)
  - Source: Canadian Department of Foreign Affairs and International Trade
  - In the definition of Polity IV, democracy is conceived as three essential, interdependent elements. One is the presence of institutions and procedures through which citizens can express effective preferences about alternative policies and leaders. Second is the existence of institutionalized constraints on the exercise of power by the executive. Third is the guarantee of civil liberties to all citizens in their daily lives and in acts of political participation. Autocracy is defined operationally in terms of the presence of a distinctive set of political characteristics. In mature form, autocracies sharply restrict or suppress competitive political participation. Their chief executives are chosen in a regularized process of selection within the political elite, and once in office, they exercise power with few institutional constraints.
  - The Political Score is a global rank based index (nine-point scale) of the Overall Polity Score, where 1 is “strongly democratic” and 9 is “strongly autocratic.”
- 6) Imports from the European Union (EU)
  - Source: World Bank and IMF staff estimates
  - This variable represents the ratio of the recipients' imports from the EU on total imports.
- 7) Population
  - Source: World Development Indicators
  - Population in millions.

*Source: _wp0639 - REFERENCES (PDF chapter/section).*

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