Rules of Redistribution and Foreign Aid: A Proposal for Change in Rules Governing Eligibility for Foreign Aid
28 Pages Posted: 18 Aug 2006
Date Written: August 2006
Abstract
When income is redistributed at national level, the minimum requirement is that the transfers should be progressive, that is flow from richer to poorer individuals. The same rule should hold at the global level: it is not sufficient that transfers be from a richer to a poorer country. But normally we do not know who are the taxpayers who finance international aid nor who are the beneficiaries. We can nevertheless establish the rules such that the likelihood of a globally regressive transfer is minimized. This implies taking into account countries' national income distributions, that is penalizing countries with highly unequal distributions since there exists a non-trivial probability that the transfers may be received by people richer than rich countries' taxpayers who finance such transfers. Some rules for changing eligibility criteria for aid are proposed.
Keywords: Aid, redistribution, global income distribution
JEL Classification: F35, D3
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
By David Dollar and Aart Kraay
-
Growth Still is Good for the Poor
By David Dollar, Tatjana Kleineberg, ...
-
What Can New Survey Data Tell Us About Recent Changes in Distribution and Poverty?
By Martin Ravallion and Shaohua Chen
-
By David Dollar and Aart Kraay
-
How Did the World's Poorest Fare in the 1990s?
By Shaohua Chen and Martin Ravallion
-
Inequality and Growth: What Can the Data Say?
By Abhijit V. Banerjee and Esther Duflo
-
Inequality and Growth: What Can the Data Say?
By Abhijit V. Banerjee and Esther Duflo
-
True World Income Distribution, 1988 and 1993: First Calculation Based on Household Surveys Alone