The Hidden Samaritan Contest

Critics of foreign aid have argued that donors are driven by ulterior motives beyond their stated goal of reducing poverty in recipient countries. Peter Bauer, a Hungarian-born British economist, presented an early and prescient criticism of aid, arguing that aid is a transfer from taxpayers in rich countries to governments in poor countries. More recently, economists Angus Deaton and William Easterly have highlighted the so-called paradox of aid, with Easterly arguing that aid is ineffective where society wishes it worked. These criticisms are especially salient in the case of bilateral aid, as donors stand to benefit from a potential quid pro quo with recipients. [...]