Author: Andreas Fuchs, Krishna Chaitanya Vadlamannati.

With the intension of understanding why poor countries provide aid to other developing countries, we analyze aid commitments by India’s Ministry of External Affairs to 125 countries over the 2008–10 period. Our findings are partially in line with our expectations of the behavior of a “needy” donor. Commercial and political self-interests dominate India’s aid allocation. We find the importance of political interests to be significantly larger for India than for all donors of the Development Assistance Committee. Moreover, countries that are geographically closer are favored, and countries at a similar developmental stage are more likely to enter India’s aid program.