Allocating aid for COVID‐19 support: A constrained optimisation approach

Abstract

AbstractThe objective of this paper is to develop a prescriptive model for the inter‐country allocation of aid for COVID‐19 support. Aid allocations are increasing functions of three dimensions of need: (i) hazard and exposure to COVID‐19; (ii) vulnerability to COVID‐19 impacts; and (iii) the capacity to cope, subject to an aid budget constraint. COVID‐19 support from official donors to all ODA eligible countries is modeled. Aid allocations for COVID‐19 support prescribed by the model are compared to actual allocations in 2020. Findings from the main model suggest that low‐income countries are over‐represented among the countries that should have received a greater share of the aid for COVID‐19 support. Middle‐income countries tended to receive more donor support for COVID‐19 than amounts suggested by the model. The choice of weights assigned to the dimensions of need is arbitrary but findings are broadly consistent with respect to the use of different weights, alternative measures of support and changes to other parameters of the model. It is recommended that the donor community commit to a transparent needs‐based funding formula when addressing a global pandemic.