Can stability of foreign aid agreement reduce global income inequality?

Abstract

Global initiatives on debt relief call for increasing foreign aid assistance to alleviate income inequality. But the potential gains from foreign aid policy coordination may be limited by the willing participation of diverse and self-interested donor countries. If stability of the foreign aid agreement does not occur, then aid effectiveness fails. Thus, the aim of this paper is to investigate the effects of the stability of foreign aid agreement on income redistribution amongst countries. The findings show that stability has positive effects on income mobility from the rich to the poorest countries reducing global income inequality.