MOTIVATION MODELS OF AUSTRALIA BILATERAL AID PROGRAM - THE CASE OF INDONESIA

This paper is concerned with the question: what motivates Australia's provision of overseas aid to Indonesia? The econometric results on tim e series data obtained by testing a recipient need and a donor interes t model suggest both these concerns are relevant to Australian aid dec isons on Indonesia. To determine which model dominates, non-nested tes ts were conducted; these indicated acceptance of the recipient need mo del and rejection of the donor interest model. Thus Australia's aid to Indonesia was found to be determined by recipient need rather than do nor interest.