Lobbying by ethnic groups and aid allocation

We develop a political-economic model of foreign aid allocation. Each ethni c group in the donor country lobbies the government to allocate mole aid to its country of origin, and the government accepts political contributions from lobby groups. Initial per-capita income of the recipients and those of the ethnic groups are shown to be important determinants of the solution o f the political equilibrium. We also examine the effects of changes in the: degree of corruption, aid fatigue, and ethnic composition, in the donor co untry on the allocation of aid.