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Poverty and Governance: The Contest for Aid

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  • Gil S. Epstein
  • Ira N. Gang

Abstract

Countries compete with one another for funds distributed by non-government organizations (NGOs). The authors consider a competition over poverty and governance conducted by a non-government organization trying to allocate its funds among potential recipient countries. In its decision-making the NGO also takes into account the initial conditions each potential recipient faces, including the current quality of governance and wealth (poverty). For example, all else being equal the poorer country will have a higher probability of obtaining funds; or, the better the applicant's governance, the more its gains. Moreover, the maximum aid a country can obtain depends on its wealth. Investment in good governance, the wealth/poverty status of the applicant, and its current quality of governance will, together, determine the funds potential recipients expect to obtain. The authors also consider recent changes in the levels of these factors. They want to understand the roles these factors play in the competition for aid and the outcome for the quality of governance. Copyright 2009 The Authors. Journal compilation 2009 Blackwell Publishing Ltd.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of Development Economics.

Volume (Year): 13 (2009)
Issue (Month): s1 (08)
Pages: 382-392

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Handle: RePEc:bla:rdevec:v:13:y:2009:i:s1:p:382-392

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References

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  1. Heckelman, Jac & Knack, Stephen, 2005. "Foreign aid and market-liberalizing reform," Policy Research Working Paper Series 3557, The World Bank.
  2. Gil S. Epstein & Ira N. Gang, 2006. "Contests, NGOs, and Decentralizing Aid," Review of Development Economics, Wiley Blackwell, vol. 10(2), pages 285-296, 05.
  3. Sajal Lahiri and Pascalis Raimondos, . "Competition for Aid and Trade Policy," Economics Discussion Papers 433, University of Essex, Department of Economics.
  4. Gil Epstein & Shmuel Nitzan, 2006. "The Politics of Randomness," Social Choice and Welfare, Springer, vol. 27(2), pages 423-433, October.
  5. Mavrotas, George & Villanger, Espen, 2006. "Multilateral Aid Agencies and Strategic Donor Behaviour," Working Paper Series DP2006/02, World Institute for Development Economic Research (UNU-WIDER).
  6. Svensson, Jakob, 2003. "Why conditional aid does not work and what can be done about it?," Journal of Development Economics, Elsevier, vol. 70(2), pages 381-402, April.
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Cited by:
  1. Brück, Tilman & Xu, Guo, 2012. "Who gives aid to whom and when? Aid accelerations, shocks and policies," European Journal of Political Economy, Elsevier, vol. 28(4), pages 593-606.

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