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Coordination Failure in Foreign Aid

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  • Halonen-Akatwijuka Maija

    (University of Bristol)

Abstract

We analyze allocation of foreign aid to different sectors in a recipient developing country. Donors tend to favor social sectors over other public expenditure programs. Due to incomplete information coordination failure occurs. The donors may concentrate too much on the priority sectors leaving the lower priority, yet important, sectors lacking of funds. Alternatively there may be gaps in services in the priority areas because of the information problem. We find that the more similar preferences the donors have, the more scope there is for coordination failure.

Suggested Citation

  • Halonen-Akatwijuka Maija, 2007. "Coordination Failure in Foreign Aid," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-40, August.
    • Handle: RePEc:bpj:bejeap:v:7:y:2007:i:1:n:43
    DOI: 10.2202/1935-1682.1616
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    References listed on IDEAS

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    Cited by:

    1. Emmanuelle Auriol & Josepa Miquel-Florensa, 2019. "Taxing fragmented aid to improve aid efficiency," The Review of International Organizations, Springer, vol. 14(3), pages 453-477, September.
    2. Elisabeth Paul, 2006. "A Survey of the Theoretical Economic Literature on Foreign Aid," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 20(1), pages 1-17, May.
    3. Kilby, Christopher, 2011. "What Determines the Size of Aid Projects?," World Development, Elsevier, vol. 39(11), pages 1981-1994.
    4. Leiderer, Stefan, 2013. "Donor Coordination for Effective Government Policies? Implementation of the New Aid Effectiveness Agenda in Health and Education in Zambia," WIDER Working Paper Series 049, World Institute for Development Economic Research (UNU-WIDER).
    5. Iñaki Aldasoro & Peter Nunnenkamp & Rainer Thiele, 2010. "Less aid proliferation and more donor coordination? The wide gap between words and deeds," Journal of International Development, John Wiley & Sons, Ltd., vol. 22(7), pages 920-940.
    6. Stefan Leiderer, 2015. "Donor Coordination for Effective Government Policies?," Journal of International Development, John Wiley & Sons, Ltd., vol. 27(8), pages 1422-1445, November.
    7. repec:unu:wpaper:wp2012-69 is not listed on IDEAS
    8. Acharya, Arnab & Martínez-Álvarez, Melisa, 2012. "Aid Effectiveness in the Health Sector," WIDER Working Paper Series 069, World Institute for Development Economic Research (UNU-WIDER).

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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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