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Can donor coordination solve the aid proliferation problem?

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  • Rahman, Aminur
  • Sawada, Yasuyuki

Abstract

We augment Holmstrom’s (1982) team production model in the context of aid effectiveness. In addition, we show how donor proliferation leads to inefficient supply of aid in the recipient country because of the free-riding problem faced by the donors. Our empirical findings support the theoretical prediction with regard to donor proliferation. However, this raises the question whether the current efforts in the international aid community with regard to donor coordination can effectively solve the aid proliferation problem.

Suggested Citation

  • Rahman, Aminur & Sawada, Yasuyuki, 2012. "Can donor coordination solve the aid proliferation problem?," Economics Letters, Elsevier, vol. 116(3), pages 609-612.
    • Handle: RePEc:eee:ecolet:v:116:y:2012:i:3:p:609-612
    DOI: 10.1016/j.econlet.2012.06.013
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    1. Michael Lokshin, 2006. "Difference-based semiparametric estimation of partial linear regression models," Stata Journal, StataCorp LP, vol. 6(3), pages 377-383, September.
    2. David Roodman, 2006. "Aid Project Proliferation and Absorptive Capacity," WIDER Working Paper Series RP2006-04, World Institute for Development Economic Research (UNU-WIDER).
    3. Yutaka Arimoto & Hisaki Kono, 2009. "Foreign Aid and Recurrent Cost: Donor Competition, Aid Proliferation, and Budget Support," Review of Development Economics, Wiley Blackwell, vol. 13(2), pages 276-287, May.
    4. Knack, Stephen & Rahman, Aminur, 2007. "Donor fragmentation and bureaucratic quality in aid recipients," Journal of Development Economics, Elsevier, vol. 83(1), pages 176-197, May.
    5. David Dollar & Craig Burnside, 2000. "Aid, Policies, and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 847-868, September.
    6. Yatchew, A., 1997. "An elementary estimator of the partial linear model," Economics Letters, Elsevier, vol. 57(2), pages 135-143, December.
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    8. Arnab Acharya & Ana Teresa Fuzzo de Lima & Mick Moore, 2006. "Proliferation and fragmentation: Transactions costs and the value of aid," Journal of Development Studies, Taylor & Francis Journals, vol. 42(1), pages 1-21.
    9. Kimura, Hidemi & Mori, Yuko & Sawada, Yasuyuki, 2012. "Aid Proliferation and Economic Growth: A Cross-Country Analysis," World Development, Elsevier, vol. 40(1), pages 1-10.
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    1. Kimura, Hidemi & Mori, Yuko & Sawada, Yasuyuki, 2012. "Aid Proliferation and Economic Growth: A Cross-Country Analysis," World Development, Elsevier, vol. 40(1), pages 1-10.
    2. Pedrosa-Garcia, Jose Antonio, 2017. "Trends and Features of Research on Foreign Aid: A Literature Review," MPRA Paper 82134, University Library of Munich, Germany.
    3. Rik Habraken & Lau Schulpen & Paul Hoebink, 2017. "Putting promises into practice: The New Aid Architecture in Uganda," Development Policy Review, Overseas Development Institute, vol. 35(6), pages 779-795, November.
    4. Yasuyuki Sawada & Ryuji Kasahara & Keitaro Aoyagi & Masahiro Shoji & Mika Ueyama, 2013. "Modes of Collective Action in Village Economies: Evidence from Natural and Artefactual Field Experiments in a Developing Country," Asian Development Review, MIT Press, vol. 30(1), pages 31-51, March.
    5. Iliana Olivié & Aitor Pérez, 2016. "Why don’t donor countries coordinate their aid? A case study of European donors in Morocco," Progress in Development Studies, , vol. 16(1), pages 52-64, January.
    6. Berrittella, Maria, 2017. "Can stability of foreign aid agreement reduce global income inequality?," Economic Analysis and Policy, Elsevier, vol. 54(C), pages 105-111.
    7. Maurizio Carbone, 2017. "Make Europe happen on the ground? Enabling and constraining factors for European Union aid coordination in Africa," Development Policy Review, Overseas Development Institute, vol. 35(4), pages 531-548, July.

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    More about this item

    Keywords

    Aid proliferation; Donor coordination; Free-rider problem;
    All these keywords.

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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