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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.

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Bibliographic Info

Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 116 (2012)
Issue (Month): 3 ()
Pages: 609-612

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Handle: RePEc:eee:ecolet:v:116:y:2012:i:3:p:609-612

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Web page: http://www.elsevier.com/locate/ecolet

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Keywords: Aid proliferation; Donor coordination; Free-rider problem;

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References

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  1. Burnside, Craig & Dollar, David, 1997. "Aid, policies, and growth," Policy Research Working Paper Series 1777, The World Bank.
  2. David Roodman, 2006. "Aid Project Proliferation and Absorptive Capacity," Working Papers, Center for Global Development 75, Center for Global Development.
  3. Yatchew, A., 1997. "An elementary estimator of the partial linear model," Economics Letters, Elsevier, Elsevier, vol. 57(2), pages 135-143, December.
  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. Bengt Holmstrom, 1982. "Moral Hazard in Teams," Bell Journal of Economics, The RAND Corporation, The RAND Corporation, vol. 13(2), pages 324-340, Autumn.
  6. Michael Lokshin, 2006. "Difference-based semiparametric estimation of partial linear regression models," Stata Journal, StataCorp LP, StataCorp LP, vol. 6(3), pages 377-383, September.
  7. 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.
  8. Kimura, Hidemi & Mori, Yuko & Sawada, Yasuyuki, 2012. "Aid Proliferation and Economic Growth: A Cross-Country Analysis," World Development, Elsevier, Elsevier, vol. 40(1), pages 1-10.
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Cited by:
  1. Kimura, Hidemi & Mori, Yuko & Sawada, Yasuyuki, 2012. "Aid Proliferation and Economic Growth: A Cross-Country Analysis," World Development, Elsevier, Elsevier, vol. 40(1), pages 1-10.

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