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Aid effectiveness and imperfect monitoring: EU development aid as Prisoner’s Dilemma

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  • Theocharis Grigoriadis

Abstract

This paper analyzes the effectiveness of EU development aid to the economies of the former Soviet Union under conditions of imperfect monitoring. Transnational sovereignty partnerships (TSPs) suggest a novel type of aid recipient and an institutional component of the TACIS program. TSPs are composed of distributive planners and developmental entrepreneurs. Distributive planners set the development strategy and developmental entrepreneurs implement it based on EU development aid. I model the delivery of EU development aid to the former Soviet Union as an infinitely repeated Prisoner’s Dilemma with private signals. Aid effectiveness occurs when the European Commission signals that it will finance another TSP, without reducing its expected profit from aid implementation.

Suggested Citation

  • Theocharis Grigoriadis, 2013. "Aid effectiveness and imperfect monitoring: EU development aid as Prisoner’s Dilemma," Rationality and Society, , vol. 25(4), pages 489-511, November.
    • Handle: RePEc:sae:ratsoc:v:25:y:2013:i:4:p:489-511
    DOI: 10.1177/1043463113508427
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    References listed on IDEAS

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    Cited by:

    1. Jäger, Jannik & Grigoriadis, Theocharis, 2016. "Soft budget constraints, European Central Banking and the financial crisis," Discussion Papers 2016/7, Free University Berlin, School of Business & Economics.

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    More about this item

    Keywords

    Aid effectiveness; aid evaluation; developmental entrepreneurs; distributive planners; European Commission; imperfect monitoring; Prisoner’s Dilemma; TACIS;
    All these keywords.

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid
    • P52 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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