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Proliferation and fragmentation: Transactions costs and the value of aid

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  • Arnab Acharya
  • Ana Teresa Fuzzo de Lima
  • Mick Moore
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    Abstract

    The problem of the proliferation of the number of aid donors and aid channels continues to worsen. It is widely and plausibly believed that this significantly reduces the value of aid by increasing direct and indirect transactions costs. We contribute to the existing literature by: (a) categorising the apparent adverse effects of proliferation; (b) producing a reliable and fair indicator of the relative degree to which the main bilateral donors proliferate or concentrate their aid; (c) giving some explanation of why some donors proliferate more than others; (d) constructing a reliable measure of the extent to which recipients suffer from the problem of fragmentation in the sources of their aid; and (e) demonstrating that the worst proliferators among the aid donors are especially likely to be suppliers of aid to recipients suffering most from fragmentation. There are significant implications for aid policy.

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    Bibliographic Info

    Article provided by Taylor and Francis Journals in its journal Journal of Development Studies.

    Volume (Year): 42 (2006)
    Issue (Month): 1 ()
    Pages: 1-21
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    Handle: RePEc:taf:jdevst:v:42:y:2006:i:1:p:1-21

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    Cited by:
    1. Peter Nunnenkamp & Hannes Öhler, 2010. "Funding, Competition and the Efficiency of NGOs: An Empirical Analysis of Non-charitable Expenditure of US NGOs Engaged in Foreign Aid," cege – Center for European, Governance and Economic Development Research Discussion Papers 109, cege – Center for European, Governance and Economic Development Research, University of Goettingen (Germany)..
    2. Nunnenkamp, Peter & Öhler, Hannes, 2010. "Aid Allocation through Various Official and Private Channels: Need, Merit and Self-Interest as Motives of German Donors," Proceedings of the German Development Economics Conference, Hannover 2010 15, Verein für Socialpolitik, Research Committee Development Economics.
    3. Roodman, David, 2006. "Aid Project Proliferation and Absorptive Capacity," Working Papers RP2006/04, World Institute for Development Economic Research (UNU-WIDER).
    4. Frot, Emmanuel & Santiso, Javier, 2009. "Crushed Aid: Fragmentation in Sectoral Aid," SITE Working Paper Series 6, Stockholm Institute of Transition Economics, Stockholm School of Economics.
    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. Kihara, Takashi, 2012. "Effective Development Aid: Selectivity, Proliferation and Fragmentation, and the Growth Impact of Development Assistance," ADBI Working Papers 342, Asian Development Bank Institute.
    7. Knack, Stephen & Smets, Lodewijk, 2012. "Aid tying and donor fragmentation," Policy Research Working Paper Series 5934, The World Bank.
    8. Jin Sato & Hiroaki Shiga & Takaaki Kobayashi & Hisahiro Kondoh, 2010. "How do "Emerging" Donors Differ from "Traditional" Donors?," Working Papers 2, JICA Research Institute.
    9. Peter Nunnenkamp, Hannes Öhler, Rainer Thiele, 2011. "Donor Coordination and Specialization: Did the Paris Declaration Make a Difference?," Kiel Working Papers 1748, Kiel Institute for the World Economy.

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