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Company interests and foreign aid policy: Playing donors out against each other

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  • Espen Villanger

Abstract

Despite the importance attached to conditionality by the donors, and the fact that aid is a crucial income source for the recipient, it is found that conditionality fails. One explanation for this failure could be that a halt in aid could trigger the recipient to cancel contracts with companies from donor countries, which creates incentives for the companies to put pressure towards aid disbursement. We use a multi-agent triadic model of the relationships between a recipient and two donors and two companies to illustrate that recipients may use contracts strategically to make companies influence the disbursement decision to avoid implementing the donors' conditions. Failing to take account of the companies' role yields the opposite result in this model, i.e., conditionality becomes successful.

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Bibliographic Info

Paper provided by CMI (Chr. Michelsen Institute), Bergen, Norway in its series CMI Working Papers with number WP 2003:5.

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Length: 40 pages
Date of creation: 2003
Date of revision:
Handle: RePEc:chm:wpaper:wp2003-5

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Related research

Keywords: Triadic Conditionality Foreign aid Foreign assistance;

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References

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Citations

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Cited by:
  1. Odd-Helge Fjeldstad & Florida Henjewele & Geoffrey Mwambe & Erasto Ngalewa & Knut Nygaard, 2004. "Local government finances and financial management in Tanzania," CMI Working Papers WP 2004: 7, CMI (Chr. Michelsen Institute), Bergen, Norway.
  2. Odd-Helge Fjeldstad, 2003. "What has trust got to do with it? Non-payment of service charges in local authorities in South Africa," CMI Working Papers WP 2003:12, CMI (Chr. Michelsen Institute), Bergen, Norway.
  3. Basu , Kaushik & Stiglitz, Joseph E., 2013. "International lending, sovereign debt and joint liability : an economic theory model for amending the treaty of Lisbon," Policy Research Working Paper Series 6555, The World Bank.

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