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Poverty and Governance: The Contest for Aid

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Author Info

  • Epstein, Gil S.
  • Gang, Ira N.

Abstract

Countries compete with one another for funds distributed by nongovernment organizations (NGOs). We examine the competition over poverty and governance conducted by a NGO in the allocation of its funds among potential recipient countries. The NGO in its decisionmaking process also takes into account the initial conditions of each potential recipient, including the current quality of governance and wealth (poverty). For example, all else equal, the poorer country will have a higher probability of obtaining funds; or, the better the applicant?s governance, the greater are its gains. Moreover, the maximum aid a country can obtain depends on its wealth. Investment in good governance, the wealth/poverty status of the applicant, and its current quality of governance will in conjunction determine the funds potential recipients can expect to obtain. We also consider recent changes in the levels of these factors in our attempt to understand the roles these factors play in the competition for aid, and the outcome for the quality of governance.

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File URL: http://www.wider.unu.edu/stc/repec/pdfs/rp2008/rp2008-76.pdf
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Bibliographic Info

Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Paper Series with number RP2008/76.

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Length: 14 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:unu:wpaper:rp2008-76

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Keywords: nongovernment organizations; NGOs; aid; competition;

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References

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  1. Jac C. Heckelman & Stephen Knack, 2008. "Foreign Aid and Market-Liberalizing Reform," Economica, London School of Economics and Political Science, vol. 75(299), pages 524-548, 08.
  2. Lahiri, Sajal & Raimondos-Moller, Pascalis, 1997. "Competition for aid and trade policy," Journal of International Economics, Elsevier, vol. 43(3-4), pages 369-385, November.
  3. Svensson, Jakob, 2003. "Why conditional aid does not work and what can be done about it?," Journal of Development Economics, Elsevier, vol. 70(2), pages 381-402, April.
  4. Gil S. Epstein & Ira N. Gang, 2006. "Contests, NGOs, and Decentralizing Aid," Review of Development Economics, Wiley Blackwell, vol. 10(2), pages 285-296, 05.
  5. Mavrotas, George & Villanger, Espen, 2006. "Multilateral Aid Agencies and Strategic Donor Behaviour," Working Paper Series DP2006/02, World Institute for Development Economic Research (UNU-WIDER).
  6. Gil Epstein & Shmuel Nitzan, 2006. "The Politics of Randomness," Social Choice and Welfare, Springer, vol. 27(2), pages 423-433, October.
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Cited by:
  1. Tilman Brück & Guo Xu, 2011. "Who Gives Aid to Whom and When?: Aid Accelerations, Shocks and Policies," Discussion Papers of DIW Berlin 1133, DIW Berlin, German Institute for Economic Research.

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