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The quality of foreign aid : country selectivity or donors incentives?

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Author Info
Wane, Waly

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Abstract

The author investigates the determinants of foreign aid quality. He shows that design effects are a crucial component of quality. He thus establishes that donors have an impact on the quality of the foreign assistance they provide. The author also shows both theoretically and empirically that the quality of aid is endogenous to the relationship between the donor agency and the recipient government. Highly capable and accountable governments accept only well-designed projects, whereas governments with low accountability may accept poor quality projects either because they are unable to assess the worth of the projects or they will benefit personally.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3325.

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Date of creation: 01 Jun 2004
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Handle: RePEc:wbk:wbrwps:3325

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Keywords: Banks&Banking Reform Development Economics&Aid Effectiveness Decentralization Poverty Monitoring&Analysis Public Health Promotion Development Economics&Aid Effectiveness Banks&Banking Reform Poverty Monitoring&Analysis Health Economics&Finance Health Monitoring&Evaluation

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  1. Llavador, Humberto G. & Roemer, John E., 2001. "An equal-opportunity approach to the allocation of international aid," Journal of Development Economics, Elsevier, vol. 64(1), pages 147-171, February. [Downloadable!] (restricted)
  2. Svensson, Jakob, 2000. "When is foreign aid policy credible? Aid dependence and conditionality," Journal of Development Economics, Elsevier, vol. 61(1), pages 61-84, February. [Downloadable!] (restricted)
  3. Mosley, Paul, 1996. "The Failure of Aid and Adjustment Policies in Sub-Saharan Africa: Counter-Examples and Policy Proposals," Journal of African Economies, Oxford University Press, vol. 5(3), pages 406-43, October.
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  5. Dewatripont, Mathias & Jewitt, Ian & Tirole, Jean, 1999. "The Economics of Career Concerns, Part II: Application to Missions and Accountability of Government Agencies," Review of Economic Studies, Blackwell Publishing, vol. 66(1), pages 199-217, January. [Downloadable!] (restricted)
  6. White, H. & Woestman, L., 1993. "quality of aid : measuring trends in donor performance," Working Papers - General Series 153, Institute of Social Studies. [Downloadable!]
  7. David Roodman, 2004. "An Index of Donor Performance," Working Papers 42, Center for Global Development. [Downloadable!]
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  8. Evans, William N & Schwab, Robert M, 1995. "Finishing High School and Starting College: Do Catholic Schools Make a Difference?," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 941-74, November. [Downloadable!] (restricted)
  9. Mosley, Paul, 1985. "The Political Economy of Foreign Aid: A Model of the Market for a Public Good," Economic Development and Cultural Change, University of Chicago Press, vol. 33(2), pages 373-93, January.
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  11. Kosack, Stephen, 2003. "Effective Aid: How Democracy Allows Development Aid to Improve the Quality of Life," World Development, Elsevier, vol. 31(1), pages 1-22, January. [Downloadable!] (restricted)
  12. Kaufmann, Daniel & Kraay, Aart & Zoido-Lobaton, Pablo, 1999. "Governance matters," Policy Research Working Paper Series 2196, The World Bank. [Downloadable!]
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  14. Sah, Raaj Kumar & Stiglitz, Joseph E, 1986. "The Architecture of Economic Systems: Hierarchies and Polyarchies," American Economic Review, American Economic Association, vol. 76(4), pages 716-27, September. [Downloadable!] (restricted)
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  15. Joseph G. Altonji & Todd E. Elder & Christopher R. Taber, 2000. "Selection on Observed and Unobserved Variables: Assessing the Effectiveness of Catholic Schools," NBER Working Papers 7831, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  16. Kilby, Christopher, 2000. "Supervision and performance: the case of World Bank projects," Journal of Development Economics, Elsevier, vol. 62(1), pages 233-259, June. [Downloadable!] (restricted)
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  17. Azam, Jean-Paul & Laffont, Jean-Jacques, 2003. "Contracting for aid," Journal of Development Economics, Elsevier, vol. 70(1), pages 25-58, February. [Downloadable!] (restricted)
  18. Kaufmann, Daniel & Wang, Yan, 1995. "Macroeconomic policies and project performance in the social sectors: A model of human capital production and evidence from LDCs," World Development, Elsevier, vol. 23(5), pages 751-765, May. [Downloadable!] (restricted)
  19. William N. Evans & Matthew C. Farrelly & Edward Montgomery, 1999. "Do Workplace Smoking Bans Reduce Smoking?," American Economic Review, American Economic Association, vol. 89(4), pages 728-747, September. [Downloadable!] (restricted)
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  20. Joseph G. Altonji & Todd E. Elder & Christopher R. Taber, 2002. "An Evaluation of Instrumental Variable Strategies for Estimating the Effects of Catholic Schools," NBER Working Papers 9358, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  21. J. Svensson, 1999. "Aid, Growth and Democracy," Economics and Politics, Blackwell Publishing, vol. 11(3), pages 275-297, November. [Downloadable!] (restricted)
  22. Boone, Peter, 1996. "Politics and the effectiveness of foreign aid," European Economic Review, Elsevier, vol. 40(2), pages 289-329, February. [Downloadable!] (restricted)
  23. Fairburn, James A & Malcomson, James M, 2001. "Performance, Promotion, and the Peter Principle," Review of Economic Studies, Blackwell Publishing, vol. 68(1), pages 45-66, January.
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  24. William Easterly & Ross Levine & David Roodman, 2003. "New Data, New Doubts: Revisiting "Aid, Policies, and Growth"," Working Papers 26, Center for Global Development. [Downloadable!]
  25. 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. [Downloadable!] (restricted)
  26. Hansen, Henrik & Tarp, Finn, 2001. "Aid and growth regressions," Journal of Development Economics, Elsevier, vol. 64(2), pages 547-570, April. [Downloadable!] (restricted)
  27. Isham, Jonathan & Kaufmann,Daniel, 1995. "The forgotten rationale for policy reform : the productivity of investment projects," Policy Research Working Paper Series 1549, The World Bank. [Downloadable!]
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. John Gould & Matthew Winters, 2007. "An Obsolescing Bargain in Chad: Shifts in Leverage between the Government and the World Bank," Business and Politics, Berkeley Electronic Press, vol. 9(2), pages 1199-1199. [Downloadable!] (restricted)
  2. Kenny, Charles, 2006. "What is effective aid? How would donors allocate It?," Policy Research Working Paper Series 4005, The World Bank. [Downloadable!]
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