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Can donor coordination solve the aid proliferation problem?

  • Rahman, Aminur
  • Sawada, Yasuyuki

We augment Holmstrom’s (1982) team production model in the context of aid effectiveness. In addition, we show how donor proliferation leads to inefficient supply of aid in the recipient country because of the free-riding problem faced by the donors. Our empirical findings support the theoretical prediction with regard to donor proliferation. However, this raises the question whether the current efforts in the international aid community with regard to donor coordination can effectively solve the aid proliferation problem.

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File URL: http://www.sciencedirect.com/science/article/pii/S016517651200345X
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Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 116 (2012)
Issue (Month): 3 ()
Pages: 609-612

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Handle: RePEc:eee:ecolet:v:116:y:2012:i:3:p:609-612
Contact details of provider: Web page: http://www.elsevier.com/locate/ecolet

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  1. Yatchew, A., 1997. "An elementary estimator of the partial linear model," Economics Letters, Elsevier, vol. 57(2), pages 135-143, December.
  2. Burnside, Craig & Dollar, David, 1997. "Aid, policies, and growth," Policy Research Working Paper Series 1777, The World Bank.
  3. Roodman, David, 2006. "Aid Project Proliferation and Absorptive Capacity," Working Paper Series RP2006/04, World Institute for Development Economic Research (UNU-WIDER).
  4. KIMURA Hidemi & SAWADA Yasuyuki & MORI Yuko, 2007. "Aid Proliferation and Economic Growth: A Cross-Country Analysis," Discussion papers 07044, Research Institute of Economy, Trade and Industry (RIETI).
  5. Bengt Holmstrom, 1981. "Moral Hazard in Teams," Discussion Papers 471, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  6. Knack, Stephen & Rahman, Aminur, 2007. "Donor fragmentation and bureaucratic quality in aid recipients," Journal of Development Economics, Elsevier, vol. 83(1), pages 176-197, May.
  7. Michael Lokshin, 2006. "Difference-based semiparametric estimation of partial linear regression models," Stata Journal, StataCorp LP, vol. 6(3), pages 377-383, September.
  8. Arnab Acharya & Ana Teresa Fuzzo de Lima & Mick Moore, 2006. "Proliferation and fragmentation: Transactions costs and the value of aid," Journal of Development Studies, Taylor & Francis Journals, vol. 42(1), pages 1-21.
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