Decentralised and cooperative aid provision with short-term and long-term aid
We analyze two donors providing long- and short-run aid to one receiving (poor) country, and who may give aid in coordinated or non-coordinated fashion. An elite controls receiver policy, and diverts resources away from a poor target group. When strategic moves are simultaneous, there is excessive wasteful short-run aid diversion, which could be made worse by donor cooperation. When donors move first, aid is lower, donor utility is higher, and donors should always cooperate. Investments, by the receiving country and due to long-term aid, is greater and the solution more efficient when investments are complements than when they are substitutes. The model characterizes donors that may be considered as “gullible”, or as “skeptical”. The former type gives generously but its aid is largely wasted; the latter gives less aid, but also wastes less. Copyright Â© 2009 John Wiley & Sons, Ltd.
Volume (Year): 22 (2010)
Issue (Month): 7 ()
|Contact details of provider:|| Web page: http://www3.interscience.wiley.com/journal/5102/home|
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.:
- Raghuram G. Rajan & Arvind Subramanian, 2005.
"Aid and Growth: What Does the Cross-Country Evidence Really Show?,"
NBER Working Papers
11513, National Bureau of Economic Research, Inc.
- Raghuram G. Rajan & Arvind Subramanian, 2008. "Aid and Growth: What Does the Cross-Country Evidence Really Show?," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 643-665, November.
- Raghuram G. Rajan, 2005. "Aid and Growth: What Does The Cross-Country Evidence Really Show?," Working Papers id:54, eSocialSciences.
- Raghuram Rajan & Arvind Subramanian, 2005. "Aid and Growth; What Does the Cross-Country Evidence Really Show?," IMF Working Papers 05/127, International Monetary Fund.
- 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.
- Dollar, David & Svensson, Jakob, 2000.
"What Explains the Success or Failure of Structural Adjustment Programmes?,"
Royal Economic Society, vol. 110(466), pages 894-917, October.
- Dollar, David & Svensson, Jakob, 1998. "What explains the success or failure of structural adjustment programs?," Policy Research Working Paper Series 1938, The World Bank.
- Dollar, David & Alesina, Alberto, 2000.
"Who Gives Foreign Aid to Whom and Why?,"
4553020, Harvard University Department of Economics.
- Azam, Jean-Paul & Laffont, Jean-Jacques, 2003. "Contracting for aid," Journal of Development Economics, Elsevier, vol. 70(1), pages 25-58, February.
When requesting a correction, please mention this item's handle: RePEc:wly:jintdv:v:22:y:2010:i:7:p:906-919. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.