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Beyond Planning: Markets and Networks for Better Aid

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  • Owen Barder

Abstract

The political economy of aid agencies is driven by incomplete information and multiple competing objectives and confounded by principal-agent and collective-action problems. Policies to improve aid rely too much on a planning paradigm that tries to ignore, rather than change, the political economy of aid. A considered combination of market mechanisms, networked collaboration, and collective regulation would be more likely to lead to significant improvements. A “collaborative market” for aid might include unbundling funding from aid management to create more explicit markets; better information gathered from the intended beneficiaries of aid; decentralized decision-making; a sharp increase in transparency and accountability of donor agencies; the publication of more information about results; pricing externalities; and new regulatory arrangements to make markets work. The aid system is in a political equilibrium, determined by deep characteristics of the aid relationship and the political economy of aid institutions. Reformers should seek to change that equilibrium rather than try to move away from it. The priority should be on reforms that put pressure on the aid system to evolve in the right direction rather than on grand designs.

Suggested Citation

  • Owen Barder, 2009. "Beyond Planning: Markets and Networks for Better Aid," Working Papers 185, Center for Global Development.
  • Handle: RePEc:cgd:wpaper:185
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    File URL: http://www.cgdev.org/content/publications/detail/1422971
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    Cited by:

    1. Hartmann, Simon, 2011. "Political constraints on division of labor in development policy across countries: A proposal for a more viable coordination procedure at the EU level," Working Papers 28, Österreichische Forschungsstiftung für Internationale Entwicklung (ÖFSE) / Austrian Foundation for Development Research.
    2. Katinka Cranenburgh & Daniel Arenas, 2014. "Strategic and Moral Dilemmas of Corporate Philanthropy in Developing Countries: Heineken in Sub-Saharan Africa," Journal of Business Ethics, Springer, vol. 122(3), pages 523-536, July.
    3. repec:taf:rjapxx:v:16:y:2011:i:4:p:529-543 is not listed on IDEAS
    4. Matthew Dornan & Tess Newton Cain, 2014. "Regional Service Delivery among Pacific Island Countries: An Assessment," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 1(3), pages 541-560, September.
    5. Andy Sumner, 2010. "Global Poverty and the New Bottom Billion: What if Three-quarters of the World?s Poor Live in Middle-income Countries?," Working Papers 74, International Policy Centre for Inclusive Growth.
    6. Fritz, Livia & Raza, Werner, 2014. "Living up to Policy Coherence for Development? The OECD's disciplines on tied aid financing," Working Papers 49, Österreichische Forschungsstiftung für Internationale Entwicklung (ÖFSE) / Austrian Foundation for Development Research.
    7. George Mavrotas, 2011. "Security and Development: Delving Deeper into the Nexus," Chapters,in: Security and Development, chapter 1 Edward Elgar Publishing.
    8. David Booth, 2012. "Working with the Grain and Swimming against the Tide," Public Management Review, Taylor & Francis Journals, vol. 14(2), pages 163-180, February.
    9. Hartmann, Simon, 2013. "Collaborative capacity building as an approach to more effective development cooperation: Lessons from the nation building experience in Burundi (2002-2008)," Briefing Papers 7, Österreichische Forschungsstiftung für Internationale Entwicklung (ÖFSE) / Austrian Foundation for Development Research.
    10. Stephen Howes, 2014. "A Framework for Understanding Aid Effectiveness Determinants, Strategies and Tradeoffs," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 1(1), pages 58-72, January.
    11. repec:taf:rjapxx:v:16:y:2011:i:4:p:562-578 is not listed on IDEAS

    More about this item

    Keywords

    aid; aid reform; aid agencies; political economy; market mechanism; networks;

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