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Foreign aid transaction costs

Author

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  • Vandeninden, Frieda

    (UNU-MERIT, MGSoG, Maastricht University and Center of Research in Public Economics and Population Economics, Université de Liège)

Abstract

The term 'transaction cost' has been widely mentioned in the recent literature on aid effectiveness. In fact, the shift into the aid delivery system (see e.g. the Paris Declaration on aid effectiveness) has been justified among others by the high transaction costs generated by the previous aid modalities. In this paper, we first want to understand what the notion of transaction costs means in the context of aid delivery and give a typology of the possible costs. We also develop an analytical framework to evaluate them. This framework appears to be a relevant tool to compare the effectiveness of aid modalities. We finally apply this analytical framework in Mali: we look at the evolution of the foreign aid transaction costs in two sectors (health and education) with the introduction of sector-wide programmes.

Suggested Citation

  • Vandeninden, Frieda, 2012. "Foreign aid transaction costs," MERIT Working Papers 2012-007, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:unumer:2012007
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    File URL: https://www.merit.unu.edu/publications/wppdf/2012/wp2012-007.pdf
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    References listed on IDEAS

    as
    1. Finn Tarp, 2006. "Aid and Development," Discussion Papers 06-12, University of Copenhagen. Department of Economics.
    2. Patrick Watt, 2005. "Transaction Costs in Aid: Case Studies of Sector Wide Approaches in Zambia and Senegal," Human Development Occasional Papers (1992-2007) HDOCPA-2005-26, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
    3. Oliver E. Williamson, 1993. "The Economic Analysis of Institutions and Organisations - in General and with Respect to Country Studies," OECD Economics Department Working Papers 133, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Frolov, Daniil, 2019. "From transaction costs to transaction value: Overcoming the Coase-Williamson paradigm," MPRA Paper 95959, University Library of Munich, Germany.
    2. Rachel M. Gisselquist & Finn Tarp, 2019. "Aid Impact and Effectiveness: Introduction and Overview," Politics and Governance, Cogitatio Press, vol. 7(2), pages 1-4.
    3. Pallas, Sarah Wood & Khuat, Thi Hai Oanh & Le, Quang Duong & Ruger, Jennifer Prah, 2015. "The changing donor landscape of health sector aid to Vietnam: A qualitative case study," Social Science & Medicine, Elsevier, vol. 132(C), pages 165-172.
    4. Gallemore, Caleb & Jespersen, Kristjan, 2016. "Transnational Markets for Sustainable Development Governance: The Case of REDD+," World Development, Elsevier, vol. 86(C), pages 79-94.
    5. Pallas, Sarah Wood & Ruger, Jennifer Prah, 2017. "Effects of donor proliferation in development aid for health on health program performance: A conceptual framework," Social Science & Medicine, Elsevier, vol. 175(C), pages 177-186.
    6. Alexandra O. Zeitz, 2021. "Emulate or differentiate?," The Review of International Organizations, Springer, vol. 16(2), pages 265-292, April.
    7. Elisabeth Paul & Isidore Sielenou & Valéry Ridde, 2018. "Comment utiliser l'expérience de financement basé sur les résultats (FBR) pour rendre l'achat des services de santé plus stratégique au Bénin?," ULB Institutional Repository 2013/268893, ULB -- Universite Libre de Bruxelles.

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    More about this item

    Keywords

    aid modalities; aid effectiveness; transaction costs;
    All these keywords.

    JEL classification:

    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • O22 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Project Analysis
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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