What Determines the Size of Aid Projects?
Over the last few years, considerable attention has focused on aid fragmentation, the proliferation of donors and projects in developing countries. Aid fragmentation has continued to increase despite international efforts to foster donor coordination. One possible implication of fragmentation is smaller aid projects, potentially with the result of more administrative work for overtaxed recipient governments per dollar of aid received. In principle, project size can be a function of donor characteristics, recipient characteristics, donor-recipient relations, and the type of projects funded. This paper makes use of PLAID data on bilateral aid commitments, sector, and funding agency to explore the determinants of project size and to better understand the forces driving aid fragmentation. To the extent that project size is driven by the sectoral composition or purpose of aid, the associated administrative costs may be justified. Variations due to other factors, e.g., a donor's administrative structure or bureaucratic interests, provide a stronger case for reforms.
|Date of creation:||Mar 2010|
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