The Institutional Economics of Foreign Aid

The Institutional Economics of Foreign Aid

The Institutional Economics of Foreign Aid

The Institutional Economics of Foreign Aid

Synopsis

This book analyzes the institutions--incentives and constraints--that guide the behavior of persons involved in the implementation of aid programs. While traditional performance studies tend to focus almost exclusively on policies and institutions in recipient countries, the authors look at incentives in the entire chain of organizations involved in the delivery of foreign aid, from donor governments and agencies to consultants, experts and other intermediaries. They examine incentives inside donor agencies, the interaction of subcontractors with recipient organizations, incentives inside recipient country institutions, and biases in aid performance monitoring systems.

Excerpt

The authors of this excellent book address the question of why international foreign assistance programmes have so rarely achieved the goals set out forthem by the donorcommunity. Following the Second World War, despite massive transfers of funds from developed countries to developing countries, many developing countries have seen little improvement in economic growth. The opportunities offered to their populations are still quite limited, even though the record in regard to health statistics has improved more than economic and social conditions in many developing countries. The authors do not attribute the cause to a plot fomented by immoral individuals trying to use public funds for private gain–even though such individuals can be found to operate in this terrain. Rather, the cause is less dramatic, but more plausible. The cause is the set of incentives facing the diverse actors involved in the chain of aid delivery.

All public agencies have been created to achieve multiple goals, but they cannot all be achieved simultaneously. Diverse actors within and outside public agencies are usually more interested in seeing one set of goals accomplished overothers. Thus, the public sector is often best characterised as having multiple and sometimes conflicting goals, as well as multiple principals who tend to push forthe achievement of different goals.

The four authors of this book–Bertin Martens, Uwe Mummert, Peter Murrell and Paul Seabright–have demonstrated the relevance of the principal–agent model used by contemporary political economists by consistently using it to analyse a diverse set of fascinating questions of central importance to understanding international aid processes. The fundamental problem of all . . .

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.