The Samaritan's Dilemma: The Political Economy of Development Aid

By Clark C. Gibson | Go to book overview

11 What Have We Learnt About Aid?

Studying foreign aid has recently become a “growth industry.” In addition to the large traditional literature trying to explain the effect of aid on growth, scholars are now interested in topics including the political effects of aid for recipient governments (Bräutigam and Knack 2004 ; Coolidge and Rose-Ackerman 1997 ; Cungu and Swinnen 2003 ; Gibson and Hoffmann 2005 ; Moore 1998 ; Robinson 2003), the choices of multilateral donors themselves, especially regarding conditionality (Collier 1997 ; Easterly 2003 ; Robinson and Verdier 2002; van de Walle 2001), and the relationship between aid and recipient bureaucracies (Knack and Rahman 2004 ; Remmer 2004 ; Werlin 2003). Considering the immense amount of aid given on the world stage—at the time of this writing, for example, the United States is sending billions of dollars for the reconstruction of Iraq, and dozens of countries are contributing to disaster relief following the Southeast Asian tsunami—these studies are important and timely.

In this book we tackled a different issue: how development assistance systems generate particular patterns of incentives that affect sustainable outcomes. In Chapters 1 , we explored how all collective human endeavors are plagued by incentive problems related to motivation and information. We then investigated how institutions shape the choices of individuals, and how these institutions can lead to better or worse outcomes. In the sphere of foreign aid, these institutions are arranged in a complex set of relationships, which we sought to capture with our International Development Cooperation Octangle. In Chapters 7 , we employed these theoretical insights to analyze the incentives of individuals in the organization of Sida (Swedish International Development Cooperation Agency)-Stockholm and specific Sida-funded projects in India and Zambia. We found many institutions—some inherent in development assistance and some specific to the structure of Sida—that foster incentives that undermine Sida's goal of sustainable development. In this chapter, we explore some options that may help development assistance agencies mitigate some of the perverse incentives found in the aid system.

In the rest of this chapter, we indicate how things might be done better. We will refer at times to the particular case of Sida, but we hope to provide suggestions that are general enough to be useful enough to any agency concerned with development assistance. We identify six general areas that deserve the attention of all aid agencies, the recipients of international assistance, and those engaged in the analysis of this

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