Aid and policies under weak donor conditionality created by Giulio Federico

By:

Federico Giulio [author]

Material type: Text

TextSeries: Journal of African Economies ; Volume 13, number 3Oxford: Oxford University Press, 2004Content type:

text

Media type:

unmediated

Carrier type:

volume

ISSN:

09638024

Subject(s):

Development aid -- Conditionality

LOC classification:

HC800.A1 JOU

Online resources:

Click here to access online

Abstract: Donors who seek to impose policy conditionality on countries receiving their aid commonly face conflicting incentives between using aid to induce income-increasing reforms and using it to assist low-income countries: this conflict can lead to a time-consistency problem. This paper illustrates how conditionality contracts are affected by conflicting donor incentives in the presence of limited commitment power. Conditionality is shown to survive in an environment with weak donor commitment power, and it can eliminate the inefficiency associated with the no-conditionality outcome. However, even when conditionality is successfully imposed by donors, there may be an inverse relationship between aid and reform across different aid recipients.

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Holdings
Item type	Current library	Call number	Vol info	Copy number	Status	Notes	Date due	Barcode
Journal Article	Main Library - Special Collections	HC800.A1 JOU (Browse shelf(Opens below))	Vol. 13, no. 1 (pages 395-416)	99	Not for loan	For In house Use

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Donors who seek to impose policy conditionality on countries receiving their aid commonly face conflicting incentives between using aid to induce income-increasing reforms and using it to assist low-income countries: this conflict can lead to a time-consistency problem. This paper illustrates how conditionality contracts are affected by conflicting donor incentives in the presence of limited commitment power. Conditionality is shown to survive in an environment with weak donor commitment power, and it can eliminate the inefficiency associated with the no-conditionality outcome. However, even when conditionality is successfully imposed by donors, there may be an inverse relationship between aid and reform across different aid recipients.

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