Blockchain Technology and the Governance of Foreign Aid

Bernhard Reinsberg and Centre for Business Research

Working Papers from Centre for Business Research, University of Cambridge

Abstract: Blockchain technology has been considered a vehicle to foster development in poor countries by promoting applications such as secure delivery of humanitarian aid, digital identity services, and proof of provenance. This article examines whether (and if so how) blockchain technology - if appropriately designed- can enhance the effectiveness (and efficiency) of foreign aid governance, thereby moving beyond completely anonymous contexts. Foreign aid governance is plagued by lack of credible commitments among states which are further exacerbated by information asymmetries and which often undermine aid effectiveness. In this context, blockchain technology holds two promises. First, through guaranteed enforcement of smart contracts, it can strengthen the credibility of state commitments, for example collective burden-sharing rules among a group of donors or recipient-country compliance with policy conditionality in return for aid. Second, through leveraging prediction markets, blockchain technology can allay information problems related to the verification of real-world events along the entire aid delivery chain. Overall, the article shows that blockchain technology can be understood as a mechanism with institution-like features, with significant potential to complement real-existing institutions. The article also suggests that deploying blockchain technology in semi-trusted environments and at the international level avoids many of its well-known disadvantages.

Keywords: Foreign aid; Blockchain; Ethereum; smart contracts; international organizations; World Bank; New Institutional Economics (search for similar items in EconPapers)
JEL-codes: F30 O19 O30 (search for similar items in EconPapers)
Date: 2018-06
New Economics Papers: this item is included in nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cbr:cbrwps:wp505

Access Statistics for this paper

More papers in Working Papers from Centre for Business Research, University of Cambridge
Bibliographic data for series maintained by Ruth Newman ().