What is Behind Foreign Aid Ineffectiveness?

Mohamed Sraieb

Reflets et perspectives de la vie économique, 2016, vol. LV, issue 2, 61-73

Abstract: Despite the highly significant flows involved, development aid has turned out to be ineffective in a large number of recipient countries. This paper 2 explores the reasons behind aid failure. It starts from an investigation of donors? motivations for aid allocation and examines their potential implications on aid policies. The main findings are that aid seems to be heavily impacted by inertia. Along with self-interest, this may explain the time-inconsistency problem facing aid donors. Next, the paper examines strategies toward mitigating such a time-inconsistency, including reputation signaling and changing aid modalities. This provides guidance on how aid should be optimally allocated among recipient countries.

Keywords: development aid; effectiveness; aid modalities; inertia; dynamic panel; targeted infrastructure (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (5)

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