 Aid allocation: The role of external disciplineFrançois Bourguignon and Jean-Philippe Platteau International Economics, 2022, issue 172, 278-296 Abstract: Using an approach that embodies an explicit tradeoff between need and governance considerations, we propose an optimal aid allocation formula. We first assume exogenous, then endogenous governance. In the former case, a central concept is need-adjusted aid effectiveness while in the second case the donor has policing instruments under the form of monitoring and sanctioning capacities. We show that external disciplining has two advantages when the donor is sensitive enough to poverty intensity: (1) to cater to poor countries to a greater extent than is possible when local governance cannot be influenced by external forces, and (2) to respond (non-perversely) to improvements in the local governance of a country by raising its aid share. In institutionally weak countries, populations should welcome wisely applied donor's discipline as a way not only to get access to financial support but also to constrain their elites to refrain from abusing their position excessively. Imposing discipline when the release of externally-provided development funds is at stake seems more acceptable than aid directed to the explicit purpose of combatting corruption. Keywords: Aid effectivenes; Governance quality; Poverty aversion; Monitoring of aid use; External discipline (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:cii:cepiie:2022-q3-172-20 Access Statistics for this article More articles in International Economics from CEPII research center Contact information at EDIRC. |
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