Information transmission and ownership consolidation in aid programs

Axel Dreher and Silvia Marchesi

No 255, Working Papers from University of Milano-Bicocca, Department of Economics

Abstract: This paper explores the role of information transmission in explaining donors' choice between project aid and budget support. Budget support increases the involvement of recipient governments in the decision-making process and can thus be an example of a "delegation-scheme". Conversely, project aid represents a more "centralized" type of aid. According to the theory, when countries' local knowledge is more important than donors' information, recipient countries' discretion in the choice of policies should be increased (delegation). Conversely, there should be less freedom in designing policies when donors' information is more relevant (centralization). The empirical analysis con rms that the importance of donors' private information influences the amount of project aid, while recipients' local knowledge is positively correlated with the amount of budget support.

Keywords: Delegation; communication; ownership; foreign aid (search for similar items in EconPapers)
JEL-codes: C23 D82 F33 O1 (search for similar items in EconPapers)
Pages: 38
Date: 2013-10, Revised 2013-10
New Economics Papers: this item is included in nep-cta and nep-ppm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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http://repec.dems.unimib.it/repec/pdf/mibwpaper255.pdf First version, 2013 (application/pdf)

Related works:
Journal Article: INFORMATION TRANSMISSION AND OWNERSHIP CONSOLIDATION IN AID PROGRAMS (2017)
Working Paper: Information transmission and ownership consolidation in aid programs (2016)
Working Paper: Information transmission and ownership consolidation in aid programs (2016)
Working Paper: Information Transmission and Ownership Consolidation in Aid Programs (2013)
Working Paper: Information Transmission and Ownership Consolidation in Aid Programs (2013)
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