Coordination failure in foreign aid

Maija Halonen-Akatwijuka

No 3223, Policy Research Working Paper Series from The World Bank

Abstract: The author analyzes the allocation of foreign aid to various sectors in a recipient developing country. Donors tend to favor social sectors over other public expenditure programs. Due to incomplete information, donors may concentrate too much on priority sectors, leaving lower-priority yet important sectors lacking funds. Alternatively there may be gaps in services in priority areas because of the information problem. The author finds that the more similar preferences the donors have, the more scope there is for coordination failure. Therefore improving information is particularly important when the parties have similar priorities. A joint database on planned projects and budget allocations in each recipient country would provide such information. The author's point is that such databases should have both information on current projects and forward-looking information on the planned activities needed to improve aid coordination. She also analyzes the aid fungibility problem in an incomplete information setting and finds that incomplete information reduces the fungibility problem. On the other hand, incomplete information introduces coordination failure and the allocation can be inferior for both the recipient and the donor.

Keywords: Environmental Economics&Policies; Public Health Promotion; Health Monitoring&Evaluation; Economic Adjustment and Lending; Agricultural Knowledge&Information Systems; Economic Adjustment and Lending; Environmental Economics&Policies; Health Monitoring&Evaluation; Health Economics&Finance; Agricultural Knowledge&Information Systems (search for similar items in EconPapers)
Date: 2004-02-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www-wds.worldbank.org/external/default/WDSC ... d/PDF/wps3223AID.pdf (application/pdf)

Related works:
Journal Article: Coordination Failure in Foreign Aid (2007)
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:wbk:wbrwps:3223

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().