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Author/Editor:
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Annen, Kurt ; Moers, Luc
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Publication Date:
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August 01, 2012
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Electronic Access:
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Free Full text
(PDF file size is 1,315KB).
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.
The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
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Summary:
This paper shows that donors that maximize relative aid impact spread their budgets across many recipient countries in a unique Nash equilibrium, explaining aid fragmentation. This equilibrium may be inefficient even without fixed costs, and the inefficiency increases in the equality of donors' budgets. The paper presents empirical evidence consistent with theoretical results. These imply that, short of ending donors' maximization of relative aid impact, agreements to better coordinate aid allocations are not implementable. Moreover, since policies to increase donor competition in terms of aid effectiveness risk reinforcing relativeness, they may well backfire, as any such reinforcement increases aid fragmentation.
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Order a print copy
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Series:
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Working Paper No. 12/204
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Subject(s):
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Competition | Development assistance | Economic models | Resource allocation
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Author's Keyword(s):
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Foreign Aid | Aid Effectiveness | Aid Fragmentation | Donor Competition | Donor Coordination |
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English
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Publication Date:
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August 01, 2012
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Format:
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Paper
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Stock No:
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WPIEA2012204
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Pages:
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36
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Price:
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US$18.00 )
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Please address any questions about this title to
publications@imf.org
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