Information Transmission and Ownership Consolidation in Aid Programs

Arbeitspapier

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 confirms 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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 4437

Classification and Topics

• Classification: Wirtschaft ; Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models ; Asymmetric and Private Information; Mechanism Design ; International Monetary Arrangements and Institutions ; Economic Development: General
• Subject: delegation ; communication ; ownership ; foreign aid

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dreher, Axel ; Marchesi, Silvia
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/89781
• Last update: 10.03.2025, 11:41 AM CET