The Impact of Aid on Bureaucratic Quality: Does the Mode of Delivery Matter?

Journal of International Development 24(3): 379-386, 2012

8 Pages Posted: 31 May 2012

See all articles by Pablo Selaya

Pablo Selaya

University of Copenhagen

Rainer Thiele

Kiel Institute for the World Economy

Date Written: December 2010

Abstract

We show that the impact of foreign aid on bureaucratic quality in recipient countries varies with the mode of delivery. Specifically, grants are found to impair the functioning of the bureaucracy, whereas loans are not. The negative impact of grants is larger when they are given as budget support rather than as assistance for specific projects or for programmes in general. Our results thus suggest that the probability of adverse effects rises with the degree of discretion recipients have over the incoming resources, which is in conflict with donors’ recent emphasis on strengthening local ownership by limiting the conditions attached to foreign aid.

Keywords: Foreign aid, bureaucratic quality, budget support, project aid, programme aid, grants, loans

JEL Classification: F35

Suggested Citation

Selaya, Pablo and Thiele, Rainer, The Impact of Aid on Bureaucratic Quality: Does the Mode of Delivery Matter? (December 2010). Journal of International Development 24(3): 379-386, 2012. Available at SSRN: https://ssrn.com/abstract=2071117

Pablo Selaya (Contact Author)

University of Copenhagen ( email )

Department of Economics
Øster Farimagsgade 5
Copenhagen, 1353
Denmark

HOME PAGE: http://www.econ.ku.dk/pabloselaya

Rainer Thiele

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, D-24100
Germany
+49 431 8814 215 (Phone)
+49 431 8814 500 (Fax)

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