Making Aid Work: Governance and Decentralization

22 Pages Posted: 6 Dec 2014

See all articles by Gil S. Epstein

Gil S. Epstein

Bar-Ilan University - Department of Economics; IZA Institute of Labor Economics; University College London - CReAM - Centre for Research and Analysis of Migration

Ira N. Gang

Rutgers University - Economics Department; IZA Institute of Labor Economics

Abstract

Donor aid organizations (DAOs) are multi-layered and multi-dimensional bureaucracies with many departments trying to find solutions to problems for countries, investing staff resources and effort into having an effect. A department may come into conflict with other departments because of personal and other rivalries, at least partly overlapping jurisdictions, and/or the bureaucratic necessity of laying claim to having the bigger impact. The idea here is that good governance starts at home. We consider how inter-departmental competition within the DAO affects departments' efforts and the DAO's performance measured by its ability to maximize effort towards helping a client country. In short, we wish to see how alternative reward systems which DAOs may put into place motivate competing departments in implementing the organization's goals. The argument for establishing good governance criteria is as much to put constraints on donor behavior as on the necessity of properly acting recipients.

Keywords: foreign aid, governance, rent seeking, decentralization

JEL Classification: O10, O19, F35

Suggested Citation

Epstein, Gil S. and Gang, Ira N., Making Aid Work: Governance and Decentralization. IZA Discussion Paper No. 8653. Available at SSRN: https://ssrn.com/abstract=2534681

Gil S. Epstein (Contact Author)

Bar-Ilan University - Department of Economics ( email )

Ramat-Gan, 52900
Israel
+972 3 531 8937 (Phone)
+972 3 535 3180 (Fax)

HOME PAGE: http://faculty.biu.ac.il/~epsteig/

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

University College London - CReAM - Centre for Research and Analysis of Migration ( email )

Drayton House
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London, WC1H 0AX
United Kingdom

Ira N. Gang

Rutgers University - Economics Department ( email )

75 Hamilton Street
ECONOMICS, New Jersey Hall, Rutgers University
New Brunswick, NJ 08901-1248
United States
732-932-7363 (Phone)
732-932-7416 (Fax)

HOME PAGE: http://econweb.rutgers.edu/gang/research

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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