Throwing Dough Over Castle Walls: Improving the Rule of Law with Foreign Aid Challenge Commitments
33 Pages Posted: 21 Mar 2016
Philanthropic challenge commitments in developed countries usually take the form of private philanthropists conditionally matching financial contributions by other citizens to a charitable cause. Foreign aid could adopt this strategy. Developed countries, multilateral organizations, foundations, and international nonprofits could issue challenge commitments to motivate wealthy individuals within developing countries to match foreign aid grants. Alternatively, developing country politicians could institute challenge commitments unilaterally. Foreign aid challenge commitments would have three benefits over the current system of overseas development assistance. First, foreign aid that is contingent on challenge commitments being met would provide reformers within a developing country with a rare, yet valuable tool — a mechanism to signal to the international community as well as to their own constituencies that the developing country is serious about improving governance and the rule of law. Second, the developing country elite who donate matching funds to foreign aid projects would be more committed to putting pressure on public officials to reduce corruption because any lost funds would include their own donations. Third, foreign aid challenge grants would be a mechanism to help cultivate a sense of responsibility among the developing country elite in the spirit of Aristotelian virtue ethics.
Keywords: foreign aid, challenge commitments, developing countries, rule of law, law and development
JEL Classification: K3
Suggested Citation: Suggested Citation