TY - JOUR
T1 - Aid allocation with optimal monitoring
T2 - Theory and policy
AU - Bourguignon, François
AU - Platteau, Jean Philippe
N1 - Publisher Copyright:
© 2024 Elsevier B.V.
PY - 2025/1
Y1 - 2025/1
N2 - We explore the implications of allowing a poverty-averse donor to monitor aid use within the familiar context of the needs vs. aid effectiveness tradeoff. The paper focuses on the optimal aid allocation between two countries when the donor simultaneously decides about aid shares and country-specific monitoring effort aimed at increasing the amount reaching the poor. Endogenizing aid effectiveness is shown to raise the poor's income in the worse-governed country, yet not necessarily in the better-governed one, whereas the effect on country aid shares is essentially ambiguous. Those results still hold when the basic model is extended in various directions. Conventional aid allocation rules should be re-examined in their light.
AB - We explore the implications of allowing a poverty-averse donor to monitor aid use within the familiar context of the needs vs. aid effectiveness tradeoff. The paper focuses on the optimal aid allocation between two countries when the donor simultaneously decides about aid shares and country-specific monitoring effort aimed at increasing the amount reaching the poor. Endogenizing aid effectiveness is shown to raise the poor's income in the worse-governed country, yet not necessarily in the better-governed one, whereas the effect on country aid shares is essentially ambiguous. Those results still hold when the basic model is extended in various directions. Conventional aid allocation rules should be re-examined in their light.
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U2 - 10.1016/j.jdeveco.2024.103364
DO - 10.1016/j.jdeveco.2024.103364
M3 - Article
AN - SCOPUS:85204006287
SN - 0304-3878
VL - 172
JO - Journal of Development Economics
JF - Journal of Development Economics
M1 - 103364
ER -