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Incentives, Foreign Assistance, and Fiscal Behaviour in Less Developed Countries

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Type: Conference Paper
Author: Bartels, P. Brian
Conference: Institutional Analysis and Development Mini-Conference and TransCoop Meeting
Location: Bloomington, Indiana
Conf. Date: December
Date: 2002
URI: https://hdl.handle.net/10535/9304
Sector: Theory
Subject(s): incentives
foreign aid
governance and politics
institutional analysis
developing countries
game theory
rational choice theory
Abstract: "Current foreign assistance effectiveness research focuses primarily on the relationships between aid receipts and overall changes in a less developed country's macroeconomic conditions. The majority of the literature develops and tests mathematical models to measure the strength of relationship between foreign assistance receipts and economic growth. Unfortunately, this approach to aid effectiveness research is deficient in two ways. First, the current literature does not accord sufficient consideration to the role of institutions and institutional arrangements in determining how recipient governments allocate, disperse, and monitor foreign assistance expenditures. Although recipient countries vary in the type, strength, and organization of their institutions, current models fail to consider the mediating and channeling roles institutions perform that could influence the effectiveness of foreign assistance. The existing literature fails to account for how decision-makers' behavior varies within different institutional arrangements."

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