TY - JOUR

T1 - The Impact of Aid on Bureaucratic Quality

T2 - Does the Mode of Delivery Matter?

AU - Selaya, Pablo

AU - Thiele, Rainer

N1 - JEL classification: F35

PY - 2012

Y1 - 2012

N2 - 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.

AB - 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.

U2 - 10.1002/jid.1759

DO - 10.1002/jid.1759

M3 - Journal article

VL - 24

SP - 379

EP - 386

JO - Journal of International Development

JF - Journal of International Development

SN - 0954-1748

IS - 3

ER -