Too few donors have acknowledged the possibility that aid flows may damage the policy environment... what practical steps suggest themselves?
The private sector can help here: one output-based model of disciplined aid uses the private sector to deliver results, providing grants only after those results are confirmed.
This from my note with Michael Klein, Aid and the resource curse, also available in our book, The Market for Aid. Or see this book on output-based aid. And here is a view about the macroeconomic challenges of absorbing lots of aid (the article itself is bite-sized) from from three IMF economists, in Finance and Development.
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