Donor competition reduces development?

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When aid projects proliferate, donors often seek better oversight through smaller projects. While this may improve administration, it burdens recipient governments with reporting requirements and donor visits.

CGD research fellow David Roodman suggests in a new working paper that big projects are best for countries that get more aid, have better governance, or have less revenue. He also shows how donors who care most about their own success tend to divide their aid portfolios into more, smaller projects to draw the recipient's resources away from other donors. This reduces development.

An interesting research direction. Read this quick summary to get the main idea. Or, if you really like math, download Roodman's working paper "Competitive Proliferation of Aid Projects: A Model". Also see our note on Aid Agency Competition: A Century of Entry, but No Exit

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