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Blockchain technology and the governance of foreign aid

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  • Reinsberg, Bernhard

Abstract

Blockchain technology has been considered a vehicle to foster development in poor countries by promoting applications such as secure delivery of humanitarian aid, digital identity services, and proof of provenance. This article examines whether (and if so, how) blockchain technology can enhance the effectiveness and efficiency of foreign aid governance, thereby moving beyond completely anonymous contexts. Foreign aid governance is plagued by lack of credible commitments among states, which are further exacerbated by information asymmetries and which often undermine aid effectiveness. In this context, blockchain technology holds two promises. First, through the guaranteed execution of smart contracts, it can strengthen the credibility of state commitments, for example collective burden-sharing rules among a group of donors or recipient country compliance with policy conditionality in return for aid. Second, through leveraging prediction markets, blockchain technology can allay information problems related to the verification of real-world events along the entire aid delivery chain.

Suggested Citation

  • Reinsberg, Bernhard, 2019. "Blockchain technology and the governance of foreign aid," Journal of Institutional Economics, Cambridge University Press, vol. 15(3), pages 413-429, June.
    • Handle: RePEc:cup:jinsec:v:15:y:2019:i:03:p:413-429_00
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    Cited by:

    1. Iskender Peker & Ilker Murat AR & Ismail Erol & Cory Searcy, 2023. "Leveraging blockchain in response to a pandemic through disaster risk management: an IF-MCDM framework," Operations Management Research, Springer, vol. 16(2), pages 642-667, June.
    2. Ying Zhang & Wenwen Luo & Feifei Yu, 2020. "Construction of Chinese Smart Water Conservancy Platform Based on the Blockchain: Technology Integration and Innovation Application," Sustainability, MDPI, vol. 12(20), pages 1-16, October.
    3. Plinio Limata, 2020. "Blockchain and Institutions (I): trust and (de)centralization," CERBE Working Papers wpC35, CERBE Center for Relationship Banking and Economics.
    4. Abrar Chaudhury, 2020. "Role of Intermediaries in Shaping Climate Finance in Developing Countries—Lessons from the Green Climate Fund," Sustainability, MDPI, vol. 12(14), pages 1-17, July.
    5. Nick Bernards & Malcolm Campbell‐Verduyn & Daivi Rodima‐Taylor & Jerome Duberry & Quinn DuPont & Andreas Dimmelmeier & Moritz Huetten & Laura C. Mahrenbach & Tony Porter & Bernhard Reinsberg, 2020. "Interrogating Technology‐led Experiments in Sustainability Governance," Global Policy, London School of Economics and Political Science, vol. 11(4), pages 523-531, September.
    6. Campbell-Verduyn, Malcolm, 2021. "Conjuring a cooler world? Blockchains, imaginaries and the legitimacy of climate governance," Global Cooperation Research Papers 28, University of Duisburg-Essen, Käte Hamburger Kolleg / Centre for Global Cooperation Research (KHK/GCR21).
    7. Sebastian Haug & Jack Taggart, 2024. "Global Development Governance 2.0: Fractured accountabilities in a divided governance complex," Global Policy, London School of Economics and Political Science, vol. 15(1), pages 128-134, February.
    8. Eun-Jung Shin & Hyoung-Goo Kang & Kyounghun Bae, 2020. "A Study on the Sustainable Development of NPOs with Blockchain Technology," Sustainability, MDPI, vol. 12(15), pages 1-18, July.
    9. Hunt, Kyle & Narayanan, Adithya & Zhuang, Jun, 2022. "Blockchain in humanitarian operations management: A review of research and practice," Socio-Economic Planning Sciences, Elsevier, vol. 80(C).

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