IDEAS home Printed from https://ideas.repec.org/p/idb/ovewps/0111.html
   My bibliography  Save this paper

Incentives in Development Lending: Technical Cooperation

Author

Listed:
  • Josepa Miquel-Florensa

    (Toulouse School of Economics (ARQADE), Toulouse, France)

Abstract

This paper models incentives and information asymmetries between the different participants in multilateral development banks' decision process, namely borrowing countries, managers and the board of governors (with borrower and non-borrower members). We propose technical cooperation requirements as instruments for the board of governors to solve the moral hazard and adverse selection problems. We assume technical cooperation makes the probability of success not to depend on the agent's effort choice, as long as he provides effort, but on the principal's distribution of resources, and may also provide private benefits to the recipients. Moreover, the outcome of the agent's investment is a "public good" since is enjoyed in a non-rival fashion by both Board and agents. Using data on project performance reports from the IADB, we show that technical cooperation does have an impact on project results. Furthermore, we are able to differentiate for which projects, contract and recipients technical cooperation is more effective and relate the reported problems to the information asymmetries.

Suggested Citation

  • Josepa Miquel-Florensa, 2011. "Incentives in Development Lending: Technical Cooperation," OVE Working Papers 0111, Inter-American Development Bank, Office of Evaluation and Oversight (OVE).
    • Handle: RePEc:idb:ovewps:0111
    as

    Download full text from publisher

    File URL: http://idbdocs.iadb.org/WSDocs/getdocument.aspx?docnum=35567264
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sinclair-Desgagne, Bernard, 1999. "How to Restore Higher-Powered Incentives in Multitask Agencies," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(2), pages 418-433, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hueth, Brent & Marcoul, Philippe, 2007. "The Cooperative Firm as Monitored Credit," Staff Paper Series 508, University of Wisconsin, Agricultural and Applied Economics.
    2. Marcel Boyer & M. Martin Boyer & René Garcia, 2005. "The Value of Real and Financial Risk Management," CIRANO Working Papers 2005s-38, CIRANO.
    3. Marie-Cécile Fagart & Bernard Sinclair-Desgagné, 2002. "Auditing Policies and Information Systems in Principal-Agent Analysis," CIRANO Working Papers 2002s-18, CIRANO.
    4. Christoph H. Loch & D. Charles Galunic & Susan Schneider, 2006. "Balancing cooperation and competition in human groups: the role of emotional algorithms and evolution," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 27(2-3), pages 217-233.
    5. Laurent Franckx & F.P. de Vries, 2004. "Environmental Liability and Organizational Structure," Energy, Transport and Environment Working Papers Series ete0401, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
    6. Eric Giraud-Héraud & Jean-Pierre Ponssard & Bernard Sinclair Desgagné & Louis-Georges Soler, 2016. "The agro-food industry, public health, and environmental protection: investigating the Porter hypothesis in food regulation," Review of Agricultural, Food and Environmental Studies, Springer, vol. 97(2), pages 127-140, September.
    7. Jean-Pierre Ponssard & Olivier Saulpic, 2002. "Modelling performance in a Balanced Scorecard : findings from a case study," Working Papers hal-00243003, HAL.
    8. Bernard Sinclair-Desgagné, 2004. "Corporate Strategies For Managing Environmental Risk (The International Library Of Environmental Economics And Policy – Volume xx)," CIRANO Working Papers 2004s-43, CIRANO.
    9. Bernard Sinclair-Desgagné, 2000. "Environmental Risk Management and the Business Firm," CIRANO Working Papers 2000s-23, CIRANO.
    10. Bernard Sinclair-Desgagné & Carel Vachon, 1999. "Dealing with Major Technological Risks," CIRANO Working Papers 99s-29, CIRANO.
    11. repec:ebl:ecbull:v:10:y:2004:i:10:p:1-10 is not listed on IDEAS
    12. Josepa Miquel-Florensa, 2007. "Optimal Incentives in Dynamic Multiple Project Contracts," Working Papers 2007_2, York University, Department of Economics.
    13. Chu, Xiang & Liu, Jun & Ren, Long & Gong, Daqing, 2020. "Optimal contract design with a common agency in last-mile logistics," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 139(C).
    14. Wallace E. Huffman & Just, Richard E., 2010. "Setting Incentives for Scientists Who Engage in Research and Other Activities: An Application of Principal-Agent Theory," Staff General Research Papers Archive 31647, Iowa State University, Department of Economics.
    15. Laurent Franckx & Alessio D'Amato, 2003. "Environmental policy as a multi-task principal-agent problem," Energy, Transport and Environment Working Papers Series ete0312, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.

    More about this item

    Keywords

    Information assymetry; multilateral development; IDB; IADB; Moral Hazzard; Governance; Latin America;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:idb:ovewps:0111. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Felipe Herrera Library (email available below). General contact details of provider: https://edirc.repec.org/data/iadbbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.