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On the Non-Contractual Nature of Donor-Recipient Interaction in Development Assistance

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  • Mansoob Murshed

Abstract

This paper analyses three issues in strategic donor-recipient interaction motivated by the complexity of the rationale underlying aid. The first is when we have several principals with conflicting objectives. Any one principal cannot offer high powered incentives to the agent to carry out their designated task. The second is to do with the fact that effort associated with ensuring aid effectiveness may concern both principal and agent; the optimal solution to which requires difficult to design cooperative behaviour.

Suggested Citation

  • Mansoob Murshed, 2008. "On the Non-Contractual Nature of Donor-Recipient Interaction in Development Assistance," WIDER Working Paper Series RP2008-71, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:rp2008-71
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    References listed on IDEAS

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    1. Mosley, Paul, 1996. "The Failure of Aid and Adjustment Policies in Sub-Saharan Africa: Counter-Examples and Policy Proposals," Journal of African Economies, Centre for the Study of African Economies, vol. 5(3), pages 406-443, October.
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    7. Deger, Saadet & Sen, Somnath, 1995. "Military expenditure and developing countries," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 11, pages 275-307, Elsevier.
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    9. Tony Addison & S. Mansoob Murshed, 2002. "Credibility and Reputation in Peacemaking," Journal of Peace Research, Peace Research Institute Oslo, vol. 39(4), pages 487-501, July.
    10. Kanbur, Ravi & Sandler, Todd & Morrison, Kevin, 1999. "The Future of Development Assistance: Common Pools and International Public Goods," Staff General Research Papers Archive 1629, Iowa State University, Department of Economics.
    11. Gina Yannitell Reinhardt, 2006. "Shortcuts and Signals: An Analysis of the Micro‐level Determinants of Aid Allocation, with Case Study Evidence from Brazil," Review of Development Economics, Wiley Blackwell, vol. 10(2), pages 297-312, May.
    12. Avinash Dixit, 2003. "Some Lessons from Transaction‐Cost Politics for Less‐Developed Countries," Economics and Politics, Wiley Blackwell, vol. 15(2), pages 107-133, July.
    13. S. Mansoob Murshed, 2003. "Strategic Interaction, Aid Effectiveness And The Formation Of Aid Policies In Donor Nations," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 28(1), pages 189-203, June.
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    Keywords

    Contracts; Economic assistance and foreign aid;

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