Donor Competition for Aid Impact, and Aid Fragmentation

Working Paper No. 12/204

This paper shows that donors that maximize relative aid impact spread their budgets across many recipient countries in a unique Nash equilibrium, explaining aid fragmentation. This equilibrium may be inefficient even without fixed costs, and the inefficiency increases in the equality of donors' budgets. The paper presents empirical evidence... READ MORE...

Publication date: August 2012
ISBN 9781475505542

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Publication date: August 2012