Donor Competition for Aid Impact , and Aid Fragmentation

@inproceedings{Annen2012DonorCF,
  title={Donor Competition for Aid Impact , and Aid Fragmentation},
  author={Kurt Annen and Luc Moers},
  year={2012}
}
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 consistent with theoretical results. These imply that, short of ending donors' maximization of relative aid impact, agreements to better coordinate aid… CONTINUE READING
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