On the Delegation of Aid Implementation to Multilateral Agencies
Some multilateral agencies implement aid projects in a broad range of sectors, with aid disbursements showing a strong overlap with those of bilateral donors. The question then arises of why do bilateral donors delegate sizable shares of their aid...
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| Format: | Working Paper |
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World Bank, Washington, DC
2015
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| Online Access: | http://documents.worldbank.org/curated/en/2015/10/25192585/delegation-aid-implementation-multilateral-agencies http://hdl.handle.net/10986/22870 |
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okr-10986-228702021-04-23T14:04:11Z On the Delegation of Aid Implementation to Multilateral Agencies Annen, Kurt Knack, Stephen DEVELOPMENT RESEARCH COMPETITORS LEAD ECONOMIC GROWTH HUMANITARIAN AID DEVELOPMENT ASSISTANCE MINERAL RESOURCES DONOR PARTICIPATION AID ALLOCATION DEVELOPMENT BANKS DEVELOPMENT ISSUES HEALTH DOMESTIC RESOURCES LOAN DEVELOPMENT AID PROJECTS PRIORITIES MULTILATERAL DEVELOPMENT BANKS PM PUBLIC HEALTH DEVELOPED COUNTRIES SHAREHOLDERS FASHION DEVELOPMENT BIASES TICS AID DISEASE AID CONDITIONALITY EDUCATION COLLUSION BILATERAL DONORS LEADS EQUALITY DIS BILATERAL AID DONORS WATER LENDING SOCIETY MARKETS NEEDS DEVELOPMENT AGENCIES INTERNATIONAL DEVELOPMENT ACCESS INCLUSION MIDDLE-INCOME COUNTRIES TUBERCULOSIS LOANS AIDS SEE DEVELOPMENT ADMINISTRATION COOPERATIVE FOOD AID INDUSTRIAL COUNTRIES FISHING GRANTS DEVELOPMENT POLICY BILATERAL DONOR Some multilateral agencies implement aid projects in a broad range of sectors, with aid disbursements showing a strong overlap with those of bilateral donors. The question then arises of why do bilateral donors delegate sizable shares of their aid to non-specialized agencies for implementation? This paper develops a game theoretic model to explain this puzzle. Donors delegate aid implementation to the multilateral agency (ML) to strengthen the policy selectivity of aid, incentivizing policy improvements in recipient countries, in turn improving aid’s development effectiveness. Bilateral donors are better off delegating aid to ML even when they are purely altruistic but disagree on how aid should be distributed across recipients. Key for our result to hold is that ML searches some middle ground among disagreeing donors. Aid selectivity—in terms of both policy and poverty—emerges endogenously and is credible, as it is the solution to ML’s optimization problem. Moreover, the model shows that if one sufficiently large donor is policy selective in its aid allocations, there is no need for other donors to be policy selective. The World Bank’s aid program for lower-income countries, the International Development Administration (IDA), is shown to fit the assumptions and predictions of the model. Specifically, IDA is a dominant donor in most of its recipient countries and is much more policy and poverty selective than bilateral aid. Donors view it as a public good, and contribution more to it when bilateral aid is less selective. Potential threats to IDA’s role as a dominant, policy-selective donor include the emergence of nontraditional donors, changes in voting shares, and traditional donors’ increasing use of earmarked contributions. 2015-11-05T17:03:50Z 2015-11-05T17:03:50Z 2015-10 Working Paper http://documents.worldbank.org/curated/en/2015/10/25192585/delegation-aid-implementation-multilateral-agencies http://hdl.handle.net/10986/22870 English en_US Policy Research Working Paper;No. 7455 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
DEVELOPMENT RESEARCH COMPETITORS LEAD ECONOMIC GROWTH HUMANITARIAN AID DEVELOPMENT ASSISTANCE MINERAL RESOURCES DONOR PARTICIPATION AID ALLOCATION DEVELOPMENT BANKS DEVELOPMENT ISSUES HEALTH DOMESTIC RESOURCES LOAN DEVELOPMENT AID PROJECTS PRIORITIES MULTILATERAL DEVELOPMENT BANKS PM PUBLIC HEALTH DEVELOPED COUNTRIES SHAREHOLDERS FASHION DEVELOPMENT BIASES TICS AID DISEASE AID CONDITIONALITY EDUCATION COLLUSION BILATERAL DONORS LEADS EQUALITY DIS BILATERAL AID DONORS WATER LENDING SOCIETY MARKETS NEEDS DEVELOPMENT AGENCIES INTERNATIONAL DEVELOPMENT ACCESS INCLUSION MIDDLE-INCOME COUNTRIES TUBERCULOSIS LOANS AIDS SEE DEVELOPMENT ADMINISTRATION COOPERATIVE FOOD AID INDUSTRIAL COUNTRIES FISHING GRANTS DEVELOPMENT POLICY BILATERAL DONOR |
| spellingShingle |
DEVELOPMENT RESEARCH COMPETITORS LEAD ECONOMIC GROWTH HUMANITARIAN AID DEVELOPMENT ASSISTANCE MINERAL RESOURCES DONOR PARTICIPATION AID ALLOCATION DEVELOPMENT BANKS DEVELOPMENT ISSUES HEALTH DOMESTIC RESOURCES LOAN DEVELOPMENT AID PROJECTS PRIORITIES MULTILATERAL DEVELOPMENT BANKS PM PUBLIC HEALTH DEVELOPED COUNTRIES SHAREHOLDERS FASHION DEVELOPMENT BIASES TICS AID DISEASE AID CONDITIONALITY EDUCATION COLLUSION BILATERAL DONORS LEADS EQUALITY DIS BILATERAL AID DONORS WATER LENDING SOCIETY MARKETS NEEDS DEVELOPMENT AGENCIES INTERNATIONAL DEVELOPMENT ACCESS INCLUSION MIDDLE-INCOME COUNTRIES TUBERCULOSIS LOANS AIDS SEE DEVELOPMENT ADMINISTRATION COOPERATIVE FOOD AID INDUSTRIAL COUNTRIES FISHING GRANTS DEVELOPMENT POLICY BILATERAL DONOR Annen, Kurt Knack, Stephen On the Delegation of Aid Implementation to Multilateral Agencies |
| relation |
Policy Research Working Paper;No. 7455 |
| description |
Some multilateral agencies implement aid
projects in a broad range of sectors, with aid disbursements
showing a strong overlap with those of bilateral donors. The
question then arises of why do bilateral donors delegate
sizable shares of their aid to non-specialized agencies for
implementation? This paper develops a game theoretic model
to explain this puzzle. Donors delegate aid implementation
to the multilateral agency (ML) to strengthen the policy
selectivity of aid, incentivizing policy improvements in
recipient countries, in turn improving aid’s development
effectiveness. Bilateral donors are better off delegating
aid to ML even when they are purely altruistic but disagree
on how aid should be distributed across recipients. Key for
our result to hold is that ML searches some middle ground
among disagreeing donors. Aid selectivity—in terms of both
policy and poverty—emerges endogenously and is credible, as
it is the solution to ML’s optimization problem. Moreover,
the model shows that if one sufficiently large donor is
policy selective in its aid allocations, there is no need
for other donors to be policy selective. The World Bank’s
aid program for lower-income countries, the International
Development Administration (IDA), is shown to fit the
assumptions and predictions of the model. Specifically, IDA
is a dominant donor in most of its recipient countries and
is much more policy and poverty selective than bilateral
aid. Donors view it as a public good, and contribution more
to it when bilateral aid is less selective. Potential
threats to IDA’s role as a dominant, policy-selective donor
include the emergence of nontraditional donors, changes in
voting shares, and traditional donors’ increasing use of
earmarked contributions. |
| format |
Working Paper |
| author |
Annen, Kurt Knack, Stephen |
| author_facet |
Annen, Kurt Knack, Stephen |
| author_sort |
Annen, Kurt |
| title |
On the Delegation of Aid Implementation to Multilateral Agencies |
| title_short |
On the Delegation of Aid Implementation to Multilateral Agencies |
| title_full |
On the Delegation of Aid Implementation to Multilateral Agencies |
| title_fullStr |
On the Delegation of Aid Implementation to Multilateral Agencies |
| title_full_unstemmed |
On the Delegation of Aid Implementation to Multilateral Agencies |
| title_sort |
on the delegation of aid implementation to multilateral agencies |
| publisher |
World Bank, Washington, DC |
| publishDate |
2015 |
| url |
http://documents.worldbank.org/curated/en/2015/10/25192585/delegation-aid-implementation-multilateral-agencies http://hdl.handle.net/10986/22870 |
| _version_ |
1764452281691930624 |