Publication

This paper focuses on the foreign aid delivery problem, the proliferation of aid projects and the associated administrative burden for recipients. The author uses data on the distribution of projects by size and country and simulations of aid increases in order to examine how the project distribution evolves, how the recipient’s resource allocation responds and how this affects development if the recipient is not a pure development optimizer. With Cobb-Douglas production, the author shows that a threshold is revealed beyond which marginal aid effectiveness drops sharply.