Rents and the political economy of development aid

Abstract

Empirical studies suggest little impact of foreign aid on growth on average. As aid can be viewed as a sovereign rent akin to natural resource rents, it is likely that rent seeking plays a role in explaining this disappointing outcome. The analytic starting point of this paper is the long chain of agents connecting donors in rich countries with beneficiaries in poor countries, making aid a contestable rent for recipients at both the international and the domestic levels. Thus, rent seeking can distract attention and divert resources from more important sources of long-term progress. Moreover, there are serious incentive problems on the donor side of the relationship. Empirically, the effects seem quite heterogeneous and hence more research is needed to further our understanding of this complex system.

Losing concentration? Lessons from a Swedish aid policy reform

“…14 See Analys av det svenske biståndets fragmentering (n.d.). 15 I discuss these studies in Hagen (2015b Figure 9 suggests that there might be something to the argument. Leaving out "NGO-projects" makes no difference to the number of recipients for the UK and the DAC average, but indicates that the anomalous increase for Sweden in 2005-2006 might be due to more detailed reporting on NGOs.…”

Bias and careers: Evidence from the aid effectiveness literature

“…6 Some of the research may involve rent seeking and lead to social loses. See Hagen (2015) on rents associated with development aid. 7 Our data includes estimates reported in journal articles, books, and unpublished works.…”

Bias and Careers: Evidence from the Aid Effectiveness Literature

“…Some of the research may involve rent seeking and lead to social loses. SeeHagen (2015) on rents associated with development aid.7 Our data includes estimates reported in journal articles, books, and unpublished works. 8 These standards obviously change over time.…”