Working Papers in Economics,
University of Gothenburg, Department of Economics

Abstract: The paper discusses donor coordination and its implications for the uses of aid. The paper starts by specifying a simple framework for the discussion, and then reviews the theoretical literature. It then provides some data on donor proliferation and discusses how coordination modalities have evolved over time, in particular during the current phase with partnership and ownership. The following sections summarize the limited empirical evidence available on the impact of coordination on transaction costs and public-sector management and governance. A key issue with regard to the latter is how donor coordination affects the incentives of the recipient government. The paper concludes with a review of the policy debate and some policy conclusions.

Keywords: Aid; donor coordination; transaction costs; incentive effects

JEL-codes: F35; O19

26 pages, February 28, 2006

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