Knowledge Problems and Incentive Problems


Why is it difficult to give effective foreign aid? We discuss knowledge problems, incentive problems and feedback and learning.

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Are you suggesting that government officials are more efficient at identifying opportunities for and providing aid than private organisations? I would like to see the evidence that supports your statement. I still have to see an instance of a governmental enterprise that is more efficient than a private one in equality of conditions. The Paris Declaration and Accra Agenda for Action seem to me like a set of nice guidelines, but does that mean that they are being properly implemented and are yielding good results? We should judge by the results and not by the stated intentions.

First, there is no absolute separation as governmental aid is often executed by private enterprises like GIZ (former GTZ, InWent and DED as German agencies) which are by the way owned by the state. I think there can be no general conclusion if governmental or private organizations are more "effective" whatever you mean by this word as there are both positive and negative examples. If you are talking about the efficiency of identifying opportunities for profit obviously private organizations are better as this is usually their sole purpose. But is private profit a common aim which benefits societies as a whole? We saw in Bolivia its not. The model of state owned aid agencies operating like private agencies is pretty interesing. What is your alternative to the Paris Declaration and Accra Agenda for Action principles? In the end I guess you might agree that you yourself know better what you need than somebody from another continent.

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I saw closely some projects of foreign aid when I worked in Peru, mainly from GTZ and other European agencies. Well, they are agreed by government officers and usually are aimed to benefit the same officers with trips to Europe, fellowships, good salaries, etc. I saw lot of money lost in useless and cosmetic programs but a lot of well funded people managing the money "international aid liason" or "international officer is a very good job in our lands. Anyway, as Florian say this not always happen and some of those programs are more than simply public relations, but sadly to say the money lost in the middlemen is often a lot

You are right, I often wonder why many big programs with budgets of several million $ just seem to have a small impact even if the price level in countries such as Nicaragua or Bolivia seems so low. There are often hidden motivations both on the donor and receiver side. The whole issue of development aid or as it is now called, "international cooperation" will remain an disputed issue requiring a detailed look on individual projects rather than an overall judgement.

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