Year: 2002
Type: article
Abstract: When donors and recipients have different preferences over budgetary allocations, conditionality helps the implementation of donor-financed poverty reduction programs. However, if donors cannot perfectly monitor all recipients' actions, conditionality entails an inefficient allocation of resources. Under such conditions, the optimal amount of conditionality varies (often not monotonically) with the recipients' degree of social commitment. Finally, if recipients' preferences are not observable, conditionality can be used to prevent recipients with a weak commitment to poverty reduction from obtaining aid funds. This may however lead to further distortions in terms of resource allocation and to phenomena of "aid rationing."
Source: IMF Working Paper
Authors: Giovanni Dell'Ariccia, Tito Cordella
Institution: International Monetary Fund
Language: English
Subfield: Development
Field: Social Sciences
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W2953394935