Decentralized Aid and Democracy
Morales-Belpaire, Joaquín (2013), Decentralized Aid and Democracy. https://basepub.dauphine.fr/handle/123456789/18031
TypeDocument de travail / Working paper
Series titleNOPOOR Working Paper
MetadataShow full item record
Center of Research in the Economics of Development [CRED]
Abstract (EN)The last three decades have seen an important surge of the non-governmental sector in the provision of foreign aid. Using NGOs to deliver aid can be a solution to bypass corrupt authorities, avoid- ing that aid resources are captured by local elites. However NGOs may also act as surrogates for governmental provision of public goods. This implies that citizens make their own governments less account- able. In democratic countries, this can reduce electoral support for provision of public services by the state and harm the poor that don't directly bene t from the NGOs' projects. We develop a theoretical model of vote over public nances to analytically characterise the ef- fect of decentralised aid on welfare. We nd that non-governmental aid can harm the poor, weaken governance and aggravate inequali- ties by crowding-out governmental expenditures. These ineciencies occur even in a awless institutional context. We also nd that the crowding-out e ect can be mitigated if NGOs target countries with low income inequalities or by focusing on humanitarian-oriented missions.
Subjects / KeywordsDemocracy; governance; NGOs; nonprofits; foreign aid; taxation; public goods
JELD72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior
H44 - Publicly Provided Goods: Mixed Markets
L31 - Nonprofit Institutions; NGOs; Social Entrepreneurship
L33 - Comparison of Public and Private Enterprises and Nonprofit Institutions; Privatization; Contracting Out
O19 - International Linkages to Development; Role of International Organizations
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