Acknowledging that the effectiveness of development cooperation depends on the quality of governance in recipient countries, donors may still give foreign aid to poorly governed recipients because of a dilemma they face: those countries most in need typically also lack good institutions. This policy brief shows that donors resolve this dilemma by bypassing weak state institutions and delivering more aid through NGOs and multilateral organizations. In doing so, they may however forego the opportunity to help improve local institutions and thereby foster long-run development.
