Public Choice

, Volume 145, Issue 3–4, pp 331–337

Save the poor, shoot some bankers

Open Access
Commissioned Editorial Commentary


Bilateral or multilateral organizations control about 90% of official overseas development assistance (ODA), much of which is wasted. This note traces aid failure to the daisy chain of principal-agent-beneficiary relationships linking rich donors to aid bureaucrats to poor recipients. Waste results when aid middlemen (un)intentionally misdirect ODA. Waste can be reduced by clarifying domestic goals for ODA, using fewer middlemen with greater intrinsic motivation, empowering recipients, and/or replacing bureaucracy with markets.


Aid Principal-agent Asymmetric information Intrinsic motivation Public choice 

JEL Classification

F35 O19 

Copyright information

© The Author(s) 2010

Authors and Affiliations

  1. 1.Department of Agricultural & Resource EconomicsUniversity of CaliforniaBerkeleyUSA

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