Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/204713 
Authors: 
Year of Publication: 
2009
Series/Report no.: 
SITE Working Paper No. 1
Publisher: 
Stockholm School of Economics, Stockholm Institute of Transition Economics (SITE), Stockholm
Abstract: 
Development aid donors disburse aid to many developing countries. This paper shows that whether a partnership is established early or late matters significantly for aid quantities. Donor countries allocate larger shares of their aid budgets to recipients that entered early in their portfolios. This effect is large compared to variations due to recipients' income differences, and matters even in the long run. Entry dates are weakly related to GDP per capita, but are influenced strongly by colonial past. On the other hand, colonial relationships explain only a small part of the observed variation in entry dates. These findings imply that donors, while continuously increasing their number of recipients, have allocated smaller aid quantities to new partnerships. This has direct consequences for aid fragmentation, with many donors disbursing small amounts to a recipient. I study a simple reform that eliminates ``small'' partnerships, but leaves unaffected donor aid budgets and developing countries receipts. The reform reshuffles only about 20 percent of all the aid disbursed in a year but drastically reduces fragmentation.
Subjects: 
Aid
Fragmentation
JEL: 
F35
O19
Document Type: 
Working Paper

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