Foreign Aid

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Foreign Aid

Aside from the blunt forms of corruption that have become a major focus of the development community (theft, graft and other forms of "obvious" corruption), the undue influence of money is corrupting outcomes in the foreign aid regime in two other ways: (1) The undue influence of money in the system provides incentives for donors and aid agencies to ignore corruption and perpetuate a system that is failing to help the intended recipients, and (2) The perpetuation of the 'tied aid' system, wherein foreign aid must be spent on goods and services provided by the donor country, further dilutes the effectiveness of the aid system; financial rewards for domestic business corrupt the intended outcomes of the aid regime.

(1) Readings on Incentives for Donors (IFIs, NGOs) to Ignore Corruption

  • World Bank, The Wapenhans Report, Portfolio Management Task Force (1992) (pivotal World Bank report discussing the 'approval culture' which incentivizes employees to throughput money without adequate accountability mechanisms in place).

(2) Readings on "Tied Aid"

  • "Aid Abroad is Business Back Home: Washington Firms Profit From Overseas Aid," The Washington Post, Jan. 26, 2001, at A1. (profiling domestic businesses that receive significant profits for the foreign aid system).
  • CJ Jempa, The Tying of Aid (1991) (an authoritative overview of the tied aid system and its deleterious effects on the efficacy of aid).

fight against corruption

  • European Union tries to put policies in place, therefor justice ministeres meet ans work out plans.