R. Reinikka

A Summary 

In a Nutshell

Donors supply 40% of public resources in 30 countries. Like the previous summary this paper suggests that aid to influence institutional reform can undercut domestic accountability suggesting that donors should:

  1. Strengthen relationships with policymakers as circumvention undermines service delivery
  2. Integrate support into the recipient’s strategy where possible


  • The geographical and political distance between the taxpayers that fund donors and the recipients of the services donors provide breaks the traditional feedback loop in service delivery [restricting voice with an impossibility of exit]. If there was some client feedback it would not work in the same way as domestic accountability.
  • Donors often go straight to the service provider thus sidestepping the policy maker which reduces incentives to good government and institutional learning. This lack of contact with the government can mean that donors fund projects that governments are not interested in and so the project will not integrate well with whatever development strategy the recipient government may have in place. Additionally, donors may fund a sector which was due to receive government funds, thus increasing the fungibility of funds within the budget and allow for e.g. increased military spending.
  • Some projects run by the World Bank specifically bypass domestic organizations by setting up semiautonomous implementation units.


  • Donors imposed conditions in an effort to augment weak domestic voice. But this is a poor replacement, and has rarely been seen to work as intended as well as undermining policy ownership. When policymakers do not have to create and legitimize their own viewpoints it becomes easy for them to deny responsibility for the outcomes.
  • This is dealt with to a degree by the PRS strategy of Sachs as it encourages public participation in the poverty strategy, although there are many challenges with effectively managing this type of participation.


  • Where state systems are weak they need to be engaged not bypassed in order that they might learn to meet best practice standards. This is essential for the effectiveness of future aid, which has been shown to be more effectively used in countries with good institutions (Dollar & Burnside).
  • There should be a strengthening of domestic institutions even if projects become riskier in terms of measurable outcomes by using domestic capacity

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