Reference : Foreign Aid Transaction Costs: What are they and when are they minimised?
Scientific journals : Article
Business & economic sciences : International economics
Foreign Aid Transaction Costs: What are they and when are they minimised?
Paul, Elisabeth mailto [Université de Liège - ULiège > Institut des sciences humaines et sociales > Sociologie du développement >]
Vandeninden, Frieda mailto [Université de Liège - ULiège > HEC-Ecole de gestion : UER > Economie publique appliquée >]
Development Policy Review
Blackwell Publishing
Yes (verified by ORBi)
[en] Transaction costs ; Aid effectiveness ; Aid modalities
[en] 'Transaction costs' are commonly referred to in the recent literature on aid effectiveness. Aid transaction costs, however, have been neither consistently defined nor measured. This article defines aid transaction costs as all the economic costs associated with aid management that add
no value to aid delivery. This enables the 'net' transaction costs that should be minimised to be identified. An analytical framework is then developed for assessing these costs. This allows the effectiveness of different aid modalities to be compared, according to the characteristics of
the aid transaction. The article shows that the choice of aid modality should depend on these characteristics and, therefore, that the minimisation of transaction costs should not be an end in itself.

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