The development literature lacks consensus about the link between aid effectiveness and governance improvement. A basic rational actor model is introduced to clarify how donors can influence recipient behaviors and more broadly how foreign aid can support or impede governance quality improvement. Adopting the underutilized perspective of donor behavior, this study identifies mechanisms through which aid hinders governance improvement and offers substantive recommendations about how donors can enhance aid effectiveness, including strategies for donors to raise the level of effort recipients devote to project success.

https://www.tandfonline.com/doi/full/10.1080/17487870.2018.1551137?scroll=top&needAccess=true

Lin, J.Y., Vu, M.K. and Hartley, Kris. (2018). “A modeling framework for enhancing aid effectiveness.” Journal of Economic Policy Reform.