Skip to main content

Take the Money and Run: The Determinants of Compliance with Aid Agreements


Conditions on aid agreements aim to increase aid effectiveness, and are, therefore, an important component of aid agreements. Yet little is known about why aid-recipient governments comply with these conditions. Some scholars have suggested a strategic-importance hypothesis: recipients comply when donors enforce conditions—and donors enforce conditions when recipients are not strategically important. However, there are many cases where strategically important countries comply with conditions and strategically unimportant countries fail to do so. We argue that to explain compliance, we must also understand how the desire to maximize revenue from major income sources, such as FDI and natural resource rents, changes the recipient's incentive to comply. Using data on World Bank records of compliance from 1964 to 2010, we find strong support for our hypotheses even after accounting for different model specifications and potential endogeneity. Paradoxically, donors can secure compliance from recipients for reasons unrelated to the promise of additional aid.

Hide All
Acemoglu Daron, and Robinson James A.. 2006. Economic Backwardness in Political Perspective. American Political Science Review 100 (1):115–31.
Ahmed Faisal Z. 2012. The Perils of Unearned Foreign Income: Aid, Remittances, and Government Survival. American Political Science Review 106 (1):146–65.
Alesina Alberto, and Dollar David. 2000. Who Gives Foreign Aid to Whom and Why? Journal of Economic Growth 5 (1):3363.
Anderson James H., Kaufmann Daniel, and Recanatini Francesca. 2003. Service Delivery, Poverty and Corruption—Common Threads from Diagnostic Surveys. Background Paper for the 2004 World Development Report: Making Services Work for Poor People. Washington, DC: World Bank. Available at <>.
Arriola Leonardo R. 2013. Multiethnic Coalitions in Africa: Business Financing of Opposition Election Campaigns. New York: Cambridge University Press.
Bailey Michael, Strezhnev Anton, and Voeten Erik. 2015. Estimating Dynamic State Preferences from United Nations Voting Data. Journal of Conflict Resolution. <> doi: 10.1177/0022002715595700.
Bearce David H., and Tirone Daniel C.. 2010. Foreign Aid Effectiveness and the Strategic Goals of Donor Governments. Journal of Politics 72 (3):837–51.
Bermeo Sarah Blodgett. 2016. Aid Is Not Oil: Donor Utility, Heterogeneous Aid, and the Aid-Democratization Relationship. International Organization 70 (1):132.
Bobba Matte, and Andrew Powell. 2007. Aid and Growth: Politics Matters. Inter-American Development Bank Working Paper 601, Washington, DC.
Borensztein Eduardo, De Gregorio Jose, and Lee Jong-Wha. 1998. How Does Foreign Direct Investment Affect Economic Growth? Journal of International Economics 45 (1):115–35.
Brooks Sarah, and Kurtz Marcus. 2012. Oil and Democracy: Endogenous Natural Resources and the Political “Resource Curse.” Unpublished manuscript, Ohio State University, Columbus.
Brown Drusilla, Deardorf Alan, and Stern Robert. 1996. International Labor Standards and Trade: A Theoretical Analysis. In Fair Trade and Harmonization: Prerequisites for Free Trade? edited by Bhagwati Jagdish N. and Hudec Robert E., 227–80. Cambridge, MA: MIT Press.
Bueno de Mesquita Bruce, and Smith Alastair. 2010. Leader Survival, Revolutions, and the Nature of Government Finance. American Journal of Political Science 54 (4):936–50.
Bueno de Mesquita Bruce, Smith Alastair, Siverson Randolph M., and Morrow James D.. 2003. The Logic of Political Survival. Cambridge, MA: MIT Press.
Burnside Craig, and Dollar David. 2000. Aid, Policies, and Growth. American Economic Review 90 (4):847–68.
Callaghy Thomas M. 1984. The State-Society Struggle: Zaire in Comparative Perspective. New York: Columbia University Press.
Carkovic Maria, and Levine Ross. 2005. Does Foreign Direct Investment Accelerate Economic Growth? In Does Foreign Direct Investment Promote Development? edited by Moran Theodore H., Graham Edward M., and Blomström Magnus, 195220. Washington, DC: Center for Global Development and Institute for International Economics.
Chauvet Lisa, Collier Paul, and Fuster Andreas. 2013. Supervision and Project Performance: A Principal-Agent Approach. Unpublished manuscript, Dauphine Université Paris, Paris.
Cheibub Jose Antonio, Gandhi Jennifer, and Vreeland James Raymond. 2010. Democracy and Dictatorship Revisited. Public Choice 143 (1–2):67–101.
Collier Paul. 1997. The Failure of Conditionality. In Perspectives on Aid and Development, edited by Gwin Catherine and Nelson Joan M., 5178. Washington, DC: Overseas Development Council.
Collier Paul, Guillaumont Patrick, Guillaumont Sylviane, and Gunning Jan Willem. 1997. Redesigning Conditionality. World Development 25 (9):1399–407.
Cornia Giovanni Andrea, Jolly Richard, and Stewart Frances. 1987. Protecting the Vulnerable and Promoting Growth. Vol. 1, Adjustment with a Human Face. Oxford, UK: Clarendon Press.
Delgado Michael S., McCloud Nadine, and Kumbhakar Subal C.. 2014. A Generalized Empirical Model of Corruption, Foreign Direct Investment, and Growth. Journal of Macroeconomics 42:298316.
Denizer Cevdet, Kaufmann Daniel, and Kraay Aart. 2011. Good Countries or Good Projects? Macro and Micro Correlates of World Bank Project Performance. Policy Research Working Paper. Washington, DC: World Bank.
Dollar David, and Svensson Jakob. 2000. What Explains the Success or Failure of Structural Adjustment Programs? Economic Journal 110:894917.
Dreher Axel, Sturm Jan-Egbert, and Vreeland James Raymond. 2009. Development Aid and International Politics: Does Membership on the UN Security Council Influence World Bank Decisions? Journal of Development Economics 88 (1):118.
Drezner Daniel. 2007. All Politics Is Global: Explaining International Regulatory Regimes. Princeton, NJ: Princeton University Press.
Dunning John H. 1998. Location and the Multinational Enterprise: A Neglected Factor? Journal of International Business Studies 29 (1):4566.
Dunning Thad. 2004. Conditioning the Effects of Aid: Cold War Politics, Donor Credibility, and Democracy in Africa. International Organization 58 (2):409–23.
Eames Diane, and Thery Alain. 2002. Assessment of Corruption and Red Tape as Barriers to Trade and Investment in Mozambique. Final Report for Contract PCE-I-00-98-00013-00, Task Order 810. Washington, DC: USAID.
Easterly William. 2003. Can Foreign Aid Buy Growth? Journal of Economic Perspectives 17 (3):2348.
Emery James J. 2003. Governance, Transparency, and Private Investment in Africa. Paper presented at the Encouraging Modern Governance and Transparency for Investment: Why and How?/OECD-Africa Investment Roundtable, November, Johannesburg, South Africa.
Estrin Saul, and Myer Klaus E., eds. 2004. Investment Strategies in Emerging Markets. Cheltenham, UK: Edward Elgar.
Flores Thomas Edward, and Nooruddin Irfan. 2009. Democracy Under the Gun: Understanding Postconflict Economic Recovery. Journal of Conflict Resolution 53 (3):329.
Foreign Investment Advisory Service. 2001. Mozambique: Continuing to Remove Administrative Barriers to Investment. Washington, DC: World Bank.
Frynas Jedrzej George. 2004. The Oil Boom in Equatorial Guinea. African Affairs 103 (413):527–46.
Gelman Andrew, Carlin John B., Stern Hal S., and Rubin Donald B.. 2004. Bayesian Data Analysis. 2nd ed. New York: Chapman and Hall/CRC.
Girod Desha M. 2015. Explaining Post-Conflict Reconstruction. New York: Oxford University Press.
Goldsmith Arthur A. 2001. Foreign Aid and Statehood in Africa. International Organization 55 (1):123–48.
Government of Mozambique. 2001. Action Plan for the Reduction of Absolute Poverty (2002–2005) (PARPA). Maputo, Mozambique: Council of Ministers.
Hamilton Kirk, and Clemens Michael. 1999. Genuine Savings Rates in Developing Countries. World Bank Economic Review 13 (2):333–56.
Henisz Witold J. 2000. The Institutional Environment for Economic Growth. Economics and Politics 12 (1):131.
Independent Evaluation Group (IEG). 2007. Country Assistance Strategy Completion Report Review: Mozambique. Washington, DC: IEG.
Independent Evaluation Group (IEG). 2010. Cost-Benefit Analysis in World Bank Projects. Washington, DC: World Bank.
Independent Evaluation Group (IEG). 2012. World Bank Project Performance Ratings. Available at <>. Accessed 1 September 2012.
Independent Evaluation Group (IEG). 2015. IEG World Bank Project Performance Ratings. Available at <>. Accessed 28 May 2015.
Institute for Health Metrics and Evaluation. 2010. Available at <>. Accessed 15 October 2012.
International Monetary Fund (IMF). 2007. Guide on Resource Revenue Transparency. Available at <>. Accessed 25 June 2015.
International Monetary Fund (IMF). 2011. Revenue Mobilization in Developing Countries. Approved by Carlo Cottarelli. Washington, DC: IMF.
Jensen Nathan. 2006. Nation-States and the Multinational Corporation: A Political Economy of Foreign Direct Investment. Princeton, NJ: Princeton University Press.
Jensen Nathan, and Johnston Noel P.. 2011. Political Risk, Reputation, and the Resource Curse. Comparative Political Studies 44 (6):662–88.
Kahler Miles. 1992. External Influence, Conditionality, and the Politics of Adjustment. In The Politics of Economic Adjustment: International Constraints, Distributive Conflicts and the State, edited by Haggard Stephan and Kaufman Robert R., 89136. Princeton, NJ: Princeton University Press.
Kerner Andrew. 2014. What We Talk About When We Talk About Foreign Direct Investment. International Studies Quarterly 58 (4):804–15.
Kiakwama Gilbert, and Chevallier Jerome. 2001. Democratic Republic of Congo. In Aid and Reform in Africa: Lessons from Ten Case Studies, edited by Devarajan Shantayanan, Dollar David, and Holmgren Torgny, 627–44. Washington, DC: World Bank.
Kilby Christopher. 2009. The Political Economy of Conditionality: An Empirical Analysis of World Bank Loan Disbursements. Journal of Development Economics 89 (1):5161.
Kilby Christopher. 2014. Assessing the Contribution of Donor Agencies to Aid Effectiveness: The Impact of World Bank Preparation on Project Outcomes. Working paper, Villanova, PA: Villanova University.
Kosack Stephen, and Tobin Jennifer. 2006. Funding Self-Sustaining Development: The Role of Aid, FDI, and Government in Economic Success. International Organization 60 (1):205–43.
Laeven Luc, and Valencia Fabian. 2008. Systemic Banking Crises Database: An Update. Working paper. Available at <>. Accessed 24 June 2012.
Le Billon Philippe. 2001. The Political Ecology of War: Natural Resources and Armed Conflict. Political Geography 20 (1):561–84.
LeBlang David. 1996. Property Rights, Democracy and Economic Growth. Political Research Quarterly 49 (1):527.
Leeds Brett Ashley. 2005. The Alliance Treaty Obligations and Provisions Project. Available at <>. Accessed 2 February 2010.
Leeds Brett Ashley, Ritter Jeffrey M., Mitchell Sara McLaughlin, and Long Andrew G.. 2002. Alliance Treaty Obligations and Provisions, 1815–1944. International Interactions 28 (3):237–60.
Leslie Winsome J. 1987. The World Bank and Structural Transformation in Developing Countries: The Case of Zaire. Boulder, CO: Lynne Rienner.
Loree David W., and Guisinger Stephen E.. 1995. Policy and Non-policy Determinants of US. Foreign Direct Investment. Journal of International Business Studies 26 (2):281–99.
Love Alexander Ray, Stern Elliot, and Wiesner Eduardo. 2004. Report of the External Review of the World Bank's Evaluation Function and DGO's Mandate . Washington, DC: World Bank.
Malesky Edmund J. 2009. Foreign Direct Investors as Agents of Economic Transition: An Instrumental Variables Analysis. Quarterly Journal of Political Science 4 (1):5985.
Manfredo Fernando Jr. 1993. Future of Panama and the Canal. Journal of Interamerican Studies and World Affairs 35 (3):102–28.
McPherson Charles. 2010. State Participation in the Natural Resource Sectors: Evolution, Issues and Outlook. In The Taxation of Petroleum and Minerals: Principles, Problems and Practice, edited by Daniel Philip, Keen Michael, and McPherson Charles, 263–88. New York: Routledge.
Meernik James, Krueger Eric L., and Poe Steven C.. 1998. Testing Models of US Foreign Policy: Foreign Aid During and after the Cold War. Journal of Politics 60 (1):6385.
Millett Richard L. 1990. The Aftermath of Intervention: Panama 1990. Journal of Interamerican Studies and World Affairs 32 (1):115.
Morrison Kevin M. 2009. Oil, Nontax Revenue, and the Redistributional Foundations of Regime Stability. International Organization 63 (1):107–38.
Neumayer Eric. 2003. The Pattern of Aid Giving: The Impact of Good Governance on Development Assistance. London: Routledge.
Noorbakhsh Farhad, and Paloni Alberto. 2007. Learning from Structural Adjustment: Why Selectivity May Not Be the Key to Successful Programmes in Africa. Journal of International Development 19 (7):927–48.
Pitcher M. Anne. 2012. Party Politics and Economic Reform in Africa's Democracies. New York: Cambridge University Press.
Reno William. 1998. Warlord Politics and African States. Boulder, CO: Lynne Rienner.
Rodrik Dani. 2006. Goodbye Washington Consensus, Hello Washington Confusion? A Review of the World Bank's Economic Growth in the 1990s: Learning from a Decade of Reform. Journal of Economic Literature 44 (4):973–87.
Root Franklin R., and Ahmed Ahmed A.. 1979. Empirical Determinants of Manufacturing Direct Foreign Investment in Developing Countries. Economic Development and Cultural Change 27 (4):751–67.
Rose Andrew K. 2005. Does the WTO Make Trade More Stable? Open Economies Review 16 (1):722.
Ross Michael L. 1999. The Political Economy of the Resource Curse. World Politics 51 (2):297322.
Ross Michael L. 2006. Is Democracy Good for the Poor? American Journal of Political Science 50 (4):860–74.
Rudra Nita, and Jensen Nathan M.. 2011. Globalization and the Politics of Natural Resources. Comparative Political Studies 44 (6):639–61.
Schneider Friedrich Georg, and Frey Bruno S.. 1985. Economic and Political Determinants of Foreign Direct Investment. World Development 13 (2):161–75.
Shafer Michael. 1983. Capturing the Mineral Multinationals: Advantage or Disadvantage? International Organization 37 (1):93119.
Smets Lodewijk, Knack Stephen, and Molenaers Nadia. 2012. Political Ideology, Quality at Entry and the Success of Economic Reform Programs. Policy Research Working Paper 6130. Washington, DC: World Bank.
Steenbergen Marco R., and Jones Bradford S.. 2002. Modeling Multilevel Data Structures. American Journal of Political Science 46 (1):218–37.
Stone Randall W. 2002. Lending Credibility: The International Monetary Fund and the Post-Communist Transition. Princeton, NJ: Princeton University Press.
Stone Randall W. 2004. The Political Economy of IMF Lending in Africa. American Political Science Review 98 (4):577–91.
Stone Randall W. 2010. Buying Influence: Development Aid Between the Cold War and the War on Terror . Rochester, NY: University of Rochester.
Stone Randall W. 2011. Controlling Institutions: International Organizations and the Global Economy. New York: Cambridge University Press.
Svensson Jakob. 2003. Why Conditional Aid Does Not Work and What Can Be Done About It. Journal of Development Economics 70 (2):381402.
United Nations (UN). 2003. Monterrey Consensus of the International Conference on Financing for Development. The Final Text of Agreements and Commitments Adopted at the International Conference on Financing for Development Monterrey, Mexico, March 2002. Monterrey, Mexico: United Nations.
United Nations (UN). 2010. Human Development Report 2010: The Real Wealth of Nations: Pathways to Human Development. New York: United Nations Development Programme.
United Nations Conference on Trade and Development (UNCTAD). 1998. World Investment Report 1998: Trends and Determinants. New York: United Nations.
United Nations Conference on Trade and Development (UNCTAD). 2007. World Investment Report: Transnational Corporations, Extractive Industries and Development. New York: United Nations.
United Nations Conference on Trade and Development (UNCTAD). 2012. UNCTAD STAT: Inward and Outward Foreign Direct Investment Flows. Available at <>. Accessed 24 June 2012.
Victor David G., Hults David R., and Thurber Mark C.. 2012. Oil and Governance: State-Owned Enterprises and the World Energy Supply. New York: Cambridge University Press.
Wood Geoffrey. 2004. Business and Politics in a Criminal State: The Case of Equatorial Guinea. African Affairs 103 (413):547–67.
World Bank. 1998. Implementation Completion Report: Panama: Economic Recovery Loan (Loan No. 3438-PA). No. 18454. Washington, DC, 20 August.
World Bank. 1999. Implementation Completion Report: Republic of Equatorial Guinea: Health Improvement Project (CREDIT 2348-EG). No. 19955. Washington, DC, 17 December.
World Bank. 2003. Memorandum of the President of the International Development Association, International Finance Corporation, and the Multilateral Investment Guarantee Agency to the Executive Directors on a Country Assistance Strategy for the Republic of Mozambique. No. 26747-MOZ. Washington, DC, 20 October.
World Bank. 2006. From Curse to Blessing: Natural Resources and Institutional Quality. Washington, DC: World Bank.
World Bank. 2009. Project Performance Assessment Report: Mozambique: Economic Management and Private Sector Operation (Credit 3709); First Poverty Reduction Support Credit (Credit 3950); Second Poverty Reduction Support Credit (Credit 4111). No. 48920. Washington, DC, 17 June.
World Bank. 2012a. World Development Indicators. Available at <>. Accessed 24 June 2012.
World Bank. 2012b. Projects and Operations. Available at <>. Accessed 2 March 2012.
Wright Joseph, and Winters Matthew S.. 2010. The Politics of Effective Foreign Aid. Annual Review of Political Science 13 (1):6180.
Young Crawford, and Turner Thomas. 1985. The Rise and Decline of the Zairian State. Madison: University of Wisconsin Press.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

International Organization
  • ISSN: 0020-8183
  • EISSN: 1531-5088
  • URL: /core/journals/international-organization
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
Type Description Title
Supplementary Materials

Girod and Tobin supplementary material
Supplementary data

 Unknown (696 KB)
696 KB


Altmetric attention score

Full text views

Total number of HTML views: 24
Total number of PDF views: 536 *
Loading metrics...

Abstract views

Total abstract views: 1184 *
Loading metrics...

* Views captured on Cambridge Core between September 2016 - 19th November 2017. This data will be updated every 24 hours.