Cambodia Development Institute

Title  Proliferation and Fragmentation: Uphill Struggle of Aid Effectiveness

Abstract Aid fragmentation is one of the hindrances to aid effectiveness. As a main contributing factor, proliferation from the donor side has been pointed out. In this regard, we first examine the main factors for the donors’ proliferation and the links between the donors’ proliferation and the recipients’ fragmentation, which have been asked in literatures, but are revisited again with a comprehensive dataset. We also examine whether a recipient is indeed going to get worse off through fragmentation or, by proliferation. The main findings are: 1) donors tend to proliferate their aid disbursement as their aid budget increases; 2) the recipients’ fragmentation is mainly due to the donors’ proliferation, and this has been prevalent since the early stage of aid history back to the 1960s; 3) aid fragmentation among donors may create economies of scale in the incipient stage of a recipient country’s growth, but affect negatively in the long run; 4) therefore, the donors’ proliferation will eventually harm the recipients’ growth.