Maria Nagawa (Duke): Foreign Aid and the Performance of Bureaucrats

Maria Nagawa (Duke) will present her paper, "Foreign Aid and the Performance of Bureaucrats."

Abstract:
Foreign aid is an important financer of development projects in many developing countries. However, aid effectiveness remains equivocal and many suggestions have been made as to why this might be the case. So far, no work has examined the crucial impact of aid on bureaucrats, the people who make states work. In this chapter of my dissertation, I focus on how aid alters bureaucrats' incentives and how this affects their performance. I argue that foreign aid forces bureaucrats to make important tradeoffs between monetary benefits and intrinsic motivation which might motivate them to work hard for aid projects but reduce effort in their government work. I use interview, survey and survey experimental data collected over 8 months of fieldwork in Uganda to develop my theory and test my hypotheses. Broadly, I find that bureaucrats prefer projects with higher monetary rewards and departments with more shares of aid funding, but still have a strong preference for sources of intrinsic motivation. I further find that bureaucrats are more willing to reduce effort on government work as monetary rewards on aid projects increase. This study provides important lessons for why aid projects might fail to meet their objectives and how aid projects can be structured in less distortionary ways. The study also adds to new and growing evidence on bureaucratic motivation in low-income countries.