Bilateral versus multilateral aid and corruption

This Anti-Corruption Helpdesk brief was produced in response to a query from a U4 Partner Agency. The U4 Helpdesk is operated by Transparency International in collaboration with the U4 Anti-Corruption Resource Centre based at the Chr. Michelsen Institute.

Query

It is often argued that the UN and the development banks are better positioned in terms of capacity and knowledge to handle funds in addition to being better at preventing corruption occurring in the programmes and projects financed. Are there any studies underpinning the assumption? Are there any studies which compare aid through multilateral institutions with bilateral aid, in terms of how they engage and combat corruption? Are there any documented negative consequences on corruption of aid from multilateral institutions/banks?

Purpose

The multilateral agencies are receiving more and more financial support from the government, and there is a clear shift from bilateral aid to even more multilateral aid.

Content

1. Comparative merits of multilateral and bilateral aid channels
2. Multilateral aid and corruption
3. References

Summary

There is empirical evidence suggesting that multilateral aid channels are less politicised, more demand-driven, more selective in targeting poorer countries, better positioned to provide global public goods and the preferred option of recipient countries. Multilateral donors can also draw from a broader technical base than individual bilateral donors. However, multilateral agencies are less selective than bilateral agencies in terms of the governance of recipient countries and do not align aid modality accordingly. There are also indications that bilateral agencies exhibit lower administrative costs than multilateral agencies, but evidence is still patchy in this regard. The Helpdesk has found no comparative studies on the respective approach of bilateral and multilateral agencies to fight corruption. The evidence regarding the impact of aid – irrespective of whether it is delivered through bilateral or multilateral channels – on corruption is also mixed and inconclusive.

Authors

Reviewers

Date

28/09/2016

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